Why I Broke My Own Rule and Bought a Car Warranty

When my wife and I bought a van a few months ago, I knew we wouldn’t be buying the car warranty the dealership was bound to offer. I didn’t even ask how much it would cost; I told the salesman to leave it off the contract.

Having worked in the auto loan industry, I knew some dealerships inflated car warranty prices to take advantage of unknowing buyers. But this car-buying experience changed my mind about buying a car warranty.


Instead of having a hard-and-fast rule against them, I learned that there are some situations in which they make sense. Here’s how you can make the right decision for your situation.

A brief introduction to car warranties

If you’re Renting a new car, the car warranty is usually included in the sales price of the vehicle. But if the car is used and the manufacturer’s warranty is no longer valid, you can buy a car warranty from the dealership.

What the warranty covers can vary depending on the car and dealership. In general, it covers major components of the car, such as the engine, transmission, and suspension. A car warranty doesn’t cover normal wear and tear or vehicle maintenance such as oil changes and tire replacement.

On average, a car warranty will run you $1,800, according to Endurance Warranty. Your price, however, will depend on a few factors, including:

  • Type of vehicle: Repairs on a BMW will be more expensive than repairs on a Honda, so a BMW car warranty will cost you more.
  • Age and mileage: The older the car and the higher the mileage, the more likely it is the car will have mechanical issues. As a result, newer cars with lower mileage will qualify for a lower warranty price.
  • Location: The cost of labor and parts can differ by state. If you live in an area where the cost is higher than average, your car warranty also might be more expensive.

If you do choose to buy a car warranty, consider negotiating with the dealership. For example, you might be able to get a cheaper contract in return for a shorter coverage period. Or you can ask to get a lower price on the original warranty.

To gain leverage in your negotiations, do your homework. Check out how much it would cost if you bought a warranty directly from a warranty provider, such as Endurance Warranty, rather than through the dealership.

3 reasons I usually avoid buying a car warranty

Before my change of heart, there were three main reasons I resolved to never buy a car warranty. Visit Website

1. They’re more expensive at the dealership

Dealerships often mark up the prices of their car warranties to increase their profits on sales. As a result, salespeople often push this add-on hard. And since you’re not an expert on car warranty prices, it’s hard to know how to negotiate the price down.

If you find yourself dealing with a pushy car salesperson when it comes to adding a car warranty, do the following:

  • Take a step back to avoid getting pressured into the decision.
  • Ask the salesperson if the price is the best they can do and show them that you’re willing to walk away.
  • Consider skipping the car warranty now and shopping around after you drive home.

2. You might never get anything back

A car warranty is essentially an insurance policy against major repairs. But if the car never breaks down, you’ll never cash in.

Plus, car warranties often have many exclusions, although they can differ depending on the type of warranty you get. The following exclusions are common:

  • Brake and tire replacements
  • Oil changes
  • Cosmetic repairs
  • Scrapes and dings

So, you might think something is covered, only to find out it isn’t when it’s time for a repair.

3. You can self-insure

If you have an emergency fund, you can dip into it if you need to repair the car. And if the car never has any major breakdowns, you get to keep your money where it is. Experts recommend keeping between three and six months’ worth of basic expenses in your emergency fund.

Why I bought a car warranty anyway

As my wife and I were finishing up the paperwork, she noted that the brake pedal pulsed when she took it for a test drive. I had noticed the same thing but didn’t think twice about it.

It turned out that some of the brake rotors were warped and would cost about $400 to replace. At this point, the salesman told us it was something that would be covered under the car warranty.

The warranty ended up being $1,750 for five years or 100,000 miles, whichever came first. With an immediate savings of $400 with the brake rotor replacement, our effective cost would be $1,350 — plus whatever interest we’d pay since we rolled it into the auto loan.

My wife and I decided the below-average price was worth the peace of mind we’d have over the next few years. After all, we bought a 2011 Honda Odyssey with 88,000 miles — still in good shape but not brand-new. If the transmission were to go out (a replacement cost of $4,000 to $8,000, according to Angie’s List), it would be covered in full under our warranty.

Should you buy a warranty on your next car?

There’s no right or wrong answer to this question. It’s important that you consider it from all angles.

For example, if you have an emergency fund, you might be able to self-insure. But if you don’t have enough savings to cover unexpected repairs and want the peace of mind, a car warranty might be worth the cost. Make sure you research the cost of repairs for your car so you can crunch the numbers effectively.

When it comes to a car warranty, the more information you have going into the conversation, the easier it will be to ensure you’re getting the best deal. And if the dealer isn’t willing to negotiate or bring the price down to where you want it, be willing to walk away.

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