Buying & Selling Calculator
Extended Warranty Calculator
Dealers push extended warranties hard because they're profitable. Run the expected-value math yourself and see whether the coverage is likely to pay off — or whether you're better off self-insuring.
The Offer
Your repair outlook (over the coverage term)
Total cost of major repairs you'd expect if problems occur.
Deductible applies to each visit.
Expected Net Value
on average you'd pay more than you'd claim
Total Warranty Cost
$2,200
Expected Repairs Covered
$1,500
Break-Even Repair Bill
$4,400
Worst-Case Savings
$800
Verdict
On expected value the warranty costs more than it's likely to return. It may still be worth it for peace of mind if a big repair would strain your budget.
How it works.
Frequently asked questions.
Why do dealers push extended warranties so hard?
Because they carry high profit margins — a large share of the price is markup and commission. That doesn't make them worthless, but on average buyers pay more in premiums than they get back in claims, which is exactly how the seller profits.
When is an extended warranty actually a good idea?
When you're buying a model with a known reputation for expensive repairs, plan to keep the car well past the factory warranty, and a surprise $3,000 bill would be a genuine hardship. In those cases the peace of mind can be worth paying a premium over pure expected value.
What's the alternative to buying one?
Self-insure: set aside the warranty price (and what you'd spend on deductibles) in a savings account. If nothing breaks, you keep the money; if it does, you draw from the fund. This works best for reliable cars and disciplined savers.