An extended warranty is one of the products most often offered in the finance office. On a lease it is usually unnecessary, because the car is covered by the manufacturer's warranty for most or all of the time you have it. But there are exceptions.

This is part of insurance for a leased car.

Why it is usually unnecessary

New cars come with a manufacturer's warranty, usually in two parts:

  • Basic, or bumper to bumper, coverage. Covers most components. Commonly 3 to 5 years, with a mileage cap.
  • Powertrain coverage. Engine, transmission and drive system. Often longer.

Most leases run 24 to 36 months. If the basic warranty is 3 years or 36,000 miles and your lease is 36 months at 12,000 miles a year, the warranty covers the entire lease. An extended warranty would be paying for protection you already have.

When it might be worth it

The lease outlasts the warranty. A 48 month lease on a car with a 3 year basic warranty leaves a year uncovered.

You drive high mileage. On a 15,000 mile a year lease, a 36,000 mile warranty runs out in under two and a half years. See car lease mileage limits.

You plan to buy the car out. If you intend to keep it after the lease, coverage that extends beyond the factory warranty may be useful. See is a lease buyout worth it. You can often buy extended coverage later, closer to the buyout, rather than at signing.

A leased used car. Check exactly what warranty comes with it. See can you lease a used car.

Warranty is not maintenance

People sometimes confuse the two. A warranty covers defects and failures. It does not cover oil changes, tyres, brakes or other wear items.

Prepaid maintenance plans are a different product. Some brands include scheduled maintenance for the first few years. If yours does not, a prepaid plan can be worth pricing, but compare it against what the services would cost you individually.

How it is paid for matters

If you do buy an extended warranty at signing, it is often added to the capitalized cost. That means you pay a finance charge on it through the money factor for the whole lease. If you want it, ask whether you can pay for it separately.

What to check before buying

  • When does the factory warranty end, in years and miles?
  • Will your lease end before that?
  • Who backs the extended warranty? The manufacturer or a third party?
  • What does it exclude? Read the exclusions, not the brochure.
  • Is it cancellable, with a prorated refund, if you end the lease early?

The short version

Usually, no. The manufacturer's warranty covers most leases from start to finish. Consider extended coverage only if the lease outlasts the warranty, you drive high mileage, or you plan to buy the car out, and do not let it be rolled into the lease.

If you want to know whether the factory warranty covers a lease you are considering, ask us.