The Truth About Extended Auto Warranties

Car mechanic at the service stationMost of us know the feeling. Your car is no longer under factory warranty and you hear or feel something unusual in your car. The first thought that races through your head is your bank account balance going down. The second is finding a reputable repair shop and how long you’ll be without a car.

So you find a repair shop nearby and you take it in. Mixed in with the feeling of relief is the fear of being taken advantage of. “Yeah, your car needed a special hose that is only made in the top of the Himalayas by specially trained yak farmers. So although it looks like your typical $10 hose, it actually costs $500. But because I like you, I’m going to give it to you at cost for just $300.” Yeah, you know what I’m talking about. Another thing you noticed is all the new fancy computers that the mechanic now uses. In fact, the shops don’t look like the auto repair shops you remember. It looks more like a Best Buy Geek Squad counter with lights and displays everywhere.

In either case, the thought that keeps going through your mind is – If only my car was still under warranty.

Repair Costs Are Skyrocketing

Here’s a sobering fact. The average American household spends $3,269 a year on dealership maintenance and body shop repairs. If you purchased your new car on or after the year 1999, you’re in for a surprise to see your repair bills. Cars nowadays are not the simple machines they used to be. Today, new vehicles are loaded with complex technology and electronics. Not only have cost of repairs skyrocketed, so have the cost of just diagnosing the issue. The average cost to repair an air conditioning system for example is $825. Over the next five years’ repair costs are going to increase about 12% per year. That $825 air conditioner repair today could cost as much as $1,500 to repair five years from now.

Even newer vehicles can experience unexpected mechanical problems, and particularly today. Recent manufacturer recalls are proof of that. According to a recent JD Power study on the dependability of 3-year-old vehicles, it was found that, across all brands, more than half of all cars have to have costly repair work done.

The Solution is to Extend Your Car’s Warranty

It’s not too late to get an extended warranty on your car, even if it’s been out of warranty for years. Commonly referred to as a Vehicle Service Contract, an extended auto warranty offered is the best bet to keep out of control repair costs in check. The manufactures’ factory warranty typically covers a vehicle for an initial period of time, for this reason, it only makes sense to expend the coverage one the original manufacturer warranty runs out.

These vehicle service contracts are packaged in a similar manner to the original warranty offered by the manufacturer. You can purchase a set number of miles or a set number of years like 30,000 miles or 3 years. These extended warranties work much the same way your original factory warranty worked, but with a bit more flexibility. You can take the car into the dealership of your choice, or you can take them into independent mechanics where you may feel more comfortable. The best part is, that you will not be liable for any of the costs, no matter how much it takes to fix your vehicle.


After looking at common scenarios of what an average person will pay in auto repairs after a car is out of factory warranty, it makes sense to extend coverage. But it is important to understand what you’re getting into and especially what is covered and what isn’t. Like any other type of product that will last for years, it pays to spend a little time going over what you get, what is excluded, and what other perks come along with it. Things such as roadside assistance, loaner cars, and trip interruption can be included or offered as options. But an extended auto warranty is something that everyone should at least consider.