Checking | Auto Loans | Mortgage | HELOC | Personal Loans | Credit Cards | Membership

Are extended car warranties ever worth it?

An extended warranty, also known as a vehicle service contract, can be purchased from a car dealership, car manufacturer or third party. An extended warranty for vehicles is a contractual agreement that obligates the provider to cover the specified types of repairs, should your vehicle break down.

In some cases, an extended warranty for vehicles actually extends the protection on your new or used vehicle beyond what is covered by the manufacturer’s warranty. In other cases, an extended warranty may run concurrent with or overlap the manufacturer’s warranty and may extend coverage to the parts that aren’t covered by the manufacturer’s warranty.
Extended warranties for vehicles can save car owners money; however, these warranties come at a cost.
At Credit Union of Southern California (CU SoCal), we make getting an auto loan easy!
Call 866.287.6225 today to schedule a no-obligation consultation and learn about our mortgages, home equity lines of credit, auto loans, personal loans, checking and savings accounts, and other banking products. As a full-service financial institution, we look forward to helping you with all your banking needs.

Get Started on Your healthCAR Warranty Today!

What is an extended car warranty and how does it work?

Extended warranties for new and used cars are typically offered at the time of purchase. The purpose of an extended car warranty is generally to cover the cost of making repairs to parts not covered by the manufacturer’s warranty and repairs that are needed after the manufacturer’s warranty expires.
Car dealerships offer extended warranties for vehicles, as do third parties, including credit unions.
For example, CU SoCal offers the healthCAR Warranty, a low cost, month-to-month auto warranty coverage that helps car owners avoid costly repairs. There is no limit on your vehicle’s mileage. New cars, used cars, and even high mileage cars are eligible. And healthCAR is accepted by more than 91,000 licensed automotive repair shops.

Types of car warranties

Here is an overview of the most common types of extended warranties for vehicles:
Powertrain warranty. This warranty covers the powertrain of a vehicle, primarily the engine, transmission, fuel pump, drive axels, transfer case and other parts that power the vehicle.
Drivetrain warranty. Like the powertrain warranty, the drivetrain warranty covers the driving parts and systems, including the transmission, driveshaft, axles, and sometimes the wheels. Coverage doesn’t typically include the engine.
Wrap warranty. This warranty generally extends the bumper-to-bumper warranty provided by the manufacturer and includes repairs that the manufacturer warranty doesn’t.
Corrosion warranty. While most manufacturer’s warranties cover rust and other corrosion for three years/36,000 miles, most new vehicles won’t show corrosion in that timeframe. Purchasing a corrosion warranty could be beneficial if you purchase a used car and live near the ocean or in areas where roads are salted after each snowfall.

How long does an extended warranty last?

Extended warranties for vehicles are available for different durations, typically three years or 36,000 miles and five years or 60,000 miles. Other options may be available from the dealership or third-party warranty provider.

When can I get an extended warranty?

An extended warranty may be purchased at any time, but the longer you wait the more you’ll pay as the vehicle’s age and mileage increase. However, buying an extended warranty on a brand-new vehicle may not be worth it because most new vehicles don’t need repairs and when they do it’s often covered by the manufacturer’s warranty.

Where can I get an extended warranty for my car?

There are several types of entities that can provide an extended vehicle warranty. These are:
Vehicle manufacturer. When you purchase a new or used vehicle the dealership will provide you with information on the included warranty and offer you the option to purchase an extended warranty from the manufacturer.
Third-party. Also known as an aftermarket car warranty, there are companies that specialize in providing extended warranties after a vehicle has been owned for some time. Be sure to carefully research aftermarket car warranty options before you buy coverage, as some have a better reputation than others.
Used-car dealers. You may be wondering, “should I buy an extended warranty on a used car?” Certified pre-owned vehicles come with a warranty, and you will likely be offered the option to purchase an extended warranty.

How much is an extended warranty?

The cost to purchase an extended warranty for new and used cars may vary greatly depending on the provider. These are the main factors that can affect the cost:
Type of coverage. The type of coverage you choose, powertrain vs. drivetrain, will affect the cost.
Warranty term. The longer the term you choose, the higher the cost will be.
Vehicle mileage. The more mileage the vehicle has the higher the cost for coverage.
Vehicle age. Older vehicles will likely have higher mileage, which will result in a higher cost for coverage.

Is an extended car warranty worth the cost?

Before you buy an extended warranty or service contract, ask the provider to show you a copy of the contract so you can read the terms and conditions. If you are shopping around compare the types of repairs that are covered under each warranty. Also compare the warrantied vehicle parts and systems to the coverage already provided by the manufacturer’s warranty to see if you’ll get any extra benefits from purchasing extended coverage.
You may be able to choose the length of the term that the extended warranty will be in effect. The longer the term, the more the contract will cost. Add up how much the contract will cost you annually and take into consideration the possible cost of repairs you may have that year. Does the annual cost of the policy far exceed the potential cost of repairs? For example, if your car is brand new and an extended warranty will cost you $1,000 per year for three years, it’s unlikely that a new car will require $3,000 worth of repairs in just three years.

Other caveats to consider

Some extended warranties have stipulations regarding regular maintenance that, if not followed, can void the warranty.
Extended warranties for new and used cars typically include a deductible which you’ll need to pay before the coverage kicks in.
Additionally, be sure you fully understand the warranty or service contract before paying. Be cautious if someone tries to sell you a warranty over the phone. Recent phone scams involve a recording telling you your vehicle warranty is expired. Do not buy a vehicle warranty from a random caller, particularly if you have not called any warranty companies asking for information or a call back.

Learn more about CU SoCal's healthCAR coverage!

If you’ve recently purchase a new or pre-owned vehicle it’s not too late to protect your investment with healthCar from Credit Union of Southern California. healthCar can be used to cover repairs on new cars, used cars, and even high -mileage cars.

Why savvy consumers choose CU SoCal

For over 60 years CU SoCal has been providing financial services, including mortgages, Home Equity Loans, HELOCs, car loans, personal loans, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.
Please give us a call today at 866.287.6225 today to schedule a no-obligation loan consultation with a CU SoCal Member Services specialist.

Get Started on Your healthCAR Warranty Today!


Help + Support


Co-Browsing Code

Building Better Lives

Credit Union of Southern California (CU SoCal) is a leading financial institution empowering those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County to reach their goals and build strong financial futures. CU SoCal provides access to convenient money management services and offers competitive rates and flexible terms on auto loans, mortgages, and VISA credit cards—turning wishing and waiting into achieving and doing.


562.698.8326 | 866 CU SoCal Se Habla Español