Extended warranties at the dealer: what to check
An extended warranty is really a service contract, and it is optional. Know who backs it, what's excluded, the deductible and the cancellation terms. The price is usually negotiable, and you can buy one later or elsewhere.
Warranty vs. service contract
A manufacturer's warranty comes with the car. An “extended warranty” sold at the dealer is usually a service contract: a separate product you pay for, often backed by a third party.
Read these five things
- Who backs it: the manufacturer or a third-party administrator.
- Coverage: exclusionary (lists what's not covered) or named-component (lists what is).
- Deductible: per visit or per repair.
- Where you can get repairs: any licensed shop, or only certain dealers.
- Cancellation: how to cancel and how the refund is calculated.
Price and timing
Finance-office prices are often negotiable, and you don't have to decide on the spot. Many service contracts can be bought later, as long as the car is still within the eligible mileage. If one is added to your loan, you pay interest on it too.
Already bought one?
Most contracts can be canceled. Read the cancellation section and ask the dealer or administrator for the steps. Refunds are usually prorated and may carry a fee.
We'll review the service contract price and terms along with the rest of your finance paperwork.
This guide is general consumer information, not legal or financial advice. Rules vary by state and change over time; check the sources below and your own documents.