Auto Extended Warranty - Buying at the Dealership?

I just read this good article on auto extended warranties. It covers all the basics. It's a little too enthusiastic about the warranties in my opinion. There's not enough discussion of the pitfalls. But it does make some good points. For example, it says that it only takes one big repair bill that is covered for the policy to pay for itself. A replaced transmission can cost $2000. A/C repair cost can be over $700. So if your policy pays for one of these repairs, you'll come out ahead.

The article primarily looks at buying an extended warranty contract when you purchase your car. I don't know if this is the best approach. I think there's too much of a chance that you won't get the best deal. You can always easily purchase an extended warranty through out the period of your factory warranty.

If you do decide to purchase an extended warranty when you purchase the car, the article does provide several good tips. First, beware of dealers trying to sell you aftermarket extended warranties. Some dealers may only try to sell an aftermarket brand but they can also sell you the manufacturer-backed warranty. As I've described in my last post, there are many advantages of getting an extended warranty from the manufacturer.

Finally, the article listed some example of auto extended warranty costs. The example used a 2000 Honda Odyssey. The Honda Odyssey Honda Care Vehicle Service Contract (manufacturer brand) had coverages that ranged in price of $985 to $1435. An afermarket brand (CNA Warranty) had coverages that ranged from $989 to $1072.

I also did some research to help with comparisons. First I noticed this article is about 5 years old and originally from Edmunds. Not sure why ABC12 has it posted as a news story. So instead of a 2000 Honda Odyssey, I used a 2005 model, and plugged in this information at Penfed's quote system. I received a quote of $1,285 (plus $104 in taxes). This is a 7-years/100K-miles policy with $0 deductible. Refer to my previous post for more info on this Penfed extended warranty.