Used Car Warranties: What's Worth Buying?

When you buy a used car, you'll likely be offered an extended warranty (technically a "service contract"). Some are worthwhile; many are overpriced. Here's how to judge.

What they actually cover

An extended warranty pays for certain repairs after the original factory warranty ends. Coverage varies enormously — from powertrain-only (engine, transmission) to bumper-to-bumper. The details are everything: two contracts at the same price can cover wildly different things.

Read the fine print before anything

• What's covered vs. excluded — exclusions are where the value is won or lost. "Wear items" are often not covered.
• The deductible per visit.
• Where you can get repairs — some limit you to specific shops.
• Who backs it — a manufacturer-backed contract is more reliable than a third-party administrator that could go out of business.
• The claims process — pre-authorization requirements can be a hassle.

When one makes sense

• You're buying a model with a reputation for expensive repairs.
• You'd struggle to absorb a sudden large repair bill.
• The coverage is manufacturer-backed and reasonably priced.

When to skip it

• The car is a known reliable model with cheap parts.
• The price is high relative to likely repair costs.
• You could instead set that money aside as your own repair fund.

A smarter alternative

For many buyers, self-insuring — putting what the warranty would cost into a savings account for repairs — comes out ahead, since you keep the money if nothing breaks. And warranties are negotiable: the price offered is rarely the final price.

Buy a reliable car to begin with and the warranty question gets easier. Browse local listings and prioritize condition and history.