"An extended warranty may give you peace of mind, but Consumer Reports has found that buyers aren't always going to see a return on that investment," said Consumer Reports Auto Editor Jeff Bartlett. Not surprising, since extended warranties can also make a lot of money for those who sell them.
Vehicle service contracts, often referred to as extended warranties, are a tempting option for consumers who buy a used car or for those who want to extend the bumper-to-bumper coverage on a new car. No matter the exact type, extended warranties are an investment in peace of mind that limits financial risk for a set period of time.
Skip the extended warranty. The dealer will probably try hard to sell you one, telling horror stories about the thousands of dollars it can cost to replace an engine or transmission. But the odds are you’ll never need the coverage, and even if you do, the money you’ll save in repairs won’t come close to what you paid for the added warranty.