Extended Car Warranty Cost

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Last Updated: December 18, 2022

What is an Extended Warranty?

To put it plainly, an extended warranty is an optional service contract that protects against a predetermined list of expenses incurred due to vehicle ownership over a predetermined period and mileage threshold. These warranties, sometimes known as "vehicle service agreements," often begin after the original manufacturer's warranty has expired but can be obtained at any point in the vehicle's ownership.

In most cases, "Vehicle Service" plans refer to prepaid contracts that pay for future maintenance costs as projected. The terms are often used interchangeably due to the similarity between the two types of plans. Read your schedule carefully to find out what kind of agreement you're being offered.

The U.S. Federal Trade Commission states that guidelines and coverages for extended warranties vary significantly from state to state and brand to brand. Therefore, do your homework before purchasing the optional coverage in addition to the standard service plan provided by the manufacturer.

The Typical Price of a Longer Auto Warranty

A standard automobile extended warranty will cost you roughly $2,500. But these guarantees typically develop over several years, and you can choose between making a single lump-sum payment or spreading the cost out over several months or a year. As a result, the length of your coverage and payment term is sometimes different.

That means that while you may be covered for seven years with a $2,500 warranty, you may pay close to $70 monthly for the first three years. After that, depending on the specifics of your agreement, annual payments could range from $350 to $1,000.

Be prepared to see a wide range of prices when looking into the costs of extended warranties. Monthly payments, as opposed to a single, large amount, may increase your premium costs. The cost of an extended warranty and the extent to which it protects your investment can vary widely depending on your chosen provider. The final price for an auto warranty extension depends on various factors unique to each motorist.

What factors impact the cost of an auto warranty extension?

To turn a profit, extended warranty providers must charge customers a sum that is high enough to pay for all necessary auto repairs and still leave something over for administrative costs. As a result, most service providers impose a monthly premium at least twice as high as the cost of ordinary repairs or maintenance on the vehicle's mechanical components.

Although this may appear unfair, it results from a thorough analysis of the dangers inherent in providing auto insurance. Actuaries examine customer information to ascertain the most common problems, the types of vehicles that receive the most complaints, the average cost of repairs and labor, and the willingness of consumers to pay for warranty protection, all to set optimal prices for extended auto warranties. The price of an extended warranty depends on several variables, such as:

Level of coverage

Your claim for repairs under an extended warranty can only be for failed parts. Normal wear and tear are not covered. It's important to remember that many components come with a guarantee that operates independently from the warranty you purchased. For example, if you had a new inverter installed before buying the warranty and it broke, the manufacturer or the shop that did the installation might replace it at no cost.

Tires, brake pads, windscreen wipers, and bulbs are consumables that aren't typically covered by a warranty because they are part of regular maintenance or wear out over time. Before deciding to buy the warranty, make sure you understand its coverage, as well as any limitations or exclusions.

Make and model of your vehicle

As a general rule, however, some automobiles have higher repair costs than others. A manufacturer warranty for a 2018 Ford F-150 Raptor worth $52,000 would naturally cost more than one for a 2018 Kia Rio worth $15,000, and vice versa. Insurance for high-performance automobiles is typically more expensive, and some providers may not even offer coverage for such vehicles.

Service fee or deductible

A deductible is the amount of money you must pay before an extended warranty pays for repairs on your vehicle. The typical deductible for medical insurance is between $75 and $250. In most cases, the cost of an extended warranty will be higher if your health insurance plan has a lower or no deductible than if your deductible is higher.

The car's age

An extended warranty may be available for your vehicle, and its price may vary depending on when it was first produced. For example, the warranty coverage cost may be higher for an older vehicle because of its lower expected lifespan. Still, it could be higher for a newer model because of its higher failure rate.

Scope of Coverage

Generally, the price of a powertrain or drivetrain program is less than that of a more inclusive plan with a longer list of excluded repairs. However, hybrid drivetrain electronics and other special features will significantly increase your warranty cost.

Length of warranty

You'll have to shell out more money for peace of mind if you opt for a longer duration when purchasing an extended warranty. Before committing to a costly extended warranty, you must consider how long you intend to keep the car and how many miles you typically drive annually.

Car Warranty Plans Cost

The best aftermarket service contract providers have a few different plans available, but they can all be broken down into either bumper-to-bumper coverage or powertrain coverage. Typically more expensive than individual component warranties, bumper-to-bumper extended warranties cover virtually every vehicle component.

However, extended powertrain warranties only protect the most expensive to replace parts of a vehicle, which are those directly related to its propulsion. Therefore, used cars are a great candidate for extended powertrain warranties, a more affordable option. In between these two extremes are extensive inclusionary policies and powertrain plus programs. The costs of the two most common warranties are listed below.

When Should You Use a Reimbursable Plan?

It's easy, if a little time-consuming, to get reimbursed for upfront costs with most plans. Learn when you will be expected to make an upfront payment before being reimbursed by reading the fine print and consulting with your claim agent or service provider, who may be a different company than the one providing your extended warranty.

This is sometimes necessary for rental loan fees, towing fees, and other similar services that are covered but still considered extras. Document everything you do, including the dates, times, places, and names of anyone you interact with. A pocket notebook or your phone's note-taking feature are both valuable tools.

The final step in filing a claim involves sending the necessary paperwork to an email address, system implementation, or fax number. Companies are not required to reimburse their employees within a certain amount of time law. Therefore this period can be anywhere from 30 to 90 days.

Extended Car Warranty Cost Bottom Line

The average cost of an extended warranty is around $2,500, but this number might go up if you drive a high-performance vehicle or wish to cover various systems and components.

Many motorists instead choose to save up regularly to pay for any necessary repairs out of pocket rather than purchase costly insurance. Investigate your options thoroughly if an extended warranty is helpful to you.

The Car Data Review Methodology

Our expert review team is committed to providing honest and objective information. Based on consumer data, we identified the following rating categories and did extensive research to determine the top extended auto warranty providers.

• Affordable: Many factors influence the cost of a service, making it difficult to compare prices between providers. Our secret shopper team analyzes different vehicles, mileages, and warranty plans to give you this rating.
• Coverage - Each consumer has different needs. Every car warranty company must offer a variety of coverage options. We consider the number of plans available, terms limits, exclusions, and additional benefits.
• Industry Standing: Our team considers Better Business Bureau (BBB), ratings, availability, years in business, and other factors when determining this score.
• Customer Services: Trusted extended car warranty companies provide a level of customer care. We consider customer reviews, BBB complaints, and responsiveness to customer service.