See more articles from the Car Warranty GuideEverything You Need to Know About Extended Car Warranties

An extended warranty is additional coverage period on a standard warranty, offered either by a dealership or a third-party vendor. With an extended warranty, the consumer is able to extend the time that the person or company offering the warranty is liable to pay for covered incidents. Consumers often have the option to include additional coverage either at the time of purchase or close to the manufacturer warranty end date.

Extended warranties may also have a very different coverage from manufacturer offers, which is why buyers should ensure that they read all of the fine print and inclusions before making a decision about purchasing an extended warranty.

Extended Warranty from a Dealership

Dealerships are often the first to offer car buyers an extended warranty (also known as a “service agreement”) – usually during the purchase of a vehicle. While most modern vehicles already come with a comprehensive manufacturer warranty, a dealership may still give the option to extend the existing coverage or offer a more inclusive one. This coverage would usually begin once the manufacturer warranty has expired.

Extended Warranty Through a Third Party

Extended warranties can also be purchased through a third-party vendor. These companies compete with dealers’ extensions by selling their contracts for a comparable price or offering more inclusions.

Conditions to Watch Out For

When purchasing an extended warranty, there are conditions that the buyer should be aware of before making their final decision. Below are examples of good and bad conditions of an extended warranty.

Good Conditions
  • Ability to choose a dealership or independent repair shop
  • Warranty is transferable
  • Trip-interruption coverage
  • Free loaner vehicle
Bad Conditions
  • Repairs are not covered
  • Specific caps on repair costs
  • Large numbers of exclusions
  • Warranty is not transferable
  • Lack of previous customer satisfaction

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