Should You Buy An Extended Car Warranty From A Dealership? (2025)

Typically, extended car warranties can either be purchased at a dealership—usually at the time of the vehicle’s sale—or directly from a third-party provider. There are only two types of providers: third-party companies and the auto manufacturers themselves.

Third-party providers, such as CarShield, Olive and CarChex, are companies that sell coverage policies and are completely unaffiliated or unrelated to automakers. Whereas automakers themselves offer factory-backed extended warranties, or vehicle service contracts as they’re legally required to call them.

But to answer the question, should you buy one from the dealer? It depends…

New or Certified Pre-Owned?

Well, it ultimately depends on some factors, such as whether you’re buying a new vehicle or a used vehicle, and where are you buying it from.

If buying a new or certified pre-owned vehicle from an authorized automaker franchise—such as your local *insert automaker here* dealer—you should absolutely strive to purchase an extended car warranty from that franchise. Most, if not all, automaker franchise locations offer their manufacturer’s factory extended vehicle service contracts, which are typically the most legitimate and worry-free, providing the best and most comprehensive coverage.

For example, if you’re buying a new or certified pre-owned BMW or GMC, you can opt for a factory-backed vehicle service contract. BMW calls it an Extended Service Contract while GMC markets it as an Extended Limited Warranty. Think of it as buying Apple’s AppleCare protection plan at an Apple store or Apple-authorized location to protect that new MacBook or iPhone.

Direct From Dealer?

Are you buying it through an automaker retail franchise store or a third-party private dealer?

Automaker-backed vehicle service contracts are only available and purchasable through franchise locations, typically at the time of the actual vehicle sale. These policies are also often the most expensive. But dealers can provide flexible payment options, such as rolling in the initial investment cost into your monthly payment or total vehicle transaction price, making that big financial commitment easier to swallow.

If buying a used vehicle that is out-of-warranty, has no pre-existing warranty and is being sold as-is, automaker franchises and third-party used car dealerships may sell a third-party extended car warranty as a vendor. However, this is where things may get tricky as its legitimacy is all down to the service being sold.

If the selling dealership is offering a policy by one of the valid third-party providers, such as the ones previously mentioned (CarShield, Olive, CarChex, Endurance), then you should be fine purchasing that extended warranty. However, keep in mind that dealerships may mark up the cost of the policy as the cost of doing business, versus purchasing the policy directly from the company.

Thus, it’s important to request and inquire for an initial pricing quote, both through the dealer and the provider, and compare your financing options and pricing.

Sometimes, a shady and untrustworthy used car dealer may attempt to pull a fast one and sell you a fraudulent extended car warranty, or one that’s of low quality, just to make a quick bit of extra cash. In any case, it’s incredibly important to conduct your own research into the coverage programs and dealerships that you plan to work with to avoid fraudulent or crooked deals.

Additionally, always thoroughly study the terms, conditions, fine print and the structure of your vehicle sale, or “deal,” to make sure the requested extended warranty or vehicle service contract is included and is on record on paper. Usually, this documentation is set forth in the finance manager’s office when concluding a vehicle sale at a dealership.

When it comes to considering extended car warranties, it’s always best to opt for the manufacturer’s. Those plans are often the most legitimate and comprehensive, providing the best long-term coverage for your vehicle once the initial factory warranty expires or goes past its limits.

Because of this, they are often the most expensive, but it’s certainly a matter of getting your money’s worth since there’s the least amount of risk.

These manufacturer-extended warranties are only sold through franchise dealership stores. In other words, if you’re purchasing a new Mercedes-Benz and want Mercedes’ Extended Limited Warranty you can only purchase such coverage at an authorized Mercedes-Benz dealer. Check with your dealership about extended warranty options when buying your new or certified-used car, even if it feels like a far-off purchase.