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

Searching for and investing in an extended warranty for your vehicle can be quite a daunting experience. Not only are there plenty of options to consider, but there are high upfront costs, lots of ins and outs to research, and tons of fine print and legalese to comb through. Worst of all, an overabundance of fake extended car warranty providers and scams are out there seeking to swipe your hard-earned money.

Thankfully, however, you’ll actually find some legitimate providers for extended car warranties (or vehicle service contracts). These providers all offer additional warranty and maintenance coverage beyond your car’s initial factory coverage. Their goal is to protect you and your vehicle from expensive out-of-pocket repair and maintenance bills and minimize the financial blow that they might incur from long-term vehicle ownership past the initial warranty period.

So how does one purchase these warranty policies?

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To Buy From the Dealership or Not To Buy?

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.

When Not To Buy From the Dealership

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.

Manufacturer is the Best Warranty

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.

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

FAQs

Is it worth getting an extended warranty from the dealer? ›

Extended car warranties can be worth it if you have an older vehicle with a high mileage but may not be worth it if your vehicle isn't likely to break down.

What are two reasons not to buy an extended warranty? ›

Terms may apply to offers listed on this page.
  • Extended warranties don't cover everything that can go wrong with a purchase, and they are expensive to boot.
  • Your purchase likely comes with a manufacturer's warranty, and the retailer you buy it from may also stand behind it.
Jan 15, 2023

Why do car dealerships push extended warranties? ›

Dealers want to make the car buying experience as easy and efficient as possible, so they will try to sell you a warranty based on convenience and accessibility. However, because extended warranty sales are so profitable, dealerships often mark up their prices.

What are two of the things should you consider before getting an extended warranty? ›

If you do want to buy an extended warranty, be sure to purchase one from a company with a long history, such as through an automaker, and understand the small print. There are often many restrictions with extended warranties, including what's covered and where the vehicle can be serviced.

How much should an extended car warranty cost? ›

Third party warranty providers set their own costs and contract terms. Extended warranty prices should fall between the $1,500 to 5,000 range, depending on the coverage type. You should be able to find a provider within this range.

Can I negotiate the price of extended warranty? ›

You can and should negotiate an extended warranty for your new or used vehicle. Get multiple quotes, understand the fine print and pay attention to timing.

Who is the best extended auto warranty company? ›

Comparing the Best Extended Car Warranty Providers
CompanyOur RatingOur Award
1. Endurance9.3Best Comprehensive Coverage
2. autopom!9.2Best Customer Service
3. Carchex9.1Best Industry Reputation
4. Everything Breaks8.7Best Contract Term Selection
1 more row
Sep 3, 2024

Is extended warranty worth it? ›

Extended car warranties can provide peace of mind and protect drivers from paying out of pocket for costly repairs. It's smart to consider an extended warranty if you have a used car, if the vehicle has high mileage or if it's an unreliable model.

What is not covered under extended warranty? ›

Like most warranties, extended warranties and vehicle service contracts don't cover routine maintenance, wear items such as tires, brakes or wiper blades, collision damage or damage resulting from lack of maintenance or abuse. You should not expect heavily modified vehicles to be covered.

How to refuse dealer add-ons? ›

Get answers about any extra fees you don't recognize and tell the dealer to remove any add-ons you don't want. Know your total cost, not just the monthly payment. Get it in writing and make sure it includes all charges, including any fees or add-ons.

What percentage of people buy extended car warranties? ›

Speaking of, only 47 percent of car owners have an extended warranty, and of those, only one in ten has actually ever used their service contract.

Why won't the dealer let me cancel my extended warranty? ›

Be firm but polite with your request to cancel. If they refuse, ask to speak to the finance manager who sold you the warranty or a general manager. If all else fails, head to the dealership in-person to put your concerns front and center, and, if need be, get an attorney involved.

What is a downside to purchasing an extended warranty? ›

Limited coverage: Extended warranties don't cover all types of damage, nor do they always cover all of your car's components. Loss of use may not be covered: Not all warranties include coverage for a rental car or other transportation fees in the event of an extended repair time.

Is it worth buying an extended warranty on a new car? ›

A long-term protection plan is likely a wise choice if you plan to keep your vehicle long after its initial factory warranty coverage expires. A good extended car warranty could save you thousands of dollars in future repairs depending on your coverage and the breakdowns you experience.

Does an extended warranty cover engine replacement? ›

Extended warranties cover the major components of your vehicle, including the engine, transmission, gaskets, and axles. In a way, an extended warranty can act like an insurance policy since you pay a pre-determined deductible for necessary repairs to these parts of your car.

Is it worth taking out extended warranties? ›

Like most insurance policies, an extended warranty is something you pay for in the hope that you'll never need to use it. For many owners, it's worth paying the price for peace of mind; even if your car is built by a brand renowned for its reliability, there's always a risk that something could go wrong.

What is not covered under an extended warranty? ›

Like most warranties, extended warranties and vehicle service contracts don't cover routine maintenance, wear items such as tires, brakes or wiper blades, collision damage or damage resulting from lack of maintenance or abuse. You should not expect heavily modified vehicles to be covered.

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