If you own an older car or a secondhand vehicle, you may want to consider an extended car warranty or “aftermarket warranty” to help protect you from unexpected, costly repairs.

Extended warranties can help to cover the cost and inconvenience of mechanical and electrical failures that occur once a manufacturer’s warranty expires. But is an extended car warranty really worth the upfront cost when your car seems to be doing just fine for now? 

But is an extended car warranty really worth the upfront cost when your car seems to be doing just fine for now? To answer that question, you’ll first need to consider: 

  • Your vehicle’s age – Typically, cars will be covered by a manufacturer’s warranty for the first five years of their lives. After that, expenses for repairs come directly out of the driver’s pocket. 
  • Your vehicle’s mileage – The more mileage a car has, the more likely they are to have breakdowns.
  • Your budget – Are you willing to pay out of pocket for repairs or do you need financial protection?
  • Your extended warranty options – depending on where your car is licensed, you’ll have different options when it comes to choosing an extended warranty provider. Compare third-party extended warranty providers in Canada.


Why would an extended car warranty be worth the money?

One of the most common questions asked by vehicle owners when they’re deciding on an extended car warranty is: “What’s the point of investing in coverage right now? Couldn’t I just put money aside every month to cover repairs?” 

Truth be told, yes—you absolutely could put money into a rainy-day repair fund for your used car. But do you have the resolve to keep these funds solely for car repairs if another expense were to arise? And will the money that you’ve saved be enough to cover all of the costs associated with your car breaking down?

To help you figure this out, let’s take a quick look at the math. Let’s say your car’s transmission fails suddenly and the cost of the repair is $4,000.

Let's have a look at the math.

Scenario A: You have an extended car warranty

Let's say you signed up for a GuardTree used car warranty subscription 24 months ago. Your plan is $59.95 per month with a deductible of $250 and a repair limit of $5,000. 

Cost of warranty subscription  $1,439 ($54.95 x 24 months) 
Cost of deductible $250
Your total out-of-pocket costs: $1,689

Scenario B: You put money into a rainy-day repair fund

Let’s say you put the same amount into a rainy-day fund. After saving the same amount as the extended warranty cost ($59.95/month for 24 months), you’d have $1,439 in your own savings account.

This would give you enough money to cover a portion of the repair bill.

Savings in your rainy-day fund  $1,439 
Remaining cost of repair (after your $1,439)


Your total out-of-pocket costs: $4,000

Based on these scenarios, you would have saved approximately $2,300 by opting for an extended car warranty instead of the rainy-day fund.

However, nobody can predict the future. And an extended car warranty won’t necessarily save you money in every scenario. For example, if you experienced no breakdowns during these 24 months, you’d still be left with your rainy-day repair fund if you opted not to purchase a warranty.

An extended car warranty does come in handy for those who would like to be prepared and prevent any unexpected bills from setting them back financially.

Scenario C: Long-term savings

Now, let’s adjust the timeline to see how the extended warranty pans out long-term:

  • If your transmission failed after 63 months, you would spend the same amount regardless of the option you selected. 
  • If it failed after 67 months, you’d save $59.95 per month in Scenario B providing you experienced no other eligible breakdowns.

However, with used cars, their tendency to have mechanical breakdowns goes up exponentially with age. For example, cars that are 10 years old or older tend to experience twice as many breakdowns as newer cars. So, with that in mind, if you are driving an older vehicle and experienced more than one eligible mechanical breakdown over 67 months, the cost of your extended car warranty will likely be less expensive than paying for those repairs out of pocket. 

Reduce the risk of buying a used vehicle

Used cars are older and have higher mileage than their brand-new counterparts, so they tend to require more repairs.

Secondhand car repair costs typically come out of the blue and can range from hundreds to thousands of dollars. For example, a failed transmission can cost anywhere from $4,000 to $6,000 to repair.

While an extended car warranty can't prevent breakdowns, it does reduce the risk of being caught off guard by a large surprise bill you can’t afford. It can also help get you back on the road quickly if you rely on your vehicle to commute to work or take your kids to school.  

Infographic displaying how the frequency of vehicle repairs increases with the age of the vehicle and gets more expensive as the vehicle gets older.

 How much do other car parts cost to repair on average?


Infographic describing the average cost of vehicle repairs broken down by each component. Cost to repair electric/hybrid power converter/inverter. Cost to repair fuel pump replacement. Cost to replace four-wheel drive transfer case repair. Cost to repair airbag assembly replacement. Cost to repair alternator replacement. Cost to repair air conditioning in car.


What are the added benefits of buying an extended car warranty?

Extended car warranties can also provide coverage for the extra costs that you’ll incur while your car is in for repairs. 

Expenses for car rentals, roadside assistance, and travel will typically be  reimbursed if you have a good extended car warranty

Extended car warranties can offer peace of mind.

Typically, an extended car warranty is the right solution if you’re someone who worries about things like:

  • Paying for unexpected, expensive car repairs
  • Living without your vehicle while it’s in for repairs
  • Ensuring your vehicle lasts a long time beyond the factory warranty

You’ll get peace of mind in knowing you’re prepared for the unexpected. For many car owners, this kind of assurance is priceless.

How to choose the right extended car warranty.   

If an extended car warranty sounds like the right option for you, make sure you understand the fine print before signing a contract. Here are some of the most important considerations to make when choosing an extended car warranty provider.   

Get more for your money. Get GuardTree.

GuardTree is a comprehensive, monthly extended warranty subscription that you can cancel at any time. GuardTree provides protection from most major electrical and mechanical repairs and offers additional benefits like roadside assistance and car rental and trip interruption costs.

See what’s covered and use our price calculator to decide if an extended car warranty is right for you.


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Disclaimer: This post is to be used for informational purposes only and does not constitute mechanical or other professional advice as it relates to your vehicle. Each person must consult a qualified professional with respect to matters referenced in this post. GuardTree Inc. assumes no liability whatsoever for actions taken (or not taken) in reliance upon the information contained herein.