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How Much Service Contract Policy for Cars Cost

How Much Should an Extended Auto Warranty Cost

Extended auto warranties are great in that they cover major repair expenses and can provide added benefits such as roadside assistance. Best of all, aside from your premium, you may have to pay just a small deductible to have the service done. With these factors in mind, these are great policies to buy. Here is a look at how different factors affect the price of the premium, how much on average the protection costs and how you can save money.


To begin, prices may vary wildly depending on the policy provider you select. While each provider has their own eligibility requirements they use to determine the price, here are some factors that may affect the cost of your extended warranty:

Some companies may have requirements as to the vehicle’s age and miles driven that you have to stay in to maintain coverage. Policy providers may charge you more if you have an older vehicle or one with higher mileage. It is difficult to find a coverage provider that will sell policies for vehicles with 150,000 miles and higher.

Simply, it costs more to protect a luxury vehicle such as a Lexus than it would a Ford. Usually, the most expensive vehicles to buy warranty for are BMW, Audi, Jaguar and Mercedes-Benz.; while service contracts for Honda, Toyota, Ford and Chevrolet vehicles are more affordable. For example, the highest level of protection for 2011 Toyota Corolla with 45,000 miles will cost about $1900, but the price for the same coverage for 2010 Mercedes-Benz with 80,000 miles can be as high as $2950.

If you want the minimum coverage, which covers Powertrain you will pay less of a premium than if you want coverage that is more comprehensive. An important thing to keep in mind is that while many policies offer up to three coverage levels, it’s imperative that you know what each plan covers. For example, some policies may only offer coverage on your electrical systems on the highest-level warranty. Considering that repairs to electrical systems can be costly, it may be worth it to buy the highest-level policy. All extended warranty plans should cover drive axle assembly, engine, seals & gaskets, transmission.

There are two types of coverage: exclusionary and inclusionary. Inclusionary protection plan covers only parts and units listed in the contract, white exclusionary policy will cover everything but those parts that are listed as exclusions in your contract. Exclusionary policy will give you the most comprehensive level of protection and is usually more expensive.

Your deductible is the amount of money you must pay before the policy provider pays the rest. In policies where you pay a lower deductible, you will pay a higher premium whereas a higher deductible means a lower premium. Deductible amount usually ranges from $100 to $500, similar to car insurance. There are also plans that have no deductible, but the price for those will of course be higher.

With these factors in mind, it can help you understand how policy providers come up with a premium for your auto extended warranty. While it’s difficult to pinpoint precisely how much you will pay, a good estimate is that an extended auto warranty costs anywhere from $1050 to $3,970. While this may seem like much money consider the following:

  • These policies can provide you coverage for up to five years. This means that if you pay off your policy early you will continue to receive these benefits with no monthly payment.
  • Repairs can easily run in the thousands so the policy could pay for itself with one major breakdown.
  • Conversely, having to come up with the money to pay for a major breakdown can cause you financial setbacks.

As you can see, these policies can give you peace of mind and provide great financial protection in the event a breakdown occurs. Here are some tips to help you save money on these policies:

  • Knowing where to buy your warranty: You can buy your extended policy from an auto dealership or directly from the provider. Dealerships tend to be the more expensive, as they often drive up the warranty costs, which can be hundreds of dollars more. Therefore, it is best to try a policy provider first.
  • Knowing when to buy: When being offered an extended protection plan by an F&I manager at a dealership one is given an option to add the cost of the extended policy to the car’s financing. A lot of drivers choose this option because it lets them pay for the coverage monthly instead of paying a few thousand dollars at once when purchasing from a dealer later. However, what many drivers don’t know is that the coverage can still be financed even after the actual vehicle is already purchased and financed. Almost all extended vehicle protection providers offer financing with no interest fees. If one didn’t purchase a protection plan from the dealership he or she can still purchase it directly from the coverage provider either by phone or online. An easy way to find coverage providers is just search for “extended car warranty companies” online.
  • Comparison shop: When selecting an extended policy provider, use an independent resource that reviews and issues ratings for policy providers. This will help you find the most reputable ones. Once you narrow your selection down to several, contact each provider to learn more about their plans and their prices. By gathering this information, it can help you determine which provider has the best price for you. Additionally, it can help you negotiate a better price for your policy.
  • Learn about discounts: While providers may not be quick to divulge discounts, they are available. Many will offer a first-time discount. They may also offer discounts if you serve in the military or are a senior. It’s important to ask them if they have any available, as this can save you money on your policy.
  • Negotiate for a lower price: Did you negotiate the price on a vehicle? Similar to vehicles and any products that dealerships sell, extended coverage prices are negotiable. Feel free to ask for at least $100 or $200 off the suggested by the dealer price. Comparison shopping will help you understand what the going rate is.

IMPORTANT: Before you go with the cheapest policy offered to you by the dealership read the contract. Most coverage providers offer multiple levels of coverage and it’s often best paying extra $300-$500 to get full protection for your vehicle rather than having a limited coverage plan for a lower cost. The most comprehensive coverage plans are similar to bumper-to-bumper warranties. Also, remember that when an extended auto warranty plan is being offered to you the full price is not always mentioned by the dealer, it is usually discussed in terms of monthly payments. When you compare prices from different providers make sure to ask what the full price of the policy is, never compare policy prices based on the monthly payment. Warranty providers offer different financing options (some will be 24 months and others 36 months), don’t let this confuse you!

Read the contract before choosing the protection for your automobile

In closing, extended auto warranties are great policies to buy because they offer outstanding protection. By following these tips, it can help you find a reputable provider and any discounts that may be available to you. In turn, this can help you receive a good deal on your new policy.

Click on the make below to learn more about extended coverage plans, also known as vehicle service contracts, that manufacturers offer.

Vehicle Service Contracts are often referred to as extended auto warranties, but they are not warranties. Vehicle Service Contract protects your car after original factory warranty expires. All covered components are listed in the contract and exclude regular wear and tear items.

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