In our survey, only about half of people who bought an extended warranty for a used car filed a claim
Most new- and used-car dealers offer customers a free, limited warranty that covers a car for the first 60 to 90 days of ownership. In fact, some states require a minimum warranty period on any used car sold by a dealership.
Yet relatively few problems arise during that time period. That’s why dealers and third-party companies offer customers an extended warranty.
Think of it as repair insurance once the manufacturer’s warranty has expired. With such coverage, used-car owners reported paying a median of $1,000 for future service work they may never need if the car is reliable. But if hit by an expensive doozy of a problem—such as a busted camshaft or a blown head gasket—car owners may be glad they have an extended warranty. That is if the warranty company pays the claim.
Consumer Reports has discouraged consumers from purchasing an extended warranty for a number of products, including cars. Why? It’s rare that the premium you pay will equal the amount of a paid repair claim down the line.
On the flip side, it’s just as rare to find a used car that has a confirmed history and all maintenance and repair receipts since it was new. And Consumer Reports has found that vehicle-history firms like Carfax and AutoCheck don’t catch all of the accidents that cars may have been involved in, especially if no insurance paperwork for the accident was filed or if a salvage history was “wiped.”