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What is the difference between a manufacturer’s warranty and an extended vehicle warranty or service contract?

Warranties provided by the manufacturer as part of the vehicle cost typically cover only certain problems with the vehicle. Extended warranties or service contracts sold for an additional charge typically cover problems with mechanical and electrical parts not covered by the manufacturers' warranty. 

Warranties are typically provided by auto manufacturers as part of the overall cost of a new vehicle. These warranties will cover certain problems and last for a certain period of time or miles of driving.

Extended warranties or service contracts are offered or sold at an additional charge by auto dealerships. These provide protection on certain mechanical and electrical components not covered by the manufacturer’s warranty. Extended warranties typically exclude routine maintenance such as oil changes and tire replacement. They can be very expensive for you. However, you don’t have to buy an extended warranty when you purchase a vehicle or at any time- they are completely optional.

When deciding whether to purchase an extended warranty, you should review the contract carefully and consider the following:

  • The cost of the extended warranty-you can negotiate the price
  • What types of problems or repairs are  covered
  • What problems are NOT covered
  • How long the extended warranty lasts
  • Whether or not the extended warranty coverage overlaps with the manufacturer’s warranty
  • How you plan to use your vehicle 

You should also check whether the coverage of the service contract overlaps with the problems and time periods the manufacturer’s warranty covers to avoid paying for unneeded coverage. You may find that any additional coverage is not worth the additional cost.

Read more information on extended warranties and service contracts, from the Federal Trade Commission .