Extended Car Warranty DO’s and DON’T's

Two years ago we bought a late model Kia Carnival that still had an 12 month balance of a new car warranty. The dealership at the time were also offering a used car extended warranty of a further 2 years leaving us with 12 months of our lease that was uncovered.

They also offered us the choice of two other after-market extended car warranties. If I remember correctly, both were for a 2-year period but the premium warranty cost a little over A$1500 while the lesser cost about $600. Obviously the more expensive warranty covered more items but I was left wondering whether I could honestly live without it…it was only an extra twelve months!

Is An Extended Car Warranty Worth The Money?

Just to put some further light on the subject, 1 month after our new car warranty expired, the head on the engine gave way and we had to tow our 2003 Carnival back to the dealership for it to be replaced. Fortunately, Kia were in the process of replacing all engines (free of charge) in their Carnivals prior to the updated 2004 model so it only cost us the labour component. Only?

Do you know how long it takes to fix the head gasket on a car’s engine?
See, the deal with an extended car warranty is that they usually only cover the parts. In most cases you will still be required to fork out the labour component. And, the parts covered are only if they fail apart from normal wear and tear.

Then there’s the required maintenance schedule that must be performed at a specific dealership. Load all that onto your extended car warranty and you may have been in front by putting the same amount of money in the bank. While all this dialogue may sound dreadfully negative there are some ways to purchase an extended car warranty that can prove worthwhile.

The Extended Car Warranty DO’s

  • Never purchase an extended car warranty from anyone that you can’t see in person. If the warranty is being on-sold by a dealership and the buck doesn’t stop with the dealer then your future complaints may end up in an abandoned corner of some high-rise office building.
  • Read the fine print carefully. What is the warranty covering? Is it just parts and are the parts that it covers just the ones that are least likely to fail during the term of the warranty?
  • Weigh up the costs and do your own risk-analysis. If the extended warranty’s cost far outweighs its benefits then pass it up. You don’t have to purchase a warranty!
  • Before you sign an extended car warranty, do some research either through other dealerships, via mechanics or online in car forums to find out if the model your contemplating has any inherent problems. If it does, then your warranty may be a genuine boon for you.
  • Ask the dealer what his or her commission is likely to be if you purchased the extended warranty from them. Its unlikely that they will tell you this but if they get flustered it will give you a sign that they’re doing alright out of the deal.
  • Ask the dealer if you’re allowed to source your own extended warranty. You are, so if they tell you that this is not permitted then it will give you more of idea that the previous point was certainly a good deal.
  • As you are assessing your options, give more weight to a car manufacturer’s extended warranty than to a business you thought was a spoof on a Road Runner cartoon. Their sheer size should give you enough confidence that they will be there in 2-3 years time if you need to make a claim.

The Extended Car Warranty DON’T's

  • Never take the dealers word for it. Always read the contract yourself thoroughly and ask to take it home to read so that you can think it through without the added pressure of a dealer who wants to get to his lunch break.
  • Don’t always think that the more expensive the warranty is that it will be the best. ‘Premium’ usually only guarantees the warranty’s price.
  • Don’t be pressured into accepting a warranty. Remember that you are the customer and if it wasn’t for your business they wouldn’t be in business.
  • Here’s one from left field… Don’t feel that you have to keep the car after the new or used car warranty has expired. Why not replace the car and take the benefits of a new warranty?

Photo source: smartvital


  1. Excellent list ;) .Our list is up if you’d like to look… have a great day!

  2. Useful tips for used car information. Thx for sharing.

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