Protecting the Value of Your Car by Going for a Car Warranty

Protecting the Value of Your Car by Going for a Car Warranty

An extended vehicle warranty is an insurance policy designed to protect the owner from repair costs after the original warranty has expired. There are a lot of different formats warranties can take, but this is the simplest way to think of them. This type of insurance product is often called a service contract, extended service agreement, or some variation therein.

Understanding Car Warranty

As a consumer you may be skeptical that an extended warranty is necessary, and suspect that is a sales gimmick to maximize profit. In some instances this may be true, but in others not, with great value being offered. Determining the difference for yourself, can represent considerable savings in the long run. This of course will vary situation-to-situation, but having some background is good regardless of your circumstances. Below are some pros and cons to think about when purchasing an extended warranty.


  • The cost of vehicle repairs has trending up substantially in recent years. Extended warranties cover the cost of unexpected repairs, part replacement, and/or technological upgrades that could be very expensive otherwise.
  • They are an extra bargaining chip if considering resale of the vehicle, assuaging any fears a potential buyer may have.
  • Most major vehicle repairs are needed several years into ownership and after the manufacturer’s guarantee are no longer valid.
  • Warranties offer peace of mind. Are you the type that worries? I may be worth it to not concern yourself what will happen if an unexpected problem crops up.
  • You can budget your car expenses more accurately with a warranty, without having to factor in potentially unknown costs.


  • Your car does not break down during the period or duration of the extended warranty. In this scenario a having it would be a largely wasted investment.
  • They represent more paperwork and negotiation when buying, so if you’re the type who doesn’t enjoy haggling this is something to consider.
  • If something does happen that requires work done you may be forced to use certain repair shops as stipulated in the contract. Some flexibility may be lost in this case.

In the end whether you should extend your coverage further with a third-party vehicle warranty depends on a variety of factors. Your budget and the cost and age of the vehicle you’re buying, and your taste for risk to name a few. Carefully considering all your options is the best practice in this sense. And of course like everything else, shopping around never hurts. Knowing you’re getting the best possible terms and price can add significantly to the peace of mind you’re purchasing.