Buying an extended car warranty, is it worth it?

SEATTLE -- New year, new you, possibly a new car? If your plans for the new year include car shopping, there's no doubt you'll be inundated with add-ons right before you sign the dotted line.

Paint sealant? Fabric protection? And of course, the extended warranty? With the average warranty costing you an additional $1,200 on average, Q13 asked the experts at PEMCO Insurance, 'is it worth it?'

"Most people who buy warranties, don't even use them," Craig Kehrberg, a product manage for PEMCO, said. "People who purchase warranties actually pay more for the warranty than they do for the repairs."

Kehrberg is referring to the results of a 2013 study from Consumer Reports. The study also found the folks who bought car brands known to be reliable, regretted purchasing warranties the most.

"Cars have become much more reliable these days," Kehrberg said. "The most reliable cars, such as Honda's, Toyota's and Subaru's... People who purchase those cars probably don't need to have extended warranties. They're more reliable and stay on the road much longer and don't have as many repairs."

But before you write off an extended warranty, Kehrberg says there are certain scenarios when opting for the extended warranty does pay off:

  • If you drive your car really hard and put a lot of miles on it
  • If you buy a car that is known to be less reliable
  • If you buy a first model year, those are notorious for problems and repairs
  • If you buy a used car that's about to go off the manufacturer's warranty

If you do decide to invest in an extended warranty, Kehrberg recommends looking into a bumper-to-bumper plan, instead of a plan that just covers a single area, like the power-train.

Also, don't let a salesman pressure you to decide on the spot. You can shop around for warranties, and you can always buy one later down the road.

Final verdict, Kehrberg says if you just prefer peace of mind then buy the warranty. Otherwise, take the money you would've spend on the warranty and put it in a savings account for car repairs. He says, as long as you start with a reliable car, odds are, you'll end up money ahead.