Extended Warranties & Vehicle Service Contracts: Cost vs Value Analysis
Evaluate extended car warranties and vehicle service contracts: factory coverage vs third-party warranties, repair costs, and dealer markup.
By Sarah Jenkins, CFA
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Reviewed by David Vance, CFP
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5 min read
Are Extended Car Warranties Worth the Cost?
An extended warranty (or Vehicle Service Contract) covers mechanical repairs after your factory warranty expires. Dealer markups on extended warranties can exceed 50% ($1,500 - $3,500 cost).
When to Buy vs Decline
- Decline if: You are purchasing a reliable vehicle brand with an active 5-year/60,000-mile factory powertrain warranty.
- Consider if: You are buying a high-maintenance luxury vehicle with expensive electronic repairs.