You’ve done your research, picked out your new car, and you’re in the process of paying when the dealer asks, “Do you want to add an extended car warranty?” This question may catch you off guard, especially if you don’t know what “extended warranty” means. Fortunately, not too much separates an extended warranty from a manufacturer’s warranty, and knowing what each entails can help provide your car with the exact coverage it needs. 

What is a warranty?

Generally speaking, both a manufacturer’s warranty and extended car warranty cover problems that might arise with your car. The exact coverage differs from warranty to warranty, but usually, a manufacturer’s warranty covers factory-installed parts. There are two essential types: a bumper-to-bumper warranty, which covers general defects from the manufacturing process, and a powertrain warranty, which covers essential mechanical parts like the transmission or engine. 

An extended warranty, also known as a service contract, usually covers these items as well. However, extended warranties are more likely to include additional services like roadside assistance, as well as coverage for additional electrical/mechanical parts. Sometimes, the dealer will even throw in bonuses, like a free rental car. Unfortunately, neither warranty covers routine maintenance requirements, like oil changes, and they don’t tend to cover issues like wear-and-tear damage (for brake pads, tires, etc.). However, wear-and-tear coverage may be available for an added fee, along with a variety of other coverages. 

How much do they cost?

A manufacturer’s warranty is included with all new cars, and it’s part of the total price tag. Some certified-used cars may also include this type of warranty for no added cost, but it’s usually a partial warranty, or the warranty will only remain valid for a few more miles. 

For extended warranties, the prices vary, but they will always include a deductible and premium. Often, these warranties can be negotiated, though up front costs tend to be between $1000 and $3000.

When can I buy one?

While a manufacturer’s warranty is included with your car from day one, you can purchase an extended warranty later on. However, it’s advisable to purchase this warranty before your manufacturer’s warranty expires, and some people choose to purchase it on the same day they purchase their car. You can buy this extended car warranty directly from the automaker or from a third-party–the former has restrictions on which repair shops you can use, while the third-party might require you to pay upfront for repairs, and then reimburse you. Third-party warranties tend to be cheaper and more customizable.

How long do they last?

Most manufacturer’s warranties last for 36,000 miles or 3 years, whichever comes first, though they can go up to 100,000 miles or 5 years. Extended car warranties start when the manufacturer’s warranty ends, and their longevity depends on the current age and mileage of your car. Either warranty can be voided if the car owner fails to perform regular car maintenance or participates in reckless car activities (so no drag racing!). 

Warranties are essential for older cars, as well as car brands that are known to break down. They can also be useful during car emergencies, especially if your warranty includes roadside assistance. It’s always a good idea to check exactly what your warranty covers and when that coverage ends, especially before buying another warranty. 

Both a manufacturer’s warranty and an extended warranty can benefit your car and make repairs easier down the road (pun intended). However, your car will likely come with a manufacturer’s warranty, which means you can take your time choosing when and where to get an extended warranty. The more research you put in, the better deals you’ll find, which will ultimately work out best for your wallet and vehicle.