Extended Warranties: Are They Worth It?

When purchasing a new car, you’ll likely be offered an extended warranty to protect against unexpected repair costs. But are extended warranties worth the investment? In this blog post, we’ll explore the pros and cons of extended warranties, helping you make an informed decision. While our focus is on extended warranties in general, it’s important to remember that this information applies to car loans in New Brunswick and other provinces.

What is an Extended Warranty?

An extended warranty, which is also referred to as a vehicle service contract, is an additional protection plan that provides coverage for specific repairs and maintenance beyond the original warranty offered by the manufacturer. These warranties usually offer an extended coverage period and can be purchased as optional additions when you buy a new or used car.

Pros of Extended Warranties

Peace of Mind

One of the main advantages of an extended warranty is the peace of mind it provides. Having coverage for unexpected repair costs can reduce stress and worry, knowing that major repairs won’t drain your pocketbook. If you prefer the security of comprehensive coverage and don’t want to deal with unexpected repair bills, an extended warranty can offer peace of mind.

Potential Cost Savings

Extended warranties can potentially save you money on repairs and maintenance over time. If your car experiences a major mechanical or electrical failure, the cost of repairs could be significant. With an extended warranty, these costs may be covered, allowing you to avoid out-of-pocket expenses. Additionally, the rising costs of labour and parts make extended warranties even more valuable.

Transferable and Resale Value

Many extended warranties are transferable, meaning that if you sell your car before the warranty expires, the new owner can benefit from the coverage. This transferability can increase the resale value of your vehicle, as potential buyers may be willing to pay a higher price for a car with an extended warranty.

Cons of Extended Warranties


Extended warranties can be expensive, adding a significant amount to the cost of your car. Depending on the coverage level, the length of the warranty, and the car’s make and model, extended warranties can range from a few hundred to several thousand dollars. It’s important to weigh the cost of the warranty against the potential savings it may provide in repairs.

Overlapping Coverage

Before purchasing an extended warranty, carefully review any existing warranties that come with your car. Some new cars come with a manufacturer’s warranty that already covers repairs for a specific period. If the extended warranty overlaps with the manufacturer’s warranty, you may be paying for duplicate coverage, which is not cost-effective.

Limited Coverage

Extended warranties often come with limitations and exclusions. These limitations may include specific parts or systems not covered, mileage restrictions, or requirements for routine maintenance. It’s important to understand the terms and conditions of the warranty, ensuring that it covers the repairs and services you’re most concerned about.

Claim Process and Deductibles

Filing a claim under an extended warranty can sometimes be a hassle. The claim process may involve paperwork, waiting periods, and dealing with specific authorized repair facilities. Additionally, some extended warranties require the car owner to pay a deductible for each repair, which further adds to the cost.

Making an Informed Decision

To determine whether an extended warranty is worth it for you, consider the following factors:

Car Reliability

Research the reliability and reputation of the car’s make and model. If the vehicle has a history of mechanical or electrical problems, an extended warranty may be more worthwhile.

Budget and Risk Tolerance

Evaluate your budget and ability to handle potential repair costs. If you have the financial means to cover unexpected repairs without significant impact, an extended warranty may not be necessary. Conversely, if the thought of costly repairs keeps you up at night, an extended warranty can provide peace of mind.

Coverage Terms and Conditions

Read the terms and conditions of the extended warranty carefully. Understand the coverage limits, exclusions, deductibles, and claim procedures. Ensure that the warranty aligns with your specific needs and concerns.

Alternative Options

Instead of purchasing an extended warranty, consider setting aside money in an emergency fund specifically designated for car repairs. This way, you’ll have funds readily available if an unexpected repair arises. Additionally, some credit cards and insurance providers offer extended warranty-like benefits as part of their services. Investigate if any of these options suit your needs.


Extended warranties can offer peace of mind and potential cost savings by covering unexpected repair costs. However, they come with a cost and limitations that need careful consideration. Assess your car’s reliability, budget, and risk tolerance, as well as the coverage terms and conditions, before deciding whether an extended warranty is worth it for you. Remember, making an informed decision based on your unique circumstances is crucial when weighing the pros and cons of extended warranties.


Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *