When buying a new car, used car, or any motor vehicle, most drivers strive to get the best deal and value for their money. By securing the very best deal possible, it gives you better assurance about the after-sale services you may be in store for and the extent to which your coverage, if any will apply. This is the reason why many car dealerships have started to offer customers the option of purchasing an extended auto warranty for any vehicle sold. But how much will this dealership warranty cost you? And a better question would be: What is the average cost of an extended car warranty?
While we cannot speak for every dealer across the nation, it is a well-known fact that any warranty purchased from a dealer will result in higher prices and stricter rules and regulations than purchasing from a direct-to-consumer aftermarket warranty provider.
The primary reason car owners consider purchasing this extended service is because after spending nearly $30k on a new vehicle they expect to get a trouble free operation from it and vastly extend the life of their vehicle. And with technology advancing so much in the past few years, many minor repairs have turned into an enormous fix with extravagant costs. As a result, the demand for extended car warranties has surged throughout the past decade.
However, one major thing must be said about extended car warranties: they aren’t actually a warranty at all. We know this may sound strange, but for coverage to actually be referred to as an “extended auto warranty” it must be provided by the manufacturer. Because the dealer did not manufacture your vehicle, most likely they will provide you with a third-party provider. Just as we did not manufacture your car, we cannot call our policies a “warranty”, which is why our protection plans are referred to as a vehicle service contract.
Although a vehicle service contract may sound synonymous with automobile insurance, the main distinguishing factor between it and insurance is that with insurance your claim is directly proportional to the amount which you have paid for, and often customers who pay less do not get a good coverage on their investment. Whereas the price that you pay for your extended vehicle protection is merely the cost of the policy broken up into equal and affordable monthly payments. This means that your monthly payment will never increase. Another distinguishing factor is that many drivers actually pay off their policy early which gives them the remainder of the policy’s term completely payment free!
Why Every Driver Needs Vehicle Protection
Prior to making the final decision on whether one really needs extended protection for their car or not, there are a few factors which one should take into consideration in order to determine whether they would really benefit from the extra investment or not. First, let’s identify if what coverage you have or will need.
Manufacturer’s Warranty – Most major automobile manufacturers offer, what they like to refer to as a, “bumper-to-bumper warranty”- this coverage is commonly referred to as the “factory warranty”, and spans for 3-years or 36,000-miles, whichever comes first. But if you’re looking to use the vehicle for more than this period of time before purchasing another car, then paying for extended vehicle protection could be really worth the investment. Especially since the majority of high-ticket items will begin to fail after this short period of factory warranty coverage
Aftermarket Auto Warranty – Even though car dealerships are well known to offer this service to customers, even independent companies and third parties are also starting to offer extended car warranties to vehicle owners. As a result, consumers have found themselves granted access to a variety of coverage options and an online marketplace to compare prices and coverage terms. Though the door of opportunity is open and the extended vehicle protection industry has improved greatly over the last decade thanks to the establishing of the Vehicle Protection Association, there are still some bad apples out there. Be sure to pick a coverage provider you can trust.
After choosing a good provider, it is important to understand that all the benefits coverage for your car would provide in the long-run far outweigh the small initial investment. This is why it is highly recommended for all car owners to consider placing coverage on their vehicle.
What Does Protection Cover
This is an important question which a potential buyer should be aware of as they need to have a clear understanding about what will and won’t be covered by their extended protection plan. Although every car service contract differs from one another, it is the responsibility of the buyer to read the contract thoroughly and ask the representative any questions that they may have. We believe that a buyer’s knowledge is one of the most important products that we can provide, which is why we created this Learning Center.
A typical contract would cover automotive repairs, which are not caused due to wear and tear and are not caused due to negligent maintenance. Choosing the right service provider for this purpose is therefore an important decision. To ensure your decision is the most informed one, drivers should make sure that the provider they choose features the following factors:
- BBB Certification (Better Business Bureau)
- Ability to Choose Any Dealership or Repair Shop
- Ability to Transfer Coverage to Another Car or Owner
- Independent Website and Customer Reviews
In addition to the above, plans from better coverage providers will also include exclusive benefits to their customers as well, such as:
- Food and Lodging Expense (if the car breaks down miles away from your home)
- 24-Hour Roadside Assistance
- Complimentary Towing
- Reimbursement of Car Rentals
Drivers wishing to purchase the very best coverage available from the most reputable company around should also be cautious with any provider that:
- Excludes the Majority of Repairs and High-Ticket Components: An exclusionary policy is a policy that covers so many parts and components that it is easier to list what isn’t covered rather than what is, because the coverage is that complex. If you see a list of exclusions a mile long, you’re probably dealing with a company that will do anything to get out of paying for repairs.
- Requires the Car Owner to Contribute a Percentage for Repairs: In the vehicle protection industry, deductibles are very common. Generally, drivers will be required to pay a small fee any time a repair is done. In most cases, your deductible should never exceed $100. If a company requires you to pay a specified percentage of a repair to get your car fixed, you can find a much better deal some place else.
- Encourages Unsavory Sales Tactics from Employees: At Endurance, we pride our employees on selling our brand. We have done so much over the past couple decades to ensure that we maintain a level of excellence that we demonstrate to our customers each and every day. We train each employee to delicately listen to and understand each customer’s needs and provide them with unparalleled service. Not every company is like Endurance though and there are others that do not value their customers as we do, it’s best to do as much research as possible.
When the consumer is fully aware about these factors then choosing a reliable and suitable extended car warranty for their vehicle would be much easier and save them a lot of headaches in the future.
What is the Average Price of an Extended Car Warranty
Before attempting to analyze the average cost of an extended car warranty, it is essential to understand that there are various criteria that will factor in to determine your final cost for coverage. We like to call these criteria as “moving parts” because they will change from person to person but overall they each affect the price of coverage. In fact, these “moving parts” of our vehicle protection policies are very likely the criteria that directly influence the price of coverage.
Drivers must also consider what level of coverage they wish to protect their car with, which will also directly affect the price of coverage. These categories are based upon the extent of coverage, which it provides. For example, if an individual chooses to get “bumper-to-bumper” coverage, then the cost of coverage will be somewhat higher than a basic package, which covers only specified items. This is because the “bumper-to-bumper” package covers almost the entire vehicle, excluding wear and tear items.
The term “bumper-to-bumper” is actually misleading because no such coverage even exists. However, there are many coverage plans out there that will give you the same sense of security and will cover almost every component on the vehicle. Typically the average cost of an extended car warranty would be around the range of $1,800 with good quality package and after sales service. But when you divide that price up into affordably low monthly payments, protection for your vehicle ends up costing a whole lot less than your cable bill.
It should also be noted that if it’s an old vehicle, the value of extended vehicle protection far outweighs the cost. With the price of a new engine averaging $3,400 and the cost of a new AC $1,100, you can see that vehicle protection pays for itself after only a few repairs, oftentimes in the very first repair! Wouldn’t you rather have an affordable monthly payment and peace of mind behind the wheel rather than waiting for something to break down and be staring down a big, fat repair bill? We know which option all of us would choose. Find out how little extended vehicle protection from Endurance can cost you and how much you can save on auto repairs. Get your free quote today!
*A Vehicle Service Contract (VSC) is often referred to as an “extended warranty”, but is not a warranty. A VSC does, however, provide repair coverage for your vehicle after the manufacturer’s warranty expires. A VSC is a contract between you and a VSC provider or administrator that states what is a covered repair and what is not. Endurance is an administrator of VSCs and does not sell warranties.*