They come in your mailbox, over the phone, and through your television. It seems no matter where you go, third-party warranty companies are always soliciting. They yell things like: Final Notice, Urgent Request, and Hurry Now, to try and spook you into buying quickly. The question is, should you?

The simple answer

To put it simply: no, you shouldn’t. These third-party warranty companies are widely known for their lack of efficacy. They take your money and typically won’t have your back when you need them most. CarMax offers an extended warranty program for their used cars called Maxcare Auto Warranty, and even their service has terrible reviews. Here’s one example:

“We have not been impressed. We paid $2300 for an extended warranty on a Mercedes. We have come $1800 out of pocket on one occurrence and $300 on another. Maxcare provided only $300 in coverage.” – Bryon of Newnan, GA

Bryon and his family in total have paid $4400 for the Maxcare Auto Warranty, and have only received $300 in coverage – leaving them out $4100.

War and tea

That’s the problem with most third-party warranty companies. They’re turning a profit by charging you more than they cover. It’s that simple. You pay more, they pay less, you suffer the financial burden, and they stay afloat long enough to make a sizable chunk of change. That’s why they’ll typically make you pay everything up front – they want to get your money before you realize the kind of deal you got.

Our advice?

If you want an extended warranty, buy it from the manufacturers. That way, you’ll be dealing with the company you trusted enough to buy a car from: a company that has a lot more to lose than these small, one-off scam companies.

If you insist on using a third-party company, we hope you’ll check out Consumer Affair’s top 15 rated Auto Warranty Companies. These are the companies with the best customer reviews, so we imagine they’re pretty safe bets. Just steer clear of any company trying to aggressively pressure you into buying a warranty – take your time with any big purchase, do your research, and always consider multiple options.

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