A document with the word caa on it.

Nov 7, 2023

5 min. read

DO YOU NEED an extended warranty on your new vehicle?

The short answer is no. Sometimes, though, it feels like you do—especially if the salesperson is pushy.

Here’s the usual scenario. Just when you think the deal for that new car is done, you’ll be ushered into the dealership’s business office, or something like that, where another salesperson will try to sell—among other things—an extended warranty.

“Just know it’s coming, so don’t be alarmed when it does,” advises Ryan Peterson, manager of automotive services for CAA Club Group. He’s well acquainted with the inner workings of car dealerships, having spent more than 20 years as an employee at various dealers in both service and management roles before joining CAA.

Buyers should anticipate high-pressure sales tactics from reps in the business office. “Some of them will almost hold you hostage,” Peterson warns. Dealer margins are typically thin, and offering extra products like warranties is one way to boost profits. Meanwhile, drivers are keeping their vehicles longer, and with an older vehicle comes the fear of expensive repairs. This makes buyers vulnerable to suggestion.

Keep in mind that every new vehicle has a factory warranty included in the price. Extended warranties can provide longer-term coverage and can be optionally offered from the manufacturer or from third parties. As The New York Times reported in June, some of those third-party warranties can be okay, while others are bad and some are total scams. The cost of making repairs as they are needed very rarely exceeds the price of the extended warranty.

So, what’s a car buyer to do? Consumer Reports doesn’t recommend third-party warranties at all. Peterson’s advice: “If you’re a person who’s fearful or worried about a big expensive repair, then maybe the mental calmness an extended warranty would bring is worth the money. Or, if you can’t afford that sudden unexpected repair, then buy the factory extended warranty.” For everyone else, extended warranties are usually not worth the cost.

Can the dealer change the price after we’ve agreed on it?

In certain rare circumstances, yes, the dealer can change the price of a vehicle even after a contract is signed. (Be sure to read the fine print.) If, for example, a manufacturer stops building a certain trim level, a dealer may have to substitute a higher-end trim at a higher price. In that case, the buyer could back out and get the deposit back. But if there is no good reason for the sudden price hike, buyers should contact the manufacturer and the provincial regulator to report the dealer’s improper behaviour.

Questions about vehicles?

Ask us anything. Email autoadvice@cassco.ca or call 1-866-464-6448 with questions for our experts.

Share this article: