Can I finance my extended warranty by dumping it into my car loan?

Many warranty companies do offer financing of their plans, but the financing terms are typically only 1 year long. Generally, the only way to include an auto warranty inside your car loan is to either, finance them together at the time you're going to purchase your vehicle, or, to include the warranty at a time when you are refinancing the car loan. Most banks or financial institutions will not allow you to include an extended warranty unless you are purchasing the warranty through them or one of their affiliates. This obviously limits your choice in selecting a car warranty. The major advantage to financing your warranty within your car loan is that you can spread out the payments, thereby paying a much smaller amount per month for the warranty. Also, if your vehicle is totaled or stolen and your insurance company is going to reimburse your bank for the vehicle loan, then you would not be responsible for paying off the whole warranty. However, the major disadvantage to financing the extended car warranty with the auto loan is that you will be paying finance charges on the service contract. This is an added expense.

If you are going to finance your warranty alongside your loan be careful that there is not a gap between what you owe on your car loan and what your car is actually worth. If you believe there will be a large gap, you may want to explore GAP insurance. For more information, please click below.