Should I Buy an Extended Warranty for My Used Car?

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - March 19, 2020

If you're purchasing a used car and it’s being sold "as is," this means it isn’t covered by any type of warranty. This isn't a bad thing, but it means you pay for any repairs. An extended warranty could help you save on repair costs, but is it really worth it to buy an extended warranty for a used vehicle?

Why Get an Extended Warranty?

An extended warranty, also known as a service contract, has the potential to save you hundreds, or even thousands, in repair costs if something happens to your used car. Because of this, peace of mind is one of the key reasons many people get an extended warranty. But this comes at a price: tacking on an extended warranty means a higher monthly payment if it's rolled into your loan contract.

There's also a chance of paying for something that you're never going to use, which can make your decision to buy a service contract a bit tougher. In order to ease the strain of this decision, consider your driving habits. Are you constantly on the go? Did you purchase a reliable vehicle? Your answers to these questions and more like them could help you make up your mind.

If you're always on the road and your make or model isn't known to be the most reliable of used cars, an extended warranty could be just what you need. However, if you buy a vehicle that's known for its reliability, and don't spend a lot of time in the car, you may be better off skipping the service contract and putting money away in a repair fund instead.

What Does an Extended Warranty Cover?

Extended warranties can cover a wide range of services and repairs, or only a limited number of systems. Because they cover different systems based on the policy and provider, it's important to know what is and isn’t included before you sign the contract.

Some policies offered by third-party providers may have different packages at different price points, so you may be able to decide how much coverage you wish to pay for. However, this isn't always the case.

Also, make sure you know who's covering your warranty. Some warranties allow you to go to a choice of locations for repairs. Many manufacturer-backed extended warranty programs allow you to go to any franchised dealership of that make for service, while a dealer-backed or third-party contract may only allow you to bring your used car to the selling dealership, or certain authorized repair shops.

Additionally, make sure you're prepared to pay the deductible amount, or even the entire repair up front, if necessary. Some service contracts only reimburse you for service, while others pay directly. In most cases, there's a deductible that you have to pay up front.

Thinking About Adding a Warranty to Your Auto Loan?

Since extended warranties are optional coverage for a used car, whether or not you should buy one, and how much having that peace of mind is worth, is really up to you. At the same time, having an extended warranty can mean a great deal of savings if you end up needing expensive repairs on your vehicle that are covered by your policy.

Service contracts are typically offered as a dealer add-on when you're sitting down with a finance manager to finalize your purchase. If you're not prepared to make the decision for or against an extended warranty at that time, that's OK.

Often, you can opt to add one on later, or search for third-party service contracts on your own. Just know that if you don't add it before you sign the financing contract, you're either going to have to pay for it up front, or on a separate contract with monthly payments.

If you decide to get a warranty when you sign your auto loan, you can typically cancel it later if need be, although you get a refund for the unused portion, rather than a lower monthly payment.

Get an Extended Warranty for Your Car »

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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