Does your new or used car need an extended warranty? Here are the pros and cons.

A few years ago, Jon Linkov got a phone call from his aunt as she was buying a new 2021 Volvo at a car dealership in Florida. She wanted his advice on whether she should buy an extended warranty for the vehicle.

Linkov is a good guy to ask. He's the deputy auto editor at Consumer Reports. His advice was to wait and shop around.

"You don’t have to buy an extended warranty on a new car at the time of purchasing the car," Linkov said. "You can buy it from another dealer of the same brand a few years after buying the car."

Linkov did some research and he found a Volvo dealer in Michigan that offered a manufacturer-backed extended warranty for a cheaper price than his aunt was being offered in the Sunshine state.

"I gave my brother-in-law in New Hampshire the same advice," Linkov said. "I said, 'Shop around.' He did and he found another one for less and he bought it.”

So lesson No. 1: Car dealers make a lot of money selling extended warranties on new and used vehicles, but resist the hard pitch at the dealership and take your time to shop around. Secondly, if you buy an extended warranty, pay for it in full, do not finance it as part of your car payment, experts said. Also, look to get a manufacturer-backed extended warranty rather than one from a third party, even if it the third-party plan is cheaper.

Those lessons aside, the overarching question is: Can you actually benefit from purchasing an extended warranty or is it just not worth it? The answer is: It depends. It depends on the year, make and model of the vehicle being bought and its known reliability. It depends on the person buying it and their need for peace of mind.

In 2013, Consumer Reports surveyed its members (its most recent survey on this topic) and it found the average cost of an extended warranty then was $1,214, but the respondents reported just $837 in savings on repairs. That could be explained by having bought reliable cars that did not need repairs, Linkov said. Still, other studies show many people who buy extended warranties do not recoup in repairs what they paid for the warranty.

For example, as the Detroit Free Press reported, the Federal Trade Commission noted in a complaint filed July 31 that many CarShield customers complained that the plan, for which they paid thousands, failed to cover many of the high-priced car repairs that it touted it would.

"Oftentimes (buying an extended warranty) just comes down to peace of mind," said Ronald Montoya, senior consumer advice editor at car shopping website Edmunds.com. "If you’re not going to feel comfortable with your vehicle, then I recommend you get an extended warranty."

The cost and a warning

Vehicle repairs are rarely cheap these days, and they are getting more expensive. Between January 2019 and January of this year, the cost to maintain and repair a vehicle rose 36%, according to Consumer Affairs, citing the U.S. Bureau of Labor and Statistics. On top of that, many consumers cannot afford to pay out of pocket for pricey car repairs. MarketWatch reported this month that it surveyed 1,000 people ages 18-85 who currently lease or own a vehicle and more than 36% said that the most they could afford to pay for an unexpected car repair was $0 to $500.

Still, the cost of an extended warranty is not cheap either. According to www.bankrate.com, an extended warranty can range from $1,300 to $4,600 depending on:

• The provider.

• What is covered in the existing warranty.

• The make, model and year of the vehicle covered.

• The car's existing mileage.

• Where you live and how much you drive.

• The cost of replacing parts and labor.

• Any eligible discounts.

• The leverage of coverage and deductible chosen. The higher the deductible, the lower the costs.

Montoya and Linkov warn beware of buying extended warranties from third parties. Third-party warranties might be less expensive, but their coverage on repairs could be spotty or limited to a certain mechanic and might require you to pay out of pocket first and wait for a long time to get reimbursed.

On the other hand, a manufacturer-backed warranty might also restrict where you can take the vehicle for repairs and if it's only to a dealership that's 50 miles away, that may not be helpful, said David Undercoffler, head of consumer insights at car shopping website CarGurus.

Buying a new car? Read our guide on the best new car warranties.

The coverage

The typical coverage in an extended warranty usually includes expensive powertrain-related repairs involving major vehicle systems, suspension, engine components, transmission, heating/ventilation and some electrical, Linkov said. The exact coverage will depend on the warranty. It might include parts, labor or both. Some extended warranties offer optional coverage for roadside assistance, tire repairs and other expenses.

This is where consumer research comes in, and reading the fine print is critical. Not all repairs are covered and there may be rules and restrictions for reimbursement. For example, Linkov said in Consumer Reports' testing of a Cadillac Lyriq it bought, the driver chipped the touchscreen. That's a $2,000 repair that the manufacturer's warranty won't cover because it was Consumer Reports' fault. Extended warranties work the same way, he said: You break it, you pay for it.

Also, there's a time limit for extended warranties. Some might extend the original warranty by two years or 24,000 miles, for example, so pay attention to that information to make sure it meets your needs.

Finally, consider the likely fact that you may never use it. Bankrate cited Consumer Affairs data that showed 37% of vehicle owners have extended warranty coverage, but only 1 in 10 ever use it.

The bet against your car

Edmunds.com's Montoya said purchasing an extended warranty means, “You’re sort of betting against the car" and if you take care of the car, you shouldn’t have too many issues with it, he said. Of course that's not a sure bet.

"If you sell your car after five or six years, don’t even worry about getting an extended warranty," Montoya said. "We’re talking about people keeping it well past after the manufacturer warranty's expiration. Most problems probably don’t present themselves until after five years."

If you're buying an older used car, such as CarGurus' Undercoffler did years ago, you may want to buy an extended warranty if it is not a certified pre-owned vehicle. But fewer extended warranties are available once a car hits 50,000 to 60,000 miles, Linkov said.

"My first car out of college was a 6-year-old Subaru," Undercoffler said. "I got an extended warranty that was $250. Six months later, the car needed a new head gasket and that was a $1,200 repair with a $50 deductible, so that was a good deal. You have to figure it out and it can be worth it on the right vehicle.”

Undercoffler said if you do want to buy an extended warranty at the point of your car purchase, you can use it as part of the negotiation. If the dealer won't come down on the vehicle's price, you can ask for an extended warranty at a discount.

But while it's tempting to roll the cost into the loan because it will "only add $10 a month" to your car payment, experts warn to only do that if the total price of that warranty is below say $300. Otherwise, pay for it in total, separately, rather than paying interest on it.

“You really want to finance the least amount of money as possible. You want that 60-month loan, not that 84-month loan," Linkov said. "They will always sell you something if you come back in later. It’s better to say, 'Let’s see how reliable the car is.' ”

Best extended car warranty companies: Check out great local picks at USA TODAY Homefront.

Rules: Don't fall in love

Here are Linkov's rules of thumb for considering extended warranties:

• Buy a car that has data showing it is reliable. Toyota Tundra, "we don’t recommend it because it has low reliability," Linkov said. "So that would be a good candidate to get an extended warranty on even though it’s a Toyota. But don’t buy it the minute you’re buying the car. Wait a year."

• Buy a reliable car and save the money you would have spent on an extended warranty to use for future vehicle repairs or maintenance.

• Always do the research ahead of time: “Don’t buy when you’re desperate," Linkov said. "You’re at their mercy and can’t do the research."

• If the data show that a certain vehicle model is troublesome, get an extended warranty and read the fine print in the warranty to know what is covered and what is not.

• Go with a manufacturer-backed extended warranty.

• In used cars: If you’re buying a used Ford from a Ford dealership, have the dealer run the VIN to see the car’s history. But, if you're at a Toyota dealership looking at a used Honda Civic, you want to take that Civic's VIN to a Honda dealer to see the service history before buying it.

• If you're going to buy certain European high-end luxury vehicles, you will likely want an extended warranty.

“Buy the reliable," Linkov said. "Buy the thing with history, don’t fall in love. If you’re buying a car that is the first model year of a car, the new redesign, you may consider an extended warranty. Those tend to be less reliable, the first year of a model, than the final year.”

Are you OK going 'into the unknown'?

For some buyers, all of that might not matter, they just want security knowing the car is covered, Undercoffler said.

“Growing up we always had used cars and they always broke, so reliability is a big thing for me," Undercoffler said. "I’ll pay the $250 for an extended warranty, but it depends on the person. What is peace of mind worth to you? You are taking a gamble that you’re paying money for something you may never use. But it’s mental health right? There’s something to that. There’s a lot to be said for peace of mind.”

Then there's Montoya: "The argument that is given nowadays is there’s so much electronics in the car that any one of these things could go wrong. That is true: There are a lot of electronics. But I don’t find it’s worth it to pay for an extended warranty in case something breaks down. But I’m OK going into the unknown for that. For some people, they’ll have this lingering feeling of not being OK if the car breaks down."

This story has been updated to reflect that Jon Linkov meant to say the Toyota Tundra was a vehicle Consumer Reports would not recommend, not the Toyota Sequoia.

Contact Jamie L. LaReau: jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter. Become a subscriber.

This article originally appeared on Detroit Free Press: Considering an extended warranty on your car? Here are the pros and cons