Are extended warranties worth it?

In an ideal world, our cars would work perfectly and run smoothly forever, and we wouldn’t have to worry about surprise breakdowns halfway through the school run or that expensive repair to a rattling gearbox that you’ve been wishing away for weeks. We could just enjoy the open road with the wind in our hair and not a car-related care in the world.

Sadly, we don’t live in an ideal world, and cars have been known to need the occasional repair from time to time. Despite what the salesperson at the dealership might tell you, there’s no guarantee of how long a car will keep driving for - and that’s where extended warranties come in. Let’s take a look at how an extended warranty could help to keep your car running in peak condition.

What is an extended warranty?

A warranty is a guarantee that lets you get your car repaired for free if anything goes wrong. New cars come with a warranty from the manufacturer, which tends to last anything from three to seven years. If you’re planning to keep the car longer than that, or if you’re buying a used car that’s out of its warranty period, you might want to think about an extended warranty.

An extended warranty works a bit like an insurance policy. You pay a certain amount for the policy - either to the car manufacturer or to a third party warranty supplier - and then if your car has a fault or a problem, the cost of repairing it is taken care of by the warranty (provided it’s a fault that’s covered - we’ll come to that in a sec). 

An extended warranty can give you peace of mind when you’re buying a used car, but you need to consider whether it’s really worth it. Lucky for you, we’re here to help you weigh up your options (you’re welcome!)

What do extended warranties cover and how do they work?

You can buy an extended warranty from the car manufacturer, either when the car is new or before the original warranty runs out. Alternatively, you can get a used car warranty from the dealership or car supermarket where you buy your car, or from an independent provider.

Whatever type of warranty you go for, you’ll want to make sure the big (expensive to fix and/or replace) systems are covered. We’re talking about the engine, the electrics, the steering, the suspension, the on-board computer. These are critical components, and unexpected problems with them can cost an arm and a leg to fix, so you’ll want to make sure these are covered as a priority. 

A decent warranty will also cover other parts, like the air-conditioning system, dashboard screens and airbags - or it’ll at least partly cover them. 

If you’re buying a warranty through an independent company, you’ll usually be able to choose what level of cover you want, and if you want to cover something specific (like the infotainment system, for instance), you can specify that.

All extended warranties should make it clear what is and isn’t covered. If it’s not clear, or if it’s not easy to find the terms and conditions for a policy, it’s probably best to swerve that particular policy and keep shopping around.

What is excluded from extended warranties?

Whilst an extended warranty can be a genuinely useful thing to have, it’s not a silver bullet that covers every single issue you might ever have with your car. Not everything is covered under a warranty, especially the parts of a car that tend to be most frequently damaged, like windscreens, tyres and bodywork. So if someone accidently scrapes your car door in a car park, your warranty won’t be much help.

Extended warranties aren’t designed to cover general wear and tear, so if you need to replace a part that’s just naturally come to the end of its working life, like brake pads, tyres or clutch plates, you’ll likely need to sort this out without getting your warranty involved.

It’s worth bearing in mind that if you’re buying an electric or hybrid car, most extended warranties won’t cover the batteries in these types of vehicles. The manufacturer will usually cover it as standard for a good five years or more, but if this cover has run out you might need a specialist policy.

With all extended warranties, you’ll need to keep on top of your car’s general maintenance. That means making sure you get your car serviced on time, and that you report problems like weird noises or dashboard warning lights. If you ignore problems, or if you’re a bit lax with the servicing, the warranty company could refuse to pay out on any claim you make.

How can I claim on an extended warranty?

Warranty companies will usually have an emergency phone number you can call if your car breaks down, or if something goes wrong.

When you call, you should be able to get the arrangements for repair or recovery sorted over the phone. If you need to hire a car while yours is getting fixed, the call centre staff you speak to should be able to sort you out.

Any repairs or inspections need to be agreed with the warranty company in advance. They’ll usually pay for this directly if you use a company that’s approved by them. You might be able to choose your own repair company - in this case the chances are you’ll have to pay for the work yourself and then claim the cost back from the warranty company. You’ll still have to get the work authorised first, though.

What’s covered by the Consumer Rights Act?

Even if you don’t take out an extended warranty, you already have some protection under the Consumer Rights Act 2015. This is a piece of legislation that sets out your rights when you buy goods or services. 

Under the Consumer Rights Act, everything you buy - including cars - must be:

• Fit for purpose
• As described
• Of a satisfactory quality

If you buy something - let’s say a car, for argument’s sake - and it doesn’t meet one of these criteria, you can make a claim against the retailer or dealership you bought it from. You have the legal right to either get a full refund, or get it repaired, depending how long you’ve owned it.

• Up to 30 days - you can claim a full refund for goods that are unfit for purpose, not as described, or of unsatisfactory quality
• 30 days to six months - you must give the retailer one chance to repair or replace it before you can claim a refund
• Six months or longer - you must give the retailer one chance to repair or replace it, and the burden of proof moves to you, the buyer, to prove that the car was faulty at the time of delivery/purchase

If your new car develops a fault when you’ve not had it very long, you have a legal right to make a claim under the Consumer Rights Act. It’s worth bearing this in mind when you’re considering whether it’s worth paying for an extended warranty. You can get more information about how it works from Citizen’s Advice.

What factors should I consider before committing?

Tempted by the idea of an extended warranty? Take a moment and hit the brakes before you sign on the dotted line. You don’t have to take out an extended warranty - it’s an optional extra - so before you decide whether it’s worth it, have a good think about your budget.

Can you comfortably afford to pay for an extended warranty? Do you have enough disposable income to potentially pay for any repairs yourself? 

Also, how reliable is your car? If it’s pretty solid and you think there’s a smaller chance of things going wrong, consider whether it’s worth paying for a warranty you may not realistically need to use.

Many extended warranties dictate that you have to take your car to a specific garage - maybe a franchised dealership, or one of the provider’s approved garages. If you’d rather choose the garage yourself, check if the warranty is specific about this.

What options are available?

You might be offered an extended warranty by the dealership when you buy your car. But don’t just take the first one you’re offered, as you can often find a better deal by shopping around.

All new cars come with a warranty from the manufacturer, which usually lasts anything from three to seven years. If you’re still within this warranty period, you can look at extending the manufacturer warranty.

Your other option is to buy from a third party warranty provider. These policies tend to be cheaper, but the cover might not include as much as a manufacturer’s warranty. Having said that, some providers let you choose what level of cover you want, so you can choose what’s covered.

How much might this cost?

How long is a piece of string? The cost of an extended warranty depends on the make, model and age of the car, and the level of cover it provides. It can range from a few hundred pounds a year to over a thousand. That’s why it’s so important to shop around, so you can find the cover you want at a price that suits you.