The Car Buying Guide for Extreme Savers
Detailed Instructions

Step 4. Get a Deal on Extended Warranties

If you plan on keeping your vehicle for several years after the manufacturer warranty expires (and you don't want to worry about repair bills), you may want to consider buying an extended warranty.

Extended warranties cover repair bills after the manufacturer warranty expires (usually after 3 years or 36,000 miles). They usually cover everything except normal "wear and tear" items such as oil changes, brake pads, etc.

Standard Warranties
Vehicle
Basic
Powertrain
Acura 4 years/50K 6 years/70K
Audi 4 years/50K 4 years/50K
BMW 4 years/50K 4 years/50K
Buick 4 years/50K 5 years/100K
Cadillac 4 years/50K 5 years/100K
Chevrolet 3 years/36K 5 years/100K
Chrysler 3 years/36K Lifetime Limited
Dodge  3 years/36K Lifetime Limited
Ford  3 years/36K  5 years/60K 
GMC 3 years/36K 5 years/100K
Honda  3 years/36K 5 years/60K
Hyundai  5 years/60K 10 year/100K *
Infiniti 4 years/60K 6 years/70K
Isuzu  3 years/50K 7 years/75K
Jaguar 4 years/50K 4 years/50K
Jeep  3 years/36K Lifetime Limited
Kia  5 years/60K 10 year/100K *
Lexus 4 years/50K  6 years/70K 
Lincoln  4 years/50K  6 years/70K 
Mazda 3 years/36K  5 years/60K 
Mercedes 4 years/50K 4 years/50K
Mercury 3 years/36K 5 years/60K
Mini 4 years/50K 4 years/50K
Mitsubishi  5 years/60K 10 years/100K
Nissan 3 years/36K 5 years/60K
Pontiac 3 years/36K 5 years/100K
Porsche  4 years/50K 4 years/50K
Saab  4 years/50K  5 years/100K 
Saturn 3 years/36K 5 years/100K
Scion 3 years/36K 5 years/60K
Smart  2 years/24K 2 years/24K
Subaru 3 years/36K 5 years/60K
Suzuki  3 years/36K 7 years/100K
Toyota 3 years/36K 5 years/60K
VW  4 years/50K 5 years/60K
Volvo 4 years/50K 4 years/50K
* Powertrain warranty available to first owners only.

You can usually buy an extended warranty covering a new vehicle within 1 month or 1,000 miles BEFORE the expiration of the manufacturer warranty. That gives you plenty of time to shop around. Even if you miss that deadline, you can still buy an extended warranty at a slightly higher price.

Extended warranties are essentially prepaid repair contracts. They are not insurance products, as some people assume. This means they are not subject to the same close regulation and oversight as insurers. Since they're not regulated, dealers can and will charge any price they want; it's not unusual for extended warranties to be marked up by 100% or more, so it really pays to comparison shop if you're interested in getting one.

It's a toss-up as to whether extended warranties are really worth the price. From my research, most experts seem to agree that extended warranties are worth the price if you can find a good bargain. On the other hand, Consumer Reports suggests that extended warranties are a high-priced gamble not worth pursuing, especially if the car you're purchasing has a history of good reliability.

The choice is really up to you. I would recommend comparison shopping for the best price, then decide whether that price is worth the peace of mind. To give you an idea of cost, extended warranties usually sell for between $400 and $2,500 for up 3 years (or 36,000 miles) of additional coverage. Remember, there's usually a lot of negotiating room so don't be discouraged with the first price you're quoted.

If you do decide to buy one, most experts recommend you buy one that is backed by the manufacturer. This reduces the risk of being stuck with a worthless warranty in the event the issuing company goes bankrupt (which has happened frequently in the past). There are only two independant online warranty providers that I recommend as an alternative: WarrantyDirect and CARCHEX. They've each been in business for over a decade and can usually provide warranties that are less expensive.

There are two kinds of extended warranties. The more common is an inclusive policy, which only covers things that are specifically included in the policy details. The other is an exclusive policy, which covers everything except what is specifically excluded in the policy. Exclusive policies are more expensive, but offer better protection.

1. Get a Quote from WarrantyDirect

The first step is to get an online price quote through WarrantyDirect. You'll be using this price as a default to measure against future prices you'll be quoted by dealers.

WarrantyDirect may not offer plans for your specific vehicle, or may not be available in your state, but don't be discouraged, just move onto the next step.

Get Quote From WarrantyDirect

2. Get a Quote from CARCHEX

CarChex is the other 3rd party warranty provider I recommend. They have been in business for over 10 years, and may be able to beat the rates you get through WarrantyDirect, so it's always smart to check.

Get Quote From CARCHEX

3. Get Quotes From Dealers

You can buy an extended warranty from any dealer, you can even do it over the phone so no need to visit them in person. You should call at least 4 or 5 dealers and ask for their rates on a manufacturer-backed warranty. As you begin getting prices, use the lowest bid to try to get new dealers to lower their offers. For example, if a dealer quoted you $1,000 for the extended warranty, and the next dealer you call quotes you $1,200, ask if they can beat $1,000.

You can also try to lower their bids by comparing the prices to quotes you received through WarrantyDirect and CARCHEX.

There are a handful of dealers around the country that specialize in selling extended warranties for low cost. Two examples are

  • Midwest Toyota (1-800-530-5789)
  • Hyannis Honda (508-778-7878)

I'll list more as I find them. It's worthwhile to get on car forums and ask around for dealers who sell extended warranties on the cheap. Sometimes you'll get some good tips on who to call.

Step 5. Get the Best Price on Car Insurance »