Have you ever had recurring thoughts about whether you should get a warranty for your used car or not? A solid warranty can eliminate all the “what‑ifs” and a $3,000 repair bill from ruining your day. This article walks you through when a warranty makes sense, what types exist, and how to choose wisely, to help you decide whether it’s a smart investment… or a wasted expense.
Should You Buy an Extended Warranty on a Used Car?
It depends on the car, your budget, and how long you plan to keep it. If you’re buying a reliable Honda or Toyota with under 80,000 miles, you will most likely never need to use a used car warranty. You might also consider skipping it if the car is still under the manufacturer’s warranty or you’re not planning to drive often. On the other hand, if it’s a luxury car or one with a complicated history, the chances of expensive breakdowns increase. But if it’s in good shape and reliable, you might be better off without the warranty.
Types of Warranties
Remaining Factory Warranty
This refers to whatever is left of the original new‑car warranty. Most new cars usually come with a 3‑year warranty with a mileage limit of 36,000 miles. This is typically the best type of warranty because it’s supported directly by the manufacturer, repairs are done at the dealership, and there is usually no deductible. Always request the original in‑service date and check exactly what’s remaining.
CPO (Certified Pre-Owned) Warranties
These are factory-backed programs (Toyota Certified, HondaTrue, BMW Certified, etc.). The car undergoes a thorough multi‑point inspection, is reconditioned, and then comes with an extended warranty that begins once the original factory warranty expires. Most offer about 1–2 years of bumper-to-bumper coverage or extend the powertrain warranty to 7 years / 100,000 miles. These packages usually include roadside assistance and sometimes provide a loaner car. While the cost is higher than that of a standard used car, you are investing in peace of mind and a clearer vehicle history.
Third-Party Extended Warranties
These are sold by various independent companies or occasionally through dealerships. They may be less expensive than Certified Pre-Owned warranties, and you can choose the duration and level of coverage. The catch: claims can be a hassle, repair shops sometimes dislike dealing with them, and if the warranty company goes out of business, you’re out of luck. Be sure to check reviews of the specific provider before making a purchase.
Dealer Limited Warranty (30/60/90‑day Warranty)
A limited warranty may cover only certain systems, such as the engine and transmission, excluding “wear and tear,” accidents, or neglect. In some states, if a dealer does not clearly mark a used car sale as “As-Is – No Dealer Warranty” on the required disclosure, they may be required to provide at least implied warranties.
Some warranties require you to pay half of the repair costs, while others cover 100%. While such a warranty may be included with the car at no additional charge, the coverage is limited and only lasts for a short duration. Still, it’s better than nothing and has helped many avoid purchasing a complete wreck. Always inquire about the specific details of what the dealer’s warranty includes before finalizing your agreement. Don’t let them dismiss it by simply saying, “We take care of our customers.” Get it in writing.
What to Look for in a Used Car Warranty
Terms You Should Know
- Deductible – The amount you must pay out of pocket each time you file a claim. A lower deductible is generally better, but it may require a higher upfront payment for a $0-deductible option.
- Powertrain – Covers only the engine, transmission, and driveline. It is less expensive but doesn’t include components like air conditioning, electronics, suspension, etc.
- Bumper-to-bumper – This coverage includes nearly everything except items subject to wear (tires, brakes, wipers). It is the most similar to a warranty you’d get with a new car.
- Exclusions – The fine print that outlines what’s not covered (wear and tear, modifications, racing, commercial use, pre-existing problems). Always read this section carefully.
Common Pitfalls and Red Flags
- “As-Is” disguised as a warranty
Some dealerships promote cars that have undergone a “100‑point inspection” or are labeled “certified,” but they often bury an “as-is” clause in the fine print. If the documentation states the car is sold “as-is” or “with all faults,” it means there is no warranty, no matter what the salesperson says verbally. - Powertrain-only coverage that excludes almost everything
A “lifetime powertrain warranty” sounds great until you discover it only includes the engine block and internal transmission components. Typical failures, like seals, gaskets, sensors, cooling systems, and electrical parts, are often excluded. - Third-party warranties with a history of claim denials
Check the provider’s reputation online. Companies with consistent patterns of “normal wear and tear” denials or long delays are a massive red flag. - “Betterment” or “depreciation” deductions
Some plans reduce payouts depending on mileage or age. For example, an alternator costing $1,200 for a car with 100,000 miles might only be reimbursed at $400 after a 65% “betterment” deduction. - Transfer or cancellation fees that erase the value
Many extended-warranty plans charge fees when transferring coverage to a different owner or canceling early. If you sell or trade your car soon after buying it, those fees, plus a possibly minimal prorated refund, can make the warranty a poor investment. - Extremely short claim-reporting windows
Contracts that require you to notify the warranty company within 24–48 hours of a malfunction (or before starting any repairs) are often designed to encourage denials, especially if the breakdown happens on a weekend or during a towing situation.
Reading the Fine Print
Don’t just skim. Look for words like “as-is,” “normal wear and tear,” “pre-existing conditions,” and “betterment.” Identify what is not included (which is often a longer list than what is covered). Pay special attention to where repairs must be carried out, how payments are made (dealership rates vs. what they actually reimburse), and any hidden mileage or time restrictions. If anything is unclear or confusing, ask them to explain it in plain English and get their answer in writing. Those extra five minutes could save you thousands in the future.
How Much Does a Used Car Warranty Cost?
Prices usually range from $1,000 to $3,000 for a standard used‑car warranty, depending on the car’s age, mileage, and the level of coverage you choose. Plans offered by dealerships tend to be the most expensive, in some cases twice as much as what you’d pay by purchasing directly for similar coverage.
If you decide to finance the warranty by including it in your loan, what seems like a small monthly payment could ultimately cost you several hundred or even over a thousand dollars extra in interest over the life of the loan. It’s generally wise to compare quotes from independent warranty providers or consider whether setting aside that money in a savings account might be more beneficial than buying a warranty.
Best Extended Warranty for Used Cars
There isn’t a single “best” option for everyone. However, in 2025, companies like Endurance, Carchex, Olive, Autopom, and Premier Auto Protect are receiving consistently positive feedback.
Avoid generic or no‑name plans a dealer pushes aggressively, especially those backed by companies with poor online reviews. If the dealer says, “This is the only warranty we offer,” that’s likely false. You can always buy third‑party coverage.
Checklist of Questions to Ask a Dealer or Warranty Provider
Before you sign anything:
- If something breaks next week, walk me through exactly what I must do and how much I’ll pay out of pocket.
- Where can I get it fixed, any shop or only yours?
- Are pre-existing conditions covered?
- Do you pay the shop directly, or do you pay and wait for reimbursement?
- What’s the deductible each time something breaks?
- Can I cancel and get a prorated refund if I sell the car? What are the fees?
- Can you email me the actual contract right now so I can read it tonight? (And write down their answers, if they dodge or get annoyed, walk away.)
Final Thoughts
The wisest strategy may be to plan on covering most repairs out of pocket, deposit that warranty money into a savings account, and consider purchasing coverage only if it genuinely gives you extra peace of mind. Only do so after doing your own research and paying close attention to every detail. By taking these steps, you’ll either secure real protection or realize you’re better off keeping your cash.