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Young woman sitting in a car

What Is an Extended Warranty?

If you are a car owner, you’ve probably heard the term “extended warranty” a number of times, but what exactly does it mean?

Most new cars come with a standard bumper-to-bumper warranty that covers all repairs caused by factory defects for the first few years. An extended warranty, also known as a vehicle protection plan, protects car owners from expensive repairs after the factory warranty expires and can bring peace of mind and confidence on the road.

Strictly speaking, not all extended warranties are “warranties” in the legal sense. To be considered a warranty, it must be offered by the manufacturer at the time of purchase of the new product. Most extended warranties that we see in the market today are actually service contracts, agreements, or protection plans that you purchase to cover certain unforeseen car repairs for a predetermined period of time or miles. But most people are familiar with the term “extended warranty” and use it interchangeably.

CARCHEX has multiple Extended Vehicle Protection Plans to suit every vehicle owner. Read on to find out more about extended warranties, including how they work, how much they cost, and why you need one.

Where Can You Buy an Extended Warranty?

You can buy an extended warranty for your car from your dealer or a reputable, third-party auto warranty provider like CARCHEX. Generally, dealers sell manufacturer extended warranties that increase the original factory coverage by additional years/miles and can be bought at the time of purchase of the new vehicle or any time before the factory warranty expires. In comparison, you can buy a vehicle protection plan for your car from a third-party provider at any time.

Keep in mind that some dealers do not sell manufacturer extended warranties and instead sell third-party contracts, which means that not only will you have to pay extra for the service because of the dealer markups, but you will also not be able to rely on the dealer for support when you are filing a claim.

Always read the fine print, and make sure you fully understand what you are buying and who would be responsible for administering the warranty before you sign on the dotted line. When you buy a vehicle protection plan from CARCHEX, you have the assurance of working with one of the most reputable auto warranty providers in the business today. CARCHEX warranty experts will work with you to determine the best plan for your needs and also provide support throughout the coverage period.

Also, while buying an extended warranty from the dealer may limit your choices to pre-set plans for a defined number of years or miles, a vehicle protection plan from CARCHEX will give you more flexibility in choosing the length of coverage you want.

Young Latin American woman at a garage talking to a mechanic about her car

What Is Covered in an Extended Warranty?

The length of extended warranty coverage (years/miles) and the repairs covered can vary greatly from plan to plan. Extended warranties can also be inclusionary or exclusionary. The former covers only certain listed parts, while the latter provides coverage for everything except certain listed items in the exclusions list.

For example, some extended warranties or vehicle protection plans offer comprehensive bumper-to-bumper coverage for many major car components, such as air conditioning, navigation systems, and electronics with some listed exclusions—this is an exclusionary plan. Other plans provide coverage only for the powertrain parts (engine, transmission, etc.) of the vehicle that affect a vehicle’s drivability and are inclusionary plans.

Like the original factory warranty, most dealer-backed extended warranties only cover repairs (parts and labor) due to factory defects in material or workmanship. Any repairs due to accident, fire, weather, or normal wear and tear will be excluded from the warranty coverage. If your car make and model is prone to certain specific problems, you have to make sure that the extended warranty plan you have chosen covers those repairs. Providers like CARCHEX offer a lot of flexibility, allowing you to choose from different levels of coverage and durations to create a plan that’s custom-tailored to your driving habits, vehicle, and needs.

The warranty will also specify where you can take the car for repairs, if you would have to use original parts to maintain the warranty, and how much to pay for a deductible. In addition, some extended warranty plans come with extra perks like roadside assistance, towing, trip interruption benefits, rental car reimbursement, and so on.

When Does Your Extended Warranty Start?

Manufacturer extended warranties generally have an overlap with the original factory warranty and start from the date the vehicle was sold as new. For instance, if you have a new car with a New Vehicle Limited Warranty of 3 years/36,000 miles and you have purchased an extended warranty of 6 years/60,000 miles, your total coverage will be 6 years/60,000 miles from the date of original purchase and not 9 years/96,000 miles. However, most third-party extended warranties start after the initial warranty expires, giving you more years of coverage and assurance.

Extended Warranties for Used Cars

An extended warranty for a used car can be very useful because breakdowns and repairs are more common as a car ages. However, your options for extended warranties may be limited if you are buying a used car. While some manufacturers like Toyota do offer extended warranties for certified used vehicles under certain conditions of eligibility, others cater to only new vehicles. In such cases, a third-party extended warranty will be your only option for added vehicle protection.

Similarly, if you are buying a used car with more than 90,000 miles on it, chances are that you may not be eligible for a dealer extended warranty. A third-party auto warranty that offers coverage for high mileage cars may be the only option available to you in this scenario.

If you’re buying a used car already covered by an extended warranty, you can have the warranty transferred to you. You may have to pay a small transfer fee, depending on the plan and the provider.

Car mechanics fixing a car

How Does an Extended Warranty Work?

While both dealership extended warranties and third-party vehicle protection plans have many similarities, there are also some differences in how they work.

Manufacturer Extended Warranty

If you bought a manufacturer extended warranty directly from the dealer, they will likely be the first point of contact in case of a breakdown. You can take your car for repairs to the local dealer or any other authorized dealership across the country. The factory technician will run a diagnostic test to determine what is wrong with the car and confirm whether the repairs are covered by the warranty. While the cost of labor and parts are usually covered, you may have to pay a deductible per repair or per visit, depending on your plan.

Third-party Extended Warranty

With CARCHEX, you are no longer restricted to taking your car to the dealer for repairs and can choose from over 30,000 licensed repair centers in the country. Some third-party providers require the car to be inspected before any repairs are made to be eligible for coverage, so it’s important to read your contract carefully and understand the claims process.

At the repair center, you may be asked to submit a copy of your vehicle service contract or the agreement number. The repair facility needs to be authorized to do the repairs, and a copy of this should be provided to the claims administrator. The repair facility will then get in touch with the provider’s claims administrator to get the final authorization. Once this process is complete, the repairs will be carried out.

If your repair is covered under a vehicle protection plan from CARCHEX, CARCHEX will directly pay the bill, including labor and parts. You will only have to pay the deductible, if any.

Some providers—both dealer and third-party—may ask you to pay the repair shop up front and then file a claim for reimbursement later, which can be a tedious process.

Car Insurance vs. Car Warranty

If you already have car insurance, do you still need an extended car warranty? Yes, you do. While car insurance and car warranty may seem similar at first glance, they are actually very different and fulfill separate roles.

An extended warranty, similar to a factory warranty, provides protection for car repairs due to electrical or mechanical breakdown, parts or component failures not caused by regular wear and tear, and damage to the engine or transmission.

Most states require drivers to have at least some minimum car insurance to get their car on the road. Car insurance companies provide protection for you and the car in the case of accidents, theft, vandalism, fire, or natural calamities. It will not pay you to cover repairs due to mechanical breakdowns.

What Are the Benefits of Having an Extended Warranty?

If you ask us, all car owners needs an extended warranty. No one wants to pay for an expensive car repair, but if something happens tomorrow, an extended warranty will protect you and your vehicle.

According to a 2018 Bankrate survey, just 39% of Americans can cover an unexpected $1,000 car repair or medical bill with their savings. The remaining 61% would have to cut down on other expenses, take out a personal loan, borrow from friends or family, or finance the repair with their credit card (and pay it back over time) to get their car back on the road.

Do you have an emergency fund to cover the cost of a large repair, for example, a new transmission that can cost anywhere between $1,000 to $4,000? If no, then an extended warranty might be the right choice for you.

If you’re still not sure if you need an extended warranty, here are a few important benefits that may convince you.

Get confidence and peace of mind

With an extended warranty, you won’t have to worry about paying out of pocket for an unexpected and expensive car repair. An extended warranty can also help you greatly if you’re approaching the original warranty mileage limit.

Extend the life of your car

According Fox News in 2018, four in 10 Americans avoid taking their car for repairs because they are worried they wouldn’t be able to afford the bill. But if you don’t get the necessary repairs done at the right time, your car's condition will continue to deteriorate, and the chances of more expensive breakdowns will increase.

Save money

If your vehicle make and model is known for needing frequent, expensive repairs as it ages, it will make good financial sense to buy an extended warranty that will cover you in times of need and actually save you money. Instead of paying for the entire repair, you will only have to pay for the deductible, if any, when you need a covered repair.

Add value to your car

An extended warranty is most beneficial if you plan to keep your car for a long time. However, a transferable extended warranty can also add to your car value and help you strike a better bargain when you sell the car.

How Much Do Extended Warranties Cost?

The cost of an extended warranty can vary greatly from just under $1,000 to $4,000, depending on the provider, the coverage plan, and your vehicle’s make and model. There is a premium, which can be paid annually or in monthly installments, and a deductible. Generally, the cost of an extended warranty plan increases as your car ages, so the sooner you buy a plan, the easier it will be to get a better deal.

Buying an extended warranty from the dealer at the time of purchase may allow you to roll that cost into your auto loan. While that is certainly convenient, you will end up paying interest on that amount. In comparison, many third-party extended warranty providers offer flexible payment options that allow you to pay for the coverage in low, monthly installments.

Car parts

Get a Quote

Getting a free, customized quote for your vehicle protection plan is easy. Call CARCHEX auto warranty experts to find out how much your extended car warranty will cost.


Why Choose CARCHEX?

Since an extended warranty is an investment for your car’s future, it is natural to want to make sure that you have made the right decision. Here are a few reasons why CARCHEX should be your No. 1 choice for an extended warranty for your car.

Trusted by Industry Leaders

CARCHEX has been in the business for over two decades and is one of the few third-party warranty providers accredited by the Better Business Bureau. CARCHEX also enjoys an A+ rating from the BBB and is endorsed by many industry leaders, including CARFAX, Edmunds.com, and RepairPal.

Coverage Options

CARCHEX offers five different tiers of vehicle protection plans—Titanium, Platinum, Gold, Silver, and Bronze—for customers who want to pay for only what they need.

  • The Titanium plan, which is similar to a manufacturer’s extended warranty, provides bumper-to-bumper coverage with a small list of exclusions.
  • The Platinum plan, which has the highest level of inclusionary coverage, provides protection for hundreds of important car parts.
  • The Gold plan provides coverage for all of the major systems in a vehicle and is good for older cars with more mileage on them.
  • The Silver plan provides coverage for the major systems and is suitable for vehicles with high mileage.
  • The Bronze plan ensures essential coverage for common, expensive repairs that could affect the engine and the transmission and is suitable for cars with over 100,000 miles on them.
CARCHEX Vehicle Protection Plans

Excellent Customer Service

CARCHEX has a consistently high reputation for excellent customer service. The company puts customer service as a top priority, right from helping owners choose the right plan for their budget and needs to providing support throughout the warranty.

Money-Back Guarantee

CARCHEX proudly backs our services and products. If you are not satisfied with your protection plan, you can cancel your it for a full refund within 30 days.

Affordably Priced

CARCHEX Extended Vehicle Protection Plans are affordably priced to suit all budgets. You can pay your premiums in low, monthly installments today and save yourself from unexpected, expensive repairs tomorrow.

Can You Afford To Pay These Repair Costs?

Direct Payments

CARCHEX will pay the repair facility directly. You won’t have to pay out of pocket up front and then wait for a long time to get reimbursed.

Perks and Benefits

When you buy an extended warranty for your vehicle from CARCHEX, you will also get additional benefits, such as roadside assistance, towing, gas delivery, rental car reimbursement, trip protection benefits, and more.

If you have more questions about what an extended warranty is and want to learn more about CARCHEX, call 866-261-3457 to speak directly to our helpful experts. We’ll also provide a free, customized quote.


Bankrate: https://www.bankrate.com/banking/savings/financial-security-0118/

Fox News: https://www.foxnews.com/auto/many-americans-dont-know-basic-car-care-study-finds

Lives On: http://www.liveson.org/5-expensive-car-parts-will-need-replacement/

Better Business Bureau: https://www.bbb.org/greater-maryland/business-reviews/extended-warranty-cotract-service-companies/carchex-in-hunt-valley-md-23015869

CARCHEX 118 Shawan Road, Suite 210 Baltimore, MD 21030 (FL License # E155490)

© 2018 Carchex. All rights reserved.

We proudly offer the CARCHEX No-Haggle, Lowest Price Everyday Guarantee™ for all of our auto warranty and car inspection programs.
Consistent with consumers’ understandings and expectations of the market in which CARCHEX operates, CARCHEX uses the terms “warranty”; “extended warranty”, “extended auto warranty”, “extended service protection plan” and similar terms to describe the more technical term “vehicle service contracts”. For more information, see this FTC link or learn more here or by reviewing CARCHEX’s website.
CARCHEX markets and sells extended warranties on behalf of third party extended warranty providers, and your extended warranty will be between you and the provider. This website site is intended solely for the purpose of providing general information regarding the purchase of extended warranties. Specific contract terms, rates, taxes, fees and other charges are determined upon validation of vehicle information and acceptance by the extended warranty provider, for which CARCHEX is not responsible. Extended warranties may not be sold where prohibited by law.
CARCHEX 118 Shawan Road, Suite 210 Baltimore, MD 21030 (FL License # W469753)
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