Discover the difference between warranty types—and if extended warranties are worth the cost.

When buying a car or truck, dealers often ask buyers if they’d like to purchase a warranty. Before you decide, learn the difference between manufacturer and extended warranties and what they cover.

What is a car warranty?

A car warranty offers buyers financial protection in case of defects. If a covered problem occurs, the cost of repairs is covered by the warranty provider; it doesn’t come out of the car owner’s pocket.

All new vehicles come with a manufacturer’s warranty and most provide coverage for at least three years or 36,000 miles, whichever occurs first. However, some prestige brands offer coverage for at least four years or 50,000 miles. There’s no additional cost for a manufacturer’s standard warranty. Also, some manufacturers offer warranty protection on certified pre-owned cars at no extra cost.

Third parties also offer warranty coverage—these are often called extended warranties.

They may be offered for new or used vehicles and provide coverage after the manufacturer warranty expires. Third party warranties may be offered by a dealer, or you may receive a solicitation via snail mail, email or by phone. Car owners pay for third-party warranties out of pocket and the cost can run from a few hundred dollars into the thousands.

What do a car warranties cover?

New car warranties differ by manufacturer but commonly include bumper-to-bumper, powertrain, emissions and corrosion coverage. EV manufacturers will also warranty the battery.

Bumper-to-bumper warranties cover any defect or breakdown in the car’s systems. This includes heat/air conditioning, power windows, infotainment systems and restraint systems—but there may be exclusions. Repairs needed due to wear and tear or accidents and routine maintenance are not covered.

Powertrain coverage protects car buyers if anything goes wrong with the engine, drivetrain or transmission.

Corrosion warranties kick in to replace body panels that have rusted through before the warranty period expires.

Hybrid and electric vehicles have different components than a traditional internal combustion engine. Warranties on the battery and motor may last longer; in some cases manufacturers offer a warranty of 8 years or 100,000 miles on hybrid components and 10 years or 150,0000 miles on batteries. These extended warranty terms reflect that EV motors require less maintenance and have fewer moving parts than gasoline-fueled engines.

Is it worth buying an extended car warranty?

Extended car warranties are costly for vehicle owners and profitable for those selling them. Consumer Reports says that while these contracts can offer some peace of mind most folks with warranties “paid more for coverage than what they got back in direct benefits.”

Also, keep in mind that some actions result in voided car warranties, such as using after-market parts or add-on kits, towing loads higher than specified in the manufacturer’s specifications or driving off-road.

If you want an extended warranty, shop around. Price and coverage vary by provider and the model and year of the vehicle. There are warranty options in addition to what a dealer offers. Also, read this consumer information from the Federal Trade Commission.

Many people opt not to buy an extended warranty and instead put money aside in a savings account to pay for future repairs.

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