You’ve come to an exciting point in your life … it’s time to purchase a car! But even after you’ve test-driven several models and made a budget for your purchase, you still have some critical decisions to make.
One of the most vital choices you can make when buying a used car is what kind of warranty you want. If the words “extended warranty for used cars,” “factory warranty,” and “auto insurance” make you feel dizzy and confused, you’re not alone!
Many car owners have trouble deciding what kind of coverage is best for their vehicle and end up making bad deals at the used car dealership.
Have no fear! We’re here to give you peace of mind, explain the details, and help you make the best decision for the safety and function of your new vehicle. Keep reading to learn everything you need to know about buying an extended car warranty.
Basics of Car Warranties
Even if you’ve already purchased an extended auto warranty before, there’s a fair chance that you didn’t know what that meant when you did. And that’s okay! It can become complicated.
The first thing that you should know is that all car warranties basically promise the same thing: to protect, repair, and replace your car in the case of something defective.
Any car manufacturer’s warranty is a promise from the manufacturer or dealer to replace or repair anything defective about your newly purchased car. This is especially important when it comes to issues with your car directly after it’s purchased or leased.
Limitations of Warranties
Of course, no stipulations to that general concept would be too good to be true. There are limitations such as the warranty not extending to certain repair bills or past a certain amount of time.
Some basic limitations are:
- Inclusions and Exclusions: The parts that a warranty covers are known as inclusions while those it doesn’t are known as exclusions. Different warranties have different scopes for inclusions and exclusions. For example, comprehensive warranties tend to cover everything included in the car, while a powertrain warranty will have more exclusions.
- Issues: Warranties typically don’t cover every kind of problem (just like they don’t always cover every part of the car). A warranty will usually explicitly say what it covers, and a typical warranty will only cover repairs needed due to manufacturing defects.
- Duration: Some warranties last up to a certain date while others last a certain amount of mileage. It’s important to know which kind of limitation is on your warranty and when you’re getting close to hitting it.
All of these limitations are important to keep in mind when you choose between a factory and an extended warranty. There’s no rule that you need to choose a factory warranty first, so make sure you consider the benefits of an extended warranty!
The Difference Between Factory Warranty and Extended Warranty
The basic car warranty is known as often known as a factory warranty, while extended warranty plans offer comprehensive coverage of a higher quality. Some people wait until their original warranty expires before looking into an extended warranty, but you can save money by choosing an extended warranty from the start.
When you’re new to car warranties, they can look surprisingly similar. Here are the main differences to be aware of.
Factory warranties come directly from a manufacturer. Like many tech products, it’s in the manufacturer’s best interest to make sure that their clients are happy with their products. So they offer basic coverage in the case of manufacturing issues.
A automaker can also offer an extended warranty, but this is most often where third-party dealers come into play. It’s worth looking at your extended warranty options from a variety of providers before making a decision.
One of the best things about extended warranties is the number of options that you have! There isn’t necessarily a one-size-fits-all approach to buying a warranty, so instead, feel free to look for one that perfectly matches your needs in a customized way.
While factory warranties only cover manufacturing defects, an extended warranty can cover your car in more circumstances such as accidents. You can even find extended warranties that cover routine repairs!
Repair Shop Restrictions
Factory warranties will usually only allow you to take your car to very specific locations for your repairs. All the mechanics have to be certified by the manufacturer, and sometimes that means they’re more expensive!
A third-party extended warranty is far more likely to allow you to take your car to whichever repair facility you trust and is most convenient for you. This lack of limitations is another great reason to get an extended warranty.
Of course, the prices between factory warranties and extended warranties are different but don’t be fooled into thinking that factory warranties are free. They’re actually just included in the cost of your vehicle.
By choosing to purchase an extended warranty from a third party, you can cut down on the cost of the vehicle that you pay to the manufacturer. Then, you’ll have more money to work with when you go to choose your extended warranty.
Basics of Extended Warranty for Used Cars
However, not all extended warranties are created equally, and your manufacturer or third-party dealer may offer multiple kinds of extended warranties at a variety of price points.
Make sure to sit down and take the time to read through your extended warranty options to make sure that you are getting the best coverage plan for the best price. We’ll go over some of the things that you should look for, but because warranties can vary so much, it’s on you to make sure you get a great deal.
What Does an Extended Car Warranty Cover?
Your extended warranty will cover everything included in a factory warranty (and they’ll often spell those things out) as well as other perks!
Check the inclusions list first. Make sure that the inclusions are significantly more than those available with the factory warranty so that you aren’t paying more than you should.
It’s also a good idea to consider how vague or specific the language is. Some lower-quality warranties will vaguely refer to the engine of a car, but because specific parts aren’t mentioned they may not be covered.
What Does an Extended Warranty Not Cover?
The exclusions of an extended warranty are often related to the kind of repairs you need. Some extended warranties only cover more parts of your car and for a longer period of time. A less expensive extended warranty may not cover damage from accidents.
The Difference Between Extended Warranty and Car Insurance
Because they both offer essentially the same thing (repairs to your vehicle), it can be easy to confuse extended warranties with car insurance. But there are key differences to be aware of.
Auto insurance covers more areas than warranties or mechanical breakdown insurance. While the latter only covers the car itself, auto insurance covers legal, medical, and repair costs in the case of accidents.
Mechanical breakdown insurance cannot be offered by third-party sellers or by your car’s manufacturer. This kind of insurance is only purchasable through a licensed insurer.
Many mechanical breakdown insurance plans only go up to a certain number of miles on a car. So if you are buying a used or classic car, you may not be able to receive coverage for repairs through insurance. This is a key time when extended warranties come into play, as you can receive coverage for a used vehicle through it.
How Necessary is an Extended Warranty?
Unlike automotive insurance, you do not legally need an extended or even factory warranty in order to drive your car on the road. So if it isn’t legally necessary, what’s the point?
The idea of an extended warranty is to save you money in the long run. You pay for the coverage now so that the costs of expensive repairs in the future don’t pile up and end up costing you more.
You can determine if an extended warranty is worth it for you by considering these things about your vehicle:
- Is your vehicle an older model year and will likely need repairs as it continues to age?
- Does your vehicle have a history of a lot of service appointments?
- Does your vehicle’s make and model of a reputation for needing frequent repairs?
- Do you want extra perks such as roadside assistance which can be received through an extended warranty?
Consider these pre-existing terms for your vehicle when deciding whether an extended warranty is necessary for you. The last thing you want is to realize that you need an extended warranty after you’ve already sunk money into constantly repairing your car.
Putting an Extended Warranty to Work
Now that you understand the basics of an extended warranty and how it differs from other kinds of coverage, it’s time to put that knowledge to work! Let’s take a more in-depth look at choosing your extended warranty and what you can expect from it.
Where to Buy an Extended Warranty
When you go to purchase a car from a dealership, the manufacturer will give you the option to purchase a factory warranty (included with the cost of your vehicle) or an extended warranty. While this may seem like the most convenient way to purchase an extended warranty, don’t assume it’s the best way.
Go online to research your options from third-party sellers who may be able to offer you a more customized plan. Most car warranty companies will even offer a free quote so that you can shop around for the best option.
How Much Will a Car Warranty Cost?
There is a wide range of prices when it comes to extended warranties. Nearly every variable can have an effect including location, vehicle, provider, and plan. While this can seem daunting, the variety actually makes it more likely that you’ll end up with a highly personalized plan at a price that is appropriate for your needs and budget.
When you first meet with a provider, they may be able to give you a general price range that will become narrowed down as you work together on the specifications.
Some things that your provider will take into consideration are:
- The type of car
- The age of the car
- Your own driving history
- The scope of coverage you want
- The length of the warranty
If you’re worried about the cost, you can address those variables beforehand to make sure you know what you want. Choose cars that aren’t notorious for needing repairs. If you can afford it, choose a car on the newer side. Be a safe driver, and know your car well to determine the scope of warranty coverage you’ll need.
If you find that your provider doesn’t take all the variables into consideration to create a personalized plan, you should find a competitor who will take your coverage and your budget seriously.
Covering Car Repairs
When you need to repair your car, you’ll need to submit a claim to your warranty provider. However, just because you’ve submitted a claim does not mean that your repair will automatically be covered. That’s why it’s so important to be familiar with your explicitly stated inclusions and exclusions ahead of time.
Your claim could be denied for the following reasons:
- The car part is not covered by your warranty
- The cause of the damage (such as an accident) is not covered by your warranty
- You haven’t regularly maintained your car
- You were dishonest about a pre-existing condition
Keep clear records of your vehicle’s maintenance and repairs, and don’t make any unnecessary modifications that could inhibit future claims.
Unlike insurance, once your claim is approved, you don’t have to pay a deductible to your provider or the mechanic. Your warranty provider will take care of the rest from there.
Other Key Facts
Because of all the variables that exist from warranty to warranty and provider to provider, it can be hard to get the full picture of your warranty before you start talking to warranty providers and making a purchase. But there are a few more key things that you should be aware of going into those important conversations.
Covering Pre-Existing Conditions
Don’t be fooled into thinking that you can purchase an extended warranty to cover pre-existing conditions that you are already aware of. Warranties do not cover pre-existing conditions, and your claim will be denied if you try to receive coverage for them immediately after purchasing a warranty.
After you buy a warranty, your provider will put you through a waiting period before you can make any repairs. So if your car has pre-existing repair needs, you’ll need to wait before you can have them addressed anyway. During the waiting period, your provider will determine if your vehicle is functioning properly and document any issues to deny in future claims.
The plus side is that the waiting period is also a time that you can use to determine if you want to go forward with the coverage. If you change your mind about the policy, you can usually cancel it and get your money back for the waiting period. If you like it, then you can continue your monthly payment.
Maintaining Your Warranty
There are requirements that your provider will make of you in order to stay in good standing and receive the benefits of your warranty. One of those requirements for maintaining your warranty is to bring your car in for regular maintenance. This practice (called a vehicle service contract) is in your best interest anyway and saves money for both you and the provider.
Make sure that you read the terms of your regular maintenance carefully. If you purchased your extended warranty from a manufacturer, there are likely to be stipulations about where you can bring your car. It’s also important that you strictly stick to the schedule given to you by your provider.
Paying for Regular Maintenance
So who pays for those required maintenance costs?
Unfortunately, regular maintenance, while required, is a major gap in most extended warranty policies. You may be able to find a rare warranty that does cover routine maintenance, but it will be at a higher cost.
Otherwise, the cost of regular maintenance is out of pocket. But it’s still worth paying it so that you are in good standing with your provider when the time comes for an unexpected repair.
Routine maintenance is cost-effective in the long term, and you can lower some of the costs (if you’re concerned) by learning to do basic maintenance such as oil changes yourself.
Finding the Right Extended Warranty
When searching for the right extended warranty, you need to have an intimate understanding of your needs ahead of time. You can read some sample warranties in order to get a better idea of what to look for in the fine print, but it’s even better to know your own car at a personal level.
Here are some common kinds of cars for which you may choose to buy an extended warranty and the coverage options you should look for.
Buying a Warranty for a Used Car
One of the most common reasons to buy an extended warranty is for a used car. These cars have often expired from their factory warranty, so an extended warranty is the only option for coverage that you have. This is known as a used car extended warranty, and they come in handy when you don’t know a lot about your car’s history.
For a used car warranty, you should choose a warranty plan that includes bumper-to-bumper coverage, a high length, and roadside assistance and towing. This will help you be sure that any unforeseen issues will be covered entirely.
Even if you’re buying a new car, if it has high mileage, your best option for coverage is an extended warranty. Reputable providers may have fewer options for high-mileage vehicles, but you can still get great coverage if you go to the right third party and know what to look for.
Make sure that you find a warranty with high coverage limits (in years and miles), powertrain coverage, and some extra perks such as rental car reimbursement.
While classic cars are technically used cars, they can be difficult to find an extended warranty for. Most warranty plans can’t cover anything older than ten years. With classic cars reaching that definition at twenty-five years, you’ll need to find a special extended warranty.
You’ll need to find a specialty provider who makes packages for classic cars. Your options will be limited, but they do exist.
There are only two things to really keep in mind when choosing a warranty for a classic car. It needs to have a high age limit and extensive powertrain coverage. You probably won’t be able to get extra perks on top of that.
Buying From the Right Place
We’ve mentioned the different places where you can purchase an extended warranty, but how do you decide whom to buy from?
In general, we recommend buying from a third-party site because they will have more options and customizations available to you. But how do you choose from among the many third-party providers out there?
If you can find a site (such as Carchex) that reviews providers, you can start by reading about providers there. Just be aware that some providers may make deals with these sites. The objective facts may be true, but don’t give too much attention to the opinions made from them.
What’s most important (whether you use a review website or not) is to consider the following:
- Your point of contact
- Variety in plans
- The reputation of the provider
- Signs of good customer service
At the end of the day, you are a valuable customer and your provider should make you feel like one. Go with your gut when talking to providers.
Making Your Final Decision on Extended Warranty for Used Cars
Using this guide, you can feel more confident in your ability to make your final decision on an extended warranty for used cars. Don’t jump into buying a warranty.
Give yourself the time to look through your options and know what’s best for your individual needs. Extended warranties are an amazing resource for saving money on your car repairs!
Still looking for a used car to buy? Check out our inventory here!