Should I Buy an Extended Warranty on a Used Car?

An extended warranty is optional additional coverage on your vehicle that covers the cost of specific types of repairs. These warranties will last for a set period of time or number of miles. What repairs are covered depends on your warranty terms, and a good plan can help reduce the financial burden of major repairs. A warranty is different from insurance in that it won't cover you in the case of damage due to an accident. Some restrictions and requirements must be met for a warranty to cover a repair. Overall, a warranty can be very beneficial for new car owners, depending on what type of warranty you choose.

The types of extended warranties available to you are often the same as a regular car warranty. Some of these types include:

• Bumper-to-Bumper: The standard coverage, this type of warranty will often only cover any repairs necessitated by manufacturer error or due to regular wear-and-tear. A bumper-to-bumper warranty won't cover parts that need regular replacement, like your tires, and won't cover damage due to negligence.
• Corrosion Coverage: Corrosion warranties cover any rust damage your vehicle suffers over time. Some policies will focus on exterior rust or only cover damage in the case of significant corrosion. A total rust percentage measures this; if you don't meet the criteria set by your warranty issuer, they may not cover the damage.
• Powertrain Warranty: A powertrain warranty covers any part of your vehicle that helps it move. This coverage includes your transmission, drive axle, turbocharger, and engine. A good extended warranty will cover all the parts of your engine, like the cylinder block, heads, valvetrain, fuel pump, injectors, gaskets, seals, and flywheel. A powertrain warranty can also cover the front and rear differentials and your car's driveshafts.
• EV Warranty: Often referred to as EV or Hybrid component warranties, an EV warranty will cover the internal mechanics of your electric vehicle. This coverage is separate from your standard warranty due to the construction difference between internal combustion engines and electric vehicles. An EV warranty will cover the battery, electric motor, and other EV-specific parts.
• Safety System Warranty: Sometimes referred to as a restraint systems warranty, this type of coverage will protect some of the safety features in your vehicle. These warranties usually deal with the standard features you find in most cars, like seat belts and airbags.

Whether or not you should buy an extended warranty on a new car depends on how long your original coverage lasts and what type of vehicle you chose. If you have a more expensive luxury car, getting an extended warranty is often better. Repairs on luxury models can carry a higher cost, so if an extended warranty covers the larger components of your vehicle, that may save you a lot of money down the line.

Overall, the cost of an extended warranty should be weighed against your total vehicle budget. If the warranty cost plus your monthly payments are too high, it may be best to forgo getting a plan. You can see whether you'll have enough left over for an extended warranty by calculating your lease and loan payments ahead of time. You can do this with a lease and loan calculator, like the free one available from GoodCar.

The most commonly chosen type of extended warranty is bumper-to-bumper, as it covers most major systems within your vehicle. While bumper-to-bumper warranties vary from company to company, most plans will cover essential parts of your car like:

• Electrical Components
• Safety Equipment
• Steering System
• Braking System (Minus your brake pads)
• Fuel System

A bumper-to-bumper warranty won't usually cover frequently replaced parts and will often exclude coverage on:

• Tires
• Wheels
• Windshield Wipers
• Fluids
• Rust or Corrosion
• Interior Upholstery
• Exterior Cosmetic Damage

Whether your car needs a bumper-to-bumper warranty depends on how soon it may need repairs. Getting a vehicle history report is an excellent way to find any hidden damage within your vehicle. These reports can show you information about a car's history of accidents and may help you find out whether someone fully repaired the vehicle in the past.