How to Calculate Car Extended 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?
An 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
Here is what we do know about calculating the extended warranty cost: your result will generally fall somewhere between $1,000 and $4,000 in total. This pricing can be broken down into a down payment, monthly payments, and deductible.
To calculate an extended warranty cost, factors like length and type of coverage as well as vehicle type come into play, but you generally should not pay more than $4,000 depending on how high your deductible is.
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.
Used Car Warranty Cost
A used car warranty cost will be from $1,000 to $2,000, depending on what type of car the warranty is on and what the mileage is.
What Is NOT Covered By Your Extended Warranty
Understanding 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.
- Gather 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, no matter what a scammer tells you on the phone.
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).
