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Are Extended Vehicle Warranties a Gimmick?

Are Extended Vehicle Warranties a Gimmick?

You’re ready to purchase a new-to-you vehicle or RV. Now you’ve got to decide if you want to move forward with adding on that extended vehicle warranty.

Do you spend more money to add on a warranty plan? If you do, you risk losing that money if the warranty company doesn’t cover a future repair. Or, do you decline the extended warranty coverage only to wish you purchased it months later when your transmission goes out? It’s a tough spot to be in, but it doesn’t have to be.

Today, we’ll talk about what an extended vehicle warranty is and the things we think you should look for. And, we’ll give you our opinion on if we feel they’re a gimmick or not.

Stick around, and let’s figure this out so you can get on with buying that vehicle.

What Is an Extended Vehicle Warranty? 

According to the Federal Trade Commission (FTC), an extended vehicle warranty is a contract from a company to perform or pay for certain repairs on your vehicle. It’s “…not a warranty as defined by federal law,” states the FTC. You can purchase extended warranties through dealerships, third parties, and vehicle manufacturers.

Note that dealerships often increase the price a bit to get themselves a small cut.

An extended vehicle warranty does not guarantee that the company will cover a repair. Instead, it’s an auto service contract. And as with any contract, you’ll have plenty of fine print to read in an attempt to understand the legal jargon.

They’ll likely have some rules for you to abide by that we’ll discuss later on. At the end of the day, though, the warranty company can deny a claim if it doesn’t meet their qualifications.

Pro Tip: Wait times due to warranty work aren’t the only downside of RV service. We got to the bottom of The Dirty Truth of RV Service.

What Is a Fair Price For an Extended Vehicle Warranty?

Warranty costs vary quite a bit. They can run for as little as $1,000 and as high as $4,500 for the life of the warranty. For instance, Endurance, an extended vehicle warranty company, says its plans typically run around $4,000.

The price of extended car warranties varies based on the condition and type of the vehicle. They also factor in its age, mileage, and even how much you drive it. As with car insurance, the price varies based on the amount of your warranty deductible, the type of extended warranty coverage you’re getting, and how long the warranty lasts.

Typically, more comprehensive coverage from a higher-rated extended warranty company will cost you more.

Person signing contract for warranty
Extended warranty costs will vary, so do your research before you buy!

Does It Cover Engine Replacement?

There are different coverage levels of extended vehicle warranties. You’ve likely heard of the terms “bumper to bumper” or “powertrain.” A powertrain warranty covers those aspects that power a vehicle, including the engine, transmission, axles, and gaskets. A bumper-to-bumper warranty covers more components, such as the air conditioning or electrical systems.

It’s important to check your specific coverage options to determine what it covers. By and large, however, any reputable extended warranty will cover an engine replacement for a mechanical failure. This is, of course, after proper diagnostics by a certified mechanic that your warranty has approved. And after you’ve provided records of your maintenance logs.

Pro Tip: No longer interested in keeping your RV warranty? These are 5 Ways to Void Your RV Warranty.

Are Extended Vehicle Warranties a Gimmick?

It’s all in what you’re looking for.

If you’re utilizing a reputable company, rated highly by financial companies and the Better Business Bureau, we wouldn’t consider that a gimmick. Extended vehicle warranties can provide helpful coverage to pay for the most expensive repairs on your vehicle.

Do your homework about what the company expects from you to keep the warranty valid. Aside from paying for the extended warranty, you’ll likely need to keep up with regular maintenance. When you have any claims, you’ll need to get the repair work done by approved mechanics. And you’ll need to pay for the deductible and additional parts or diagnostic services that aren’t covered by the warranty. 

Finally, the warranty company may use their own aftermarket parts instead of original equipment manufacturer (OEM) parts. These things don’t make the warranties gimmicks, but they are nuisances to be aware of ahead of time.

Man signing extended warranty contract.
Most extended warranties are a waste of money, so buy with caution!

Why They’re a Waste Of Money

Extended warranties are a waste of money when you’ve bought into an extended vehicle warranty company that doesn’t honor what they promise. They try to come up with any reason not to approve your warranty work. Imagine spending a few thousand for the warranty plan, only to have it not cover significant repairs on your vehicle when the time comes. Not only are you out the thousands for the warranty plan, but you’re also out a couple more for the vehicle repair.

Extended warranties are also a waste of money if you never use the benefits. According to Consumer Reports, 55% of people never used the warranty after purchasing it. When an issue arises, make use of your warranty by calling the company to see if it’s a covered repair.

It may add an extra layer of inconvenience if you have to take it to a specific repair shop and work with the warranty company, but at least you’ll be getting your money’s worth.

Consider your specific situation to determine if it’ll be worth your money or a waste. Is your car new or a well-used machine? If new, will you have a factory warranty already? How comfortable are you working on your own vehicle?

Would you have the money to cover a major repair without an extended vehicle warranty? Finally, do you like to work on vehicle repairs and maintenance yourself? If so, be sure to check if that would void your warranty.

Are Extended Warranties Ever Worth It? 

Extended vehicle warranties get a bad wrap, and for good reason. We can’t be the only ones hounded with spam calls wanting us to sign up for extended vehicle warranties. But if you do your homework, you can find a reputable extended warranty for your vehicle.

Ultimately, you’ll need to weigh the costs – is it easier to save the few grand and put that towards major repairs in the years to come? If those repairs would be expensive enough, it may be worth it to purchase an extended warranty for your vehicle. But remember: Be sure to do your homework and research different resources (like the Better Business Bureau) along the way.

Have you ever purchased an extended vehicle warranty? Drop a comment below!

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Michael Amodeo

Sunday 3rd of April 2022

I can't say one way or another if extended warranties are a gimmick, I can only tell you during the past 15 years I've purchased two extended warranties on new vehicles I've purchased and Never used them. Good or bad I was out approximately $7,500. Some say its better to have it and not need it than to need it and not have it, although that $7,500 would have been nice to see in my savings account.


Friday 1st of April 2022

Finance at Toyota wanted 3k for 8yr/125k/0 deductible warranty on '16 Sequoia Platinum (25k miles on vehicle). Got warranty for $1575. Do your homework!


Friday 1st of April 2022

Yes they are a gimmick you pay each month as I did when transmission had problems was told I didn't have service records and they refused to pay plus after many calls they finally told me it would be a used one so I said no way ,all these adds on t.v are full of it just a money trap

Philip portuesi

Wednesday 30th of March 2022

I bought my vehicle for a little over 8,000$ including tax,title registration etc. CAR SHIELD has been hounding me to sign [email protected] 100.oo$ a month I declined instead putting that money in the bank !! I have saved more than 8,000$ in the bank and so far had to buy a battery for about 80bucks!! So I saved enough for any repair up to 8 grand but if it costs that much to fix I'll junk it and buy another car!!! Those places are flat out crooked mother FUCKERS !!! IGNORE THOSE COMMERCIALS, FULL OF LIES!!!

Rich Rea

Wednesday 30th of March 2022

Yes, first warranty would not cover the engine failure even when the deer recommended it be replaced. Instead the cobbled it back together, failed 1000 miles later. Second time, the car was wrecked 30 days after purchase. Would not transfer the warranty and refund my money. Crock

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