Are extended car warranties worth it?

Buying an extended warranty with your new car may seem like a sensible extra protection, but it’s always wise to check the warranty conditions before you commit to a car purchase, especially if you are paying extra for the warranty.

Extended warranties cover a timeframe after the statutory or manufacturer’s warranty expires, but they may not provide the same cover as the manufacturer’s warranty.

You may pay extra for your extended warranty, or the dealer may include it to sweeten the deal, but either way there could be strict conditions attached to it. Free extended warranties in particular often come with several strict conditions.

Some of the conditions of the extended warranty may include having the vehicle serviced only at the dealership or at a specific workshop, and being liable for excess payments on some repairs. There may also be conditions related to the frequency of servicing that vary from the manufacturer's recommended service schedule.

You should always ask for a copy of the booklet detailing the warranty’s terms and conditions and check it carefully before you decide. Be aware that this may be in the form a brochure that’s also trying to sell you the extended warranty.

New car warranties have become more extensive in recent years, so it’s important to carefully assess whether any additional coverage offered by an extended warranty is really worth the extra outlay and/or commitment.

Extended warranties on used cars should be considered alongside what car buyers are already entitled to under Australian Consumer Law.