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Is a Car Worth More with Warranty?

by | Jun 24, 2022

How a Warranty Affects a Cars Value

Adding a warranty to your car purchase can be a great way to give yourself extra peace of mind.

But how does it affect the overall value of your car?

In this blog post, we’ll explore how a warranty can impact the value of a car – both when you’re buying and when you’re selling.

When you’re buying a car, the addition of a warranty can increase the total purchase price.

But in some cases, it can also make the car more affordable in the long run.

For example, if you’re buying a used car out of warranty, adding a new extended warranty can help offset the cost of future repairs.

And if you’re financing your car, the warranty can be used as collateral for the loan, which can lower your interest rate.

So in some cases, a warranty can save you money.

When you’re selling a car, the presence of a warranty can also impact the value.

If you have an extended warranty that’s transferable to the new owner, it can be a valuable selling point.

And if you’re selling a used car that’s still under warranty, the buyer may be willing to pay more for the peace of mind that comes with it.

So as you can see, a warranty can have a significant impact on the value of a car – both when you’re buying and when you’re selling.

The Cost of A Warranty

There are only two costs associated with a warranty: the premium and the deductible.

The premium is the amount you pay for the coverage and is typically based on the make and model of your car and your driving habits.

The deductible is the amount you have to pay out-of-pocket when you make a claim, and it’s usually a set dollar amount.

For example, if your deductible is $100 and you have a $1,000 repair, you would only pay $100, and the warranty would cover the rest.

According to a recent study, the average premium for an extended warranty is $1,200, and the average deductible is $100.

The Value of A Car With A Warranty

When you’re buying a car, the addition of a warranty can increase the total purchase price.

But in some cases, it can also make the car more affordable in the long run.

For example, if you’re buying a used car out of warranty, adding a new extended warranty can help offset the cost of future repairs.

And if you’re financing your car, the warranty can be used as collateral for the loan, which can lower your interest rate.

So in some cases, a warranty can save you money.

In other cases, a warranty can make you money.

If you’re selling your car in a private sale, you can offer the same peace of mind that you experienced to your prospective buyers.

The main drawback to purchasing a car from a private seller is the lack of the kind of safety net that dealerships can provide.

With a warranty in place, you can offer some protection to the buyer, making your car more attractive and potentially increasing your asking price.

The Value of A Car Without A Warranty

The presence of a warranty can have a significant impact on the value.

Without an extended warranty that’s transferable to the new owner,  your car is likely to be worth less than a comparable car with a warranty.

The same is true if you’re buying a used car without a warranty.

You can expect to pay less for a car without a warranty, but you’ll also be taking on the total cost of repairs if something goes wrong.

So while a warranty can have an impact on the value of a car, it’s ultimately up to you to decide if the peace of mind is worth the cost.

And if you’re selling a used car that’s still under warranty, the buyer may be willing to pay more for the peace of mind that comes with it.

So as you can see, a warranty can have a significant impact on the value of a car – both when you’re buying and when you’re selling.

Do Warranties Save Money?

Like most people, you may think that warranties are a waste of money.

After all, why pay for something that you may never use?

But the truth is, warranties can save you a lot of money in the long run.

For example, let’s say you buy a used car out of warranty.

If something goes wrong with the car, you’ll have to pay for all the repairs yourself.

But if you have an extended warranty, the warranty company will cover the cost of the repairs.

Over time, the money you save on repairs can add up to more than the cost of the premium.

So in a way, you’re actually paying for peace of mind.

And that’s worth a lot.

What About New Cars?

If you’re buying a new car, it’s important to remember that most new cars come with a manufacturer’s warranty.

This warranty typically covers the cost of repairs for a certain period of time – usually 3 years or 36,000 miles, whichever comes first.

The cost of a manufactures warranty is included in the MSRP of the vehicle and should not appear as an additional fee.

So if you’re buying a new car, you may not need an extended warranty.

But if you’re planning on keeping the car for a long time or worry about expensive repairs, an extended warranty can be a good idea.

Additionally, you can pair a manufacturer’s warranty with another kind of protection in the form of a maintenance plan.

A maintenance plan is a  service contract that covers the cost of routine maintenance, like oil changes and tire rotations.

So if you’re looking for complete protection for your new car, a manufacturer’s warranty and a maintenance plan are great options.

The Bottom Line

As you can see, there’s a lot to consider when it comes to car warranties.

There’s no right or wrong answer, and there’s no one-size-fits-all solution.

The best course of action is to educate yourself about your options and decide what’s right for you.

Do you have an extended warranty on your car?

Have you sold or purchased a car with one?

What was your experience?

Let us know in the comments below.

About Protect My Car

Protect My Car is an extended auto warranty company. Our goal here at Protect My Car is to eliminate your worry of being financially responsible for an expensive mechanical breakdown. With our extended auto warranty, you don’t have to worry about being fully burdened with the cost of a covered repair.

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