If you buy a used car, particularly an older one, you might be thinking about an extended warranty. Older cars sometimes come with a higher risk of mechanical or electrical problems, so an extended warranty is an optional policy people can buy that helps cover the cost of certain repairs after the manufacturer’s warranty expires. But is an extended warranty worth it? This guide tells you everything you need to know so you can make an informed decision.
How does a car warranty work?
A car warranty covers certain repairs on a car for a set period. New cars often come with a manufacturer warranty. But on used cars, coverage may be near the end or expired by the time you buy it.
That’s where extended warranty comes in. An extended warranty is bought separately and provides additional protection once the original has expired. You may pay for it upfront or in monthly instalments.
If a covered part of the car fails, you contact the warranty provider before repairs begin. The company approves the repair and they’ll either pay the repair garage directly or reimburse you.
Most warranties have limits, like:
- A maximum amount per repair
- A total limit for the life of the policy
- An excess you need to pay for each repair
What do used car warranties cover?
What’s covered in a car warranty can vary by provider and plan you choose so it’s always best to check but warranties can include:
- Major mechanical and electrical components like the engine, gearbox, and drivetrain
- Cooling and fuel systems
- Air conditioning and heating
- Suspension, steering, and brakes
- Labour costs for repairing covered parts
Policies usually don’t cover items that wear out naturally, such as brakes, tyres, clutches, and batteries. Routine servicing and cosmetic damage are also excluded. Some providers let you choose different levels of coverage depending on your needs.
The pros and cons of extended car warranties
Like any decision, it’s important to weigh up the pros and cons before you decide if an extended car warranty is worth it for you.
The pros of extended warranties
- Protection from big, unexpected bills – Major faults like engine or gearbox problems can cost a lot to fix. A warranty can cover some or all of that, depending on the policy.
- Peace of mind with older cars – Used cars, especially those with higher mileage, may be more likely to develop faults. Knowing you have some level of cover in place could make owning and driving the car feel less stressful.
- Possible resale appeal – If the warranty can be transferred to a new owner, it might make the car more attractive when you come to sell. Buyers may feel more confident knowing there is still some cover in place.
- Easier budgeting – Instead of worrying about a large cost if something goes wrong, you pay a set amount upfront or monthly. That could make it easier to manage your money, especially if you do not have a large emergency fund for car repairs.
- Address issues quickly – With an extended warranty, you may be more likely to get repairs done quickly without putting them off due to costs. This will expand your car’s lifespan and could save you money in the long run.
The cons of extended warranties
- You might not use it – The biggest downside is that you may never need to use it for a major repair. In that case, the money you spent on the warranty could end up being more than you would have paid fixing things yourself.
- Not everything is covered – Many people are disappointed when they find out certain parts or types of damage are excluded.
- Claim limits and excess fees – Warranties often have a maximum payout per claim and a total payout limit over the life of the policy. You may also have to pay an excess each time you claim. These limits can reduce how much financial help you actually get.
- Strict servicing rules – Most policies require you to service the car on time and keep records. If you miss a service or cannot prove the car has been maintained properly, a claim could be refused.
- Claims can take time – You normally need approval before repairs start, which could delay things. If you rely on your car every day, waiting for authorisation can be frustrating.
Are car warranties worth it for used cars?
Extended warranties can be worth it for used cars, simply because they’re older and have already clocked up miles. But whether it’s worth it really depends on the car, your budget, and how comfortable you are with paying for repairs yourself.
Older or high-tech cars can be expensive to fix, so a warranty could be useful. But some cars are just more reliable, so you might never need repairs, even on a used car. It may be a good idea to do some research into the reliability of the make and model you’re buying.
It could also be worth checking whether the car you’re buying has a full service history and if parts have previously been replaced.
How to decide if an extended warranty is right for you
Here’s a quick checklist to tick off before you decide whether to get an extended warranty on a used car:
- Check how reliable the car is and what problems it might have
- Compare the cost of a warranty with what repairs might actually cost.
- Look at the policy for limits, exclusions, and excesses.
- Think about how comfortable you are with paying for unexpected repairs yourself.
Is an extended warranty worth it?
Ultimately, it mostly comes down to budget. If a big repair would be stressful financially, a warranty can help give peace of mind. But if you’ve got savings set aside and have done your research into the used car you’ve got your eye on, you might decide it’s not worth it.
Check out our full range of guides for more helpful advice on car finance.