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By Kimberly S. Johnson -- AP Auto Writer

DETROIT (AP) — Want to run your next car a little longer, without those unplanned repair bills? You're not alone. More Americans are trying to milk more miles from their jalopies, especially in an economy that's leaking jobs faster than a punctured oil pan. One strategy to consider is an extended warranty. Here's what your need to know.


An extended warranty, literally extends the life of your current warranty, covering major repairs. The coverage kicks in after the manufacturer's original warranty expires. Generally, you have to purchase the extension before the original warranty expires.

Most people tend to focus on the three- to five-year bumper-to-bumper warranty that comes with a new car, because people typically trade in their cars by that point. But more and more Americans are keeping their cars longer — up to six years in some cases. According to a March study by R.L. Polk & Co., people now keep their cars an average of around 5 years, compared to 4 years in 2003.

So, if you plan on running your car into the ground and want to avoid shelling out hundreds on repairs after the warranty expires, consider the extra coverage.

It's also wise to look at reliability ratings and the cost of ownership over the life your vehicle to help gauge whether it is likely to need extensive repairs as it gets older.


Before you make a purchase, be aware that dealers will try to sell buyers an extended warranty because it's a high-profit item, says Philip Reed, senior consumer advice editor for There's a wholesale price for the warranty, based on the average number and price of repairs a vehicle might need, but he says dealership can markup the price.

"Often you need to be careful. In bad economic times, it's one of the places where dealers can recoup profits they've given up in the car buying transaction," he said. "It's highly negotiable. Take a close look at it."


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Generally, you have to purchase the warranty extension before the original warranty expires. Some dealers consider buyers ineligible for an extended manufacturer's warranty if they wait too long — say more than year — after the original car purchase. If you buy the warranty when you get your new car, the price can be included in your monthly car payments.

Reed also advises people not to feel pressured to buy the extension at the time they buy the car.

"If you want to get it, think it through clearly before you go to the dealership and negotiate for it," he said. "Don't decide at the office. If you don't buy it the night you buy your car, you can always buy it later."


Be sure you know exactly what parts the warranty covers. Not all parts or situations — such as overheating— are covered. Some warranties cover only parts that break versus parts that malfunction due to wear and tear. Also remember that a car's transmission is covered by a separate warranty. An extended warranty generally adds coverage time to components such as a fuel pump or ignition switch.

Think of an extended warranty plan like you would an insurance policy. There are deductibles and the prices vary depending on what's covered.


There are primarily two different kinds of extended warranties — the manufacturer-backed and third-party warranty. With the manufacturer's warranty, there's little hassle getting your vehicle repaired at the appropriate certified dealership, Reed said. While both kinds can carry a deductible, it's important to know how and where a third-party warranty will be honored. Find out if you have to pay the repair fees upfront and wait to be reimbursed, or which dealerships or repair shops will honor the terms.

"The third-party ones will save you money, but are less convenient," Reed said. "Also, some third parties have gone out of business and left people in the lurch."


Prices vary depending on the level of coverage. Some warranties can start at $600 and go as high as $3,000. Ford Motor Co., for example, offers four different extended plans, ranging in coverage from just the transmission to a premium package covering more than 500 components. The cost to extend a three-year, 36,000 mile bumper-to-bumper warranty on a new Ford Fusion for an additional four years or 72,000 miles would start at $1,715, according to a Detroit dealership. That warranty includes a $100 deductible and covers part of the cost for a rental car. Bringing the deductible down to zero would add another $455 to cost of the plan.

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