Is an extended warranty for your car worth what you'll pay?
The short answer: probably not. In a survey by Consumer Reports, 42 percent of buyers who sprang for an extended warranty never used it, and only 20 percent recouped more on repairs than they paid on their contract.
Most cars come with a factory warranty that covers at least three years or 36,000 miles. Many manufacturers now offer four years and 50,000 miles, and some even more. If you plan to own the car for a short time or you drive 12,000 miles a year or less, why pony up for coverage you’ll never need?
If your annual mileage is high and you plan to keep the car indeﬁnitely—or if you’re buying a good used car—an extended warranty might make sense. But ﬁrst, consider your particular automobile: What problems does that make and model typically have? If replacement parts tend to be costly, you could conceivably break even on an extended service contract.
If you do want an extended warranty, shop around ﬁrst. Sites such as carchex.com let you compare prices and terms. In addition to securing mechanical breakdown coverage for faulty parts, get a warranty that includes wear and tear over the long term.
This article was first published in September 2010. Some facts may have aged gracelessly. Please call ahead to verify information.