Should I Buy an Extended Warranty On a Used Car?

An extended warranty — also known as a vehicle service contract or protection plan — can help cover the cost of repairs and replacements to your used car after the manufacturer’s warranty ends.

An extended warranty is an add-on you can purchase from a dealership or car insurance company. Buying an extended warranty for your used vehicle can provide peace of mind that your car has protection. But you’ll have to decide if an extended warranty is worth the up-front cost.

Below is the information you need to decide whether to buy an extended warranty. This article covers how it works, what it covers, and the factors to consider before you make a decision.

How do extended warranties work?

Some used-car owners purchase extended warranties to help manage the cost of covered repairs. You can typically buy an extended warranty as an add-on from a dealership or insurance company when you purchase your used vehicle or sometime after. 

The warranty will usually cover your car for a certain amount of time or miles. The cost varies based on factors like the make, model, and mileage of your vehicle and the length of the warranty. You’ll pay anywhere from several hundred to several thousand dollars for an extended warranty.1

What an extended warranty covers

An extended warranty typically covers certain mechanical and electronic components for a certain time or number of miles. Exactly what’s covered can vary greatly between providers.

In some cases, an extended warranty will only cover your vehicle’s powertrain, which can include problems with your driveshaft, axles, or engine. In other cases, it can offer bumper-to-bumper coverage, covering a selection of manufacturing and design faults.2 Some warranties cover extras, like the cost of towing your vehicle or renting a car.

What it doesn’t cover

Most extended warranties don’t cover normal wear and tear or regularly scheduled maintenance, such as oil changes, brake-pad replacements, windshield repairs, or tire replacements.

Similarly, most warranties won’t cover your vehicle for abnormal use, like if you use your car to haul or tow more than it was designed to.3 It’s important to recognize that an extended warranty isn’t the same as car insurance, so it doesn’t cover damages from an accident, theft, or a hailstorm.

Should you purchase an extended warranty for your used vehicle?

Whether an extended car warranty is worth it for your used vehicle depends on your needs and budget. If you put a lot of miles on your car, and you’re worried you can’t afford an expensive repair, an extended warranty might make sense. It can also provide peace of mind knowing you’re protected for your coverage period. But an extended warranty comes with an added cost and often has many exclusions, so it’s important to read the fine print.

If you purchase a reliable used vehicle, don’t drive very much, and have money set aside in an emergency fund for potential repairs, you might choose to skip an extended warranty.

Factors to consider

When deciding if you should purchase an extended warranty for your used vehicle, consider the following factors:

Extended warranty pros and cons

As with any financial product, extended warranties have pros and cons to consider when deciding if this protection is right for you.

How to cancel your extended warranty

Let’s say you purchase an extended warranty, and a few months later you decide it’s not worth the cost. You can cancel at any time.4 To do so, you’ll have to send a cancellation notice to the car warranty provider. Depending on when you cancel, you may have to pay a cancellation fee.

For example, in California, if you cancel within 30 days and haven’t gone through the claims process, you’re eligible for a full refund. If you cancel after this time frame, the vehicle service contract provider may keep some of your premium, based on how much time has gone by.5

Used car extended warranty FAQs