Extended Warranty Basics | All You Need to Know

Getting a new car is tiresome. And no, I am not talking only about the financial aspects of funding your vehicle. It’s a hectic business though from selecting the best model – think prestige, space, and luxury – to knowing the best dealer to putting all the documents in order.

Oh, we shouldn’t forget the testing and insurance phase. After all, it’s a long-term investment that needs appropriate care. You would want to be sure that your car won’t deceive in the middle of its anticipated life cycle. And then you want to keep the maintenance costs down (think: durability!).

Acquiring enough knowledge about cars is a great first step. Make sure you know the terms and slang prevalent in the industry. Pay special attention to insurance terms – they are tricky and may give a false sense of security.

But before we figure out the auto-insurance we want from the company, we should understand the warranty its dealer or manufacturer will be provided. The basic warranty from a car dealer or manufacturer may work towards reducing car insurance premiums big time.

So, here is the most confusing warranty term that car buyers often have to understand – extended warranty.

What is a Warranty?

Not every dealer or company offers this warranty. The basic warranty that comes with any vehicle usually lasts three years or 36000 miles.

Usually, this first coverage comes as a bumper-to-bumper warranty and no part and component of the car is excluded. The warranty covers any maintenance that is needed by your car unless the maintenance is included in routine repairs.

According to this documented statement from the seller, the seller has to pay for the parts which break down within the warranty period without the fault of the driver.

What is an Extended Warranty?

Those companies which offer extended warranties cover wear and tear in the car after the basic warranty period has elapsed. Beware that you won’t get a complete bumper-to-bumper warranty in this extended package. Instead, this exclusionary coverage excludes a few parts of the car which you will pay for by yourself.


As we can see the benefits of an extended warranty are paramount. You have to worry about a lot fewer parts and components than you would if there was no warranty. The best feature is that the warranty helps you save costs when you need it most as the real wear and tear in a car starts happening after 3 years or after it has covered 36,000 miles.

Car Warranty Companies

If your dealer or car manufacturer is offering an extended warranty, consider inquiring about these aspects. Is it taking the coverage from a reliable insurance company? The insurance should come from one of the most reliable car warranty companies to give peace of mind. Sometimes, these warranties aren’t backed by a strong investment portfolio or asset base.


You should also read the warranty carefully. What parts are covered? Under what circumstances these parts are covered?

You also have to see if your car manufacturer covers the same parts by default. For example, if you are purchasing Chevy, you may get an extended warranty for powertrain for five years or 60000 miles. So, you have to look for a package that considers this default warranty while calculating the cost.


Before you buy an extended warranty while getting a car, you should ask yourself if it’s really profitable for you. Think of a warranty as an investment. They should save you costs or pay you profits to be proved worthwhile.

So, is your warranty worthwhile? If you want to keep it for more than three years, the chances of you benefitting from the coverage arise.

If you would keep your car in the best condition with or without a warranty (which, in most times, is given), the chance of you using the extended warranty remains slim even after the initial warranty period has expired. Ask yourself, do you want to pay the extra cash for a service you might never use.

You may in some cases. After all, the warranty gives you a unique piece of mind. But you have to consider the risks and rewards before visiting the dealer’s office.

Extended Warranty from Car Warranty Companies

Till now, we have only considered those warranties which are offered at dealers’ offices. If your dealer is not offering such assurance and if you want to protect your investment against unforeseen damages, you might want to look into other independent car warranty companies.

Know the assessment criteria. The company should have established operations. Usually, those companies which are mature and are serving the nations for more than a few decades perform better. Analyze their financial strengths. Do they have more assets than their liabilities?

Also, don’t forget to watch out for negative customer reviews. You want to get your claims processed in time, don’t you?


Extended car warranties act like insurance policies that cover damages to your car after the initial warranty period from the manufacturer has expired. Unlike the initial warranty, it rarely comes as a bumper-to-bumper warranty.