What Is an Extended Warranty & Is it Worth it?
JUMP TO:
● Extended warranties explained
● Types of warranties
● What does an extended warranty cover?
● What is not covered under an extended warranty?
● How does an extended warranty work?
● What to check before purchasing an extended warranty
● Drawbacks to purchasing an extended warranty
● Should you get an extended warranty
● More extended warranty FAQs answered
● Extended warranties at Mazda
If you’re contemplating buying an extended warranty, you’ll want to evaluate whether the warranty available to you aligns with your vehicle’s specific needs and circumstances. Generally speaking, extended warranties can be a valuable asset when your vehicle isn’t reliable but, if you rarely encounter major issues, the cost of the extended warranty might not outweigh the benefits.
In this article, we will explain how extended warranties work, what they typically do and do not cover, and some other pros and cons to consider.
Extended warranties explained
Also called a “vehicle service contract,” an extended vehicle warranty is an optional contractual agreement that offers drivers additional coverage for repairs and maintenance beyond the original manufacturer's warranty. As its name implies, an extended warranty provides an extension to the original warranty’s coverage, offering protection against unexpected vehicle failures or breakdowns.
Manufacturer’s limited warranties vs. extended warranties
Limited warranties and extended warranties both aim to provide consumers with a level of protection for their vehicles but differ in terms of coverage duration, scope, and the stage of a vehicle’s life cycle at which they are applicable.
Manufacturer’s limited warranties come standard with new vehicles and are a promise from the manufacturer to cover certain repairs on your vehicle. They typically cover the vehicle for a specific period — usually a few years or a certain mileage limit, whichever comes first. These warranties help cover repairs or replacements during the warranty period. However, coverage is limited to specific components and may exclude regular wear and tear or damage caused by reckless driving. The warranties may be separated as bumper-to-bumper, powertrain, emissions equipment, and so on.
Meanwhile, extended warranties are commonly associated with used cars, but they are also available for new vehicles. As mentioned, these optional plans allow consumers to extend coverage beyond the original limited warranty period. Like limited warranties, extended warranties have limits and exclusions, can vary widely in coverage but typically include protection against breakdowns, repairs, and sometimes even typical wear and tear or routine maintenance.
Both limited and extended warranties may be voided if:
● Any car parts have been changed, such as swapping to different size tires.
● The vehicle hauled or towed more weight than for which it was designed.
● The vehicle was taken off-road, even if the truck or SUV appears to be off-road capable (always double check the warranty terms).
● The owner failed to keep up with routine maintenance recommended or required by the manufacturer.
● The vehicle was driven on a racetrack, or in any kind of competition.
● The vehicle was used commercially, i.e., for pool or landscape service, ride-share or food delivery, and taxi and livery service.
In some cases, only part of a warranty is voided, such as for a specific part of the vehicle if it was altered. For more information, reference the Magnuson-Moss Warranty Act, a federal statute that outlines conditions under which a warranty may or may not be denied.
Some actions will result in an entirely voided warranty, including misuse of the vehicle and altering the odometer. Environmental damage can also void a warranty. Finally, if your vehicle has a salvage title after a wreck, its warranty will be voided.
Types of warranties
Manufacturer warranties
A manufacturer warranty, also known as a factory warranty, is directly provided by the vehicle’s manufacturer and comes standard with the purchase of a new vehicle. Typically, manufacturer warranties cover the vehicle for a predetermined period or set number of miles; new cars, for example, can come with a 3-year or 36,000-mile warranty bumper-to-bumper warranty, and often a longer term for powertrain components or high-voltage EV battery components.
While not all manufacturer warranties are the same, most cover defects in materials or workmanship and include repairs or replacements for certain vehicle components. Manufacturer warranties are built into the price of a new vehicle, and are often transferable to subsequent owners, potentially enhancing the resale value of the vehicle. A certified pre-owned vehicle typically carries the original factory warranty or an additional warranty if the factory warranty has expired.
Extended warranty
An extended warranty, also known as an extended service plan or vehicle service contract, is an optional coverage that extends protection beyond the original manufacturer warranty period. It can be offered by the vehicle manufacturer or a third-party provider.
Extended warranties provide coverage for a specified duration after the expiration of the manufacturer warranty and may cover a broad range of vehicle components, including mechanical and electrical systems. Extended warranties typically provide coverage for your vehicle extending from 2 to 7 years or up to 100,000 to 150,000 miles beyond the original manufacturer’s warranty.
The cost of extended warranties is not covered during a car purchase. They can be purchased via a one-time payment or through installment plans, and the cost depends on factors like the duration of coverage, the level of protection, deductibles, and whether you buy when the vehicle is new.
Many dealerships recommend buying at the time of vehicle purchase, but you may be able to buy one later — just verify if there is a limited timeframe in which to do so.
Some are also transferable to subsequent owners, but transferability terms may vary.
Third-party extended warranties
A third-party warranty for a vehicle, sometimes called an aftermarket or extended warranty, is an optional service contract or protection plan offered by an agency independent from and unaffiliated with the manufacturer. These warranties can be purchased separately by vehicle owners to provide additional coverage beyond the original manufacturer's warranty. As with manufacturer warranties and extended warranties, cost is influenced by factors such as the duration of coverage, applicable deductibles, the level of protection, and the vehicle's make and model.
While similar in premise, third-party extended warranties will have different exclusions, rules, and requirements than manufacturer warranties. For example, third-party extended warranties may have different terms regarding routine maintenance, have specific requirements on where you can service your vehicle, may require any repair to be pre-authorized by the warranty company, have no guarantee of using Original Equipment Manufacturer (OEM) parts, and may require a hefty deductible payment upfront to name a few.
What does an extended warranty cover?
Extended car warranties vary in coverage depending on the specific plan and provider, so before you buy, make sure you understand exactly what will be covered. That being said, extended warranties generally cover repairs on the major components of your vehicle like the engine, transmission, and axles.
There are also warranties suited to specific issues your vehicle may have. A powertrain warranty might be a good choice if you have engine issues, while a bumper-to-bumper warranty can provide more comprehensive coverage for other vehicle components such as steering, heating and air conditioning, electric and entertainment systems, suspension, and more.
What is not covered under an extended warranty?
As mentioned, extended warranty coverage varies widely, but there are some common exclusions and limitations. Items generally not covered in an extended warranty include routine maintenance as well as damage resulting from a lack of regular vehicle maintenance, contaminated fuel, and damage from accidents, modifications, and alterations. Once again, it’s extremely important to read and understand the terms and conditions of the particular extended warranty choices on offer before purchasing.
How does an extended warranty work?
Picture this scenario: A car owner’s limited warranty is about to expire as they reach their three-year mark as outlined in the warranty. During the past few years, the manufacturer’s warranty has protected them numerous times from paying out of pocket for costly repairs. Not taking any chances, the owner decides to purchase an extended warranty for peace of mind.
A few months later after the limited warranty has lapsed, the vehicle experiences a sudden transmission issue. The car owner takes their vehicle to the dealership’s preferred repair facility where the service team diagnoses the issue and provides an estimate of $1,500 for the necessary repairs. Since the owner has an extended warranty in place, they are only responsible for paying the deductible specified in the warranty agreement, which, for this example, is $200.
With the deductible paid, the extended warranty steps in to cover the remaining repair costs at $1,300. Without the extended warranty, the car owner would have been solely responsible for the entire repair bill.
What to check before purchasing an extended warranty
There are a few things you should check before you purchase an extended warranty for your vehicle to avoid unnecessary expenses.
● Existing Manufacturer Warranty: Make sure your vehicle isn’t already covered under a limited warranty from the manufacturer. If you’re already covered by the manufacturer’s warranty, purchasing an extended warranty is likely unnecessary. On the other hand, if you’re in the market to buy a used car, an extended warranty could be a smart financial decision to shield against unknown issues with your pre-owned vehicle, especially if its original warranty is reaching its end.
● Coverage Details: Review the specific components and systems covered by the extended warranty. Understand the terms and conditions, exclusions, claims process, and any limitations on coverage — especially if there are any restrictions on how and where you get your vehicle repaired.
● Cost and Payment Terms: Compare the cost of the extended warranty against the potential cost of future repairs. Consider payment options, including upfront costs or installment plans, and ensure they align with your budget. Additionally, consider the deductible amount on your extended warranty to determine potential out-of-pocket costs for repairs. A higher deductible may lower the overall cost of the warranty but can increase what you pay out-of-pocket.
● Vehicle Reliability and Age: Evaluate the overall reliability of your vehicle and its current age. Newer, more reliable vehicles may have fewer repair needs, potentially impacting the cost-effectiveness of an extended warranty. A vehicle with one or more expensive add-on options, such as a diesel engine, may benefit more from an extended warranty.
Are there any drawbacks to purchasing an extended warranty?
While extended warranties can provide valuable protection against unexpected repair costs, there are drawbacks and considerations that consumers should be aware of before purchasing one. Here are some potential drawbacks of extended warranties:
● High Costs: Extended warranties come with an additional cost, and in some cases, the price may be relatively high. You should carefully weigh the cost of the warranty against the potential savings on future repairs.
● Limited Coverage: Despite the term "extended warranty," coverage may still be limited. Certain components or types of repairs may not be covered, and there may be exclusions and limitations outlined in the warranty contract.
● Large Deductibles: Many extended warranties require the payment of a deductible for each covered repair. The amount of the deductible can impact the overall cost-effectiveness of the warranty, especially if multiple repairs are needed.
● Unnecessary Coverage Overlap: If you purchase an extended warranty while the manufacturer's warranty is still in effect, you may experience overlapping coverage. This redundancy could result in paying for coverage you don't fully utilize.
● Limited Access to Authorized Repair Facilities: Some extended warranties may restrict repairs to authorized service centers. If there's no authorized facility nearby, taking your car in for repairs could be inconvenient.
● Lack of Use: There’s a chance you may never actually use your extended warranty, or even need one in the first place if you have a reliable vehicle.
Should you get an extended warranty?
Determining whether to invest in an extended warranty for your vehicle is contingent on various factors, making it a decision that hinges on your unique circumstances. To help guide your choice, consider the following questions:
● Are you buying a high-mileage vehicle, where the likelihood of wear and tear on components is higher?
● Are you purchasing a car that has surpassed its manufacturer's warranty period, leaving you susceptible to potential repair costs as the vehicle ages?
● Is your current insurance, such as mechanical breakdown coverage, relatively high in cost, making an extended warranty a potentially more cost-effective alternative?
● Do you put a significant number of miles on your cars, either due to work-related travel or personal usage, potentially surpassing the mileage limits of the manufacturer's warranty?
Would large repair bills be financially burdensome for you, and do you find it more manageable to budget smaller monthly fees for warranty coverage?
More extended warranty FAQs answered
When is the right time to purchase an extended warranty?
The right time to purchase an extended warranty is typically when your vehicle's manufacturer warranty is about to expire, especially if you plan to keep the vehicle for an extended period, drive a high-mileage vehicle, or want financial protection against unexpected repair costs. Additionally, if you anticipate difficulty covering large repair bills or have concerns about the reliability of your vehicle, it may be beneficial to consider an extended warranty sooner rather than later.
How much do extended warranties typically cost?
The cost of extended warranties for vehicles can vary widely but are typically over a thousand dollars. Factors influencing the cost include the vehicle's make and model, coverage level, duration, and the provider's pricing structure. Generally speaking, the younger the vehicle, the lower the cost.
Can I get an extended warranty for a used vehicle?
Yes, you can often purchase an extended warranty for a used vehicle. Many manufacturers offer extended warranties for used cars, providing coverage beyond the original manufacturer's warranty and offering additional protection against unexpected repair costs. It may be included with a certified pre-owned car.
How are extended warranties different from mechanical breakdown insurance (MBI)?
Extended warranties typically cover a broader range of components and systems for a specified period, acting as an extension of the original manufacturer's warranty. In contrast, Mechanical Breakdown Insurance (MBI) is a type of insurance policy specifically designed to cover major mechanical failures, often excluding routine maintenance. The two protection systems also have different claims processes and coverage terms.
Are extended warranties transferable?
Yes, some extended warranties are transferable to subsequent vehicle owners, enhancing the resale value of the vehicle. However, the transferability terms and any associated fees vary among different warranty providers and specific warranty plans.
Warranties at Mazda
Every new Mazda vehicle is protected by a limited warranty. Under the Mazda New-Vehicle Limited Warranty, you’re protected against defects in materials and workmanship in all parts supplied by Mazda for 36 months or 36,000 miles, whichever comes first. This transferable limited warranty is included on all new Mazda vehicles sold and serviced in the United States.
Mazda also offers our customers warranties for specific areas of their vehicle, including Powertrain Limited Warranty, and our Parts and Accessories Warranty.
The Powertrain Limited Warranty period for defects in materials and workmanship in the powertrain components supplied by Mazda3 is 60 months or 60,000 miles, whichever comes first. This limited warranty is transferable during the warranty period on all new Mazda vehicles sold and serviced in the United States.
Mazda's genuine new or remanufactured parts (other than battery) and accessories purchased from or installed by a Mazda dealer are covered under the Replacement Parts and Accessories Warranty. This includes Mazda Accessories installed by a Mazda dealer prior to the retail delivery of a new Mazda vehicle. A Mazda dealer will repair or replace any properly installed Mazda part or accessory found to be defective in material or workmanship during the Replacement Parts and Accessories Warranty or the remainder of the warranty coverage applied by Mazda to the component.
Even certified pre-owned Mazda vehicles can enjoy additional warranty coverage.
Customers should see their Mazda Dealer for limited warranty details.
Mazda: Drive with confidence, drive with joy
Navigating the realm of warranties requires careful consideration of your unique circumstances and vehicle ownership preferences. Whether you're securing added protection for a high-mileage car or aiming to safeguard against unforeseen repair costs, the various Mazda warranty programs offer buyers the coverage options they need.
Wherever you are on your car-buying journey, Mazda is here to help. Experience the joy of driving a Mazda firsthand and reserve a test drive at a dealer near you – and don’t forget to check out the special offers and incentives available in your area.
This article is intended for general informational purposes only and is based on the latest competitive information available at the time of posting. Information herein is subject to change without notice and without Mazda incurring any obligations. Please review a variety of resources prior to making a purchasing decision. Visit Resource Center for more articles.