How to Calculate Car Extended Warranty Cost

How to Calculate Warranty Cost

Regardless of what you're purchasing, one of the first and most important things that you need to consider is cost.

With over 80% of Americans financing their automobiles through loans, you want to make sure you're protecting your investment, and that's where extended warranties come into play.

Beyond just understanding what an extended warranty can offer, we'll break down the estimated costs.

What Is an Extended Warranty?

What Is Extended WarrantyAn extended warranty is typically more extensive than the warranty coverage that comes with your new or used car (from the auto manufacturer). The extended warranty lasts longer and offers you savings on the cost of repairs after the initial warranty period expires.

You can purchase extended warranties from an auto manufacturer or third-party company. Remember this as you purchase your automobile from a dealership: theirs is not the only extended warranty available, and you do not need to feel pressured into purchasing theirs as if it is your only option.

You can drive off the lot in your new (or new to you) car, with their initial warranty period as coverage, and shop “after the fact” for extended car warranties if you wish.

Pro tip: Make the extended warranty decision before your initial warranty expires. You may still be able to buy one, but it will be more expensive.

How to Calculate the Extended Warranty Cost

Extended Warranty How to Calculate CostYou may find yourself eyeing a specific car, down to the year, make, and model, and expect you can easily find the price of an extended warranty online for that particular car. Unfortunately, it is not always that easy. Warranty companies are notoriously vague regarding pricing because there are just too many variables, including everything from the type of car to where you live. A car’s electronic components, age, and mileage can also factor in the price and services included under the extended warranty.

And it is also important to remember that warranties are negotiable: you should always attempt to negotiate a better price than what is initially offered for the car warranty. The answer may be no, but you will not know until you try. (This is, of course, also true when it comes to purchasing the car itself, where you need to be prepped and ready to negotiate with the dealer. We can teach you how.)

Here is what we do know about calculating the extended warranty cost: your result will generally fall somewhere between $1,000 and $4,000 total.

This pricing can be broken down into a down payment, monthly payments, and deductible.

What Is NOT Covered By Your Extended Warranty

Extended Warranty Costs What Is Not CoveredUnderstanding warranty coverage is key to the warranty decision, as you may be buying something with an expectation that is not aligned with reality.

If you think the extended warranty will come in handy when it is time for oil changes, if you have a flat tire on a family vacation and need roadside assistance, or need to purchase new brakes, think again. Most extended warranty providers do not include routine maintenance. However, some will include additional plans that cover things like maintenance and roadside assistance.

The routine expenses associated with car maintenance and some other similar unexpected repair costs do not fall under extended warranty coverage, so most people who purchase them never end up using them.

Extended Warranty Cost and Providers

Even though some people suggest taking a hard pass on the extended warranties, others still think they are necessary for an added level of protection and security. At the very least, you might find it a useful exercise to gather two or three quotes for your car, and you are not obligated to purchase anything.

Check out some of the most popular online extended coverage providers, in addition to asking your dealer for their quote for extended warranty coverage:

Extended Car Warranty Quotes: Tips for Consumers

Here are some tips for gathering quotes that may save you time and frustration.

  • Extended Warranty Costs Tips for ConsumersGather all pertinent data, including the vehicle identification number (VIN), the current mileage, and the make, model, and trim. Your paperwork from the dealership should have all the information you need. (Pro tip: Take a picture of your VIN from the side of your driver’s door and save it on your phone.)
  • Be ready to negotiate! Ask about any discounts you may qualify for, whether active military, senior citizen, or others. Ask if a safe driving record could lower the cost or if there is anything you can do to get a better deal on their plans.
  • Call the dealer for their quote and have that information available for comparison as you discuss prices with online or third-party providers.

The most important thing to remember is that you do not have to purchase an extended warranty. This is not a requirement of car ownership: it is an option.

This is an individual choice for a consumer based on their budget and needs. Some car owners prefer to have the added security of an extended warranty and do not mind spending up to $4,000 for that peace of mind.

Others may consider that it is too high of a price to pay on top of the car maintenance expenses that will already come out of your pocket over time (such as oil changes, new tires, and other standard wear-and-tear issues).

Frequently Asked Questions

Are extended car warranties worth the money?

A car extended warranty could save you money in the long run, so it's worth considering, especially for older and less reliable vehicles. Be sure to get multiple quotes from providers to get the best price.

How much does it cost for a car extended warranty?

Extended car warranty providers are notorious for vague pricing information. Although most providers offer a free and easy way to get a quote. You can expect it to fall between $1,000 and $4,000.

Can extended warranties be purchased later?

Yes, third-party extended warranty programs can be purchased at any time. However, if you are extending your manufacturer warranty, you most likely have to extend it before your original warranty expires.

How is extended warranty cost calculated?

Many factors go into the car extended warranty cost. Some of these include the year, make, model, age, mileage, and even where you live.