Is an Extended Warranty Worth It on a New Car?

An extended warranty pays for some repairs after the factory warranty ends. It is a service contract you buy on top of the car.

Each plan is different. Some cover most parts. Others cover only the engine and transmission.

Wear items like brakes and tires are left out. Read the list of what is not covered. That list matters as much as what is.

Consumer Protection BC says to find out what is covered before you buy. Ask if labour is included. Ask if you can use any repair shop or only the dealer.

Every new car comes with a factory warranty at no extra cost. Toyota Canada lists 3 years or 60,000 km of basic cover. The engine and drive parts get 5 years or 100,000 km.

Other brands are close to that. Some offer more. Check the warranty booklet for your model.

Write down when your factory cover ends. Set a reminder a few months before that date.

So an extended warranty you buy today does not start working for years. You pay now for cover you may never use. That is the main reason many buyers skip it.

It can be worth it if you plan to keep the car well past the factory warranty. It can also fit a model with a weak repair record.

It can make sense if a big repair would hurt your budget. Some buyers pay for peace of mind and that is a fair choice.

If you can cover a repair from savings you may come out ahead without one. Put the money aside in a savings account. Use it if a repair comes up.

A plan that costs $2,000 has to save you more than $2,000 in repairs to pay off. Ask yourself how likely that is for your model.

You do not have to buy it the day you sign for the car. Consumer Protection BC says to ask how long you have to buy the warranty. It also says not to feel pushed into buying on the spot.

Many brands let you add their own plan later. It just has to be before the factory warranty ends. That gives you time to compare prices.

In Ontario a warranty is an optional add-on. OMVIC says you can try to negotiate add-ons out or walk away.

Use the time to read the contract at home. Ask what it costs to cancel and if you get money back.

Yes. The price on the first sheet is not fixed. The dealer earns a profit on each plan it sells.

Ask for the price in writing with the plan name and the terms. Then call another dealer of the same brand and ask for the same plan. The gap can be large.

Keep the warranty out of the car price talk. Settle the car price first. A car broker can price the car and any add-ons for you so nothing slips into the deal.

Say no if the numbers do not work for you. The car deal does not depend on it.