What’s in a Used Car Warranty?

by Don Elliott on April 9, 2011

Most people generally think about buying a warranty for their used car after they’ve purchased the vehicle.  We recommend you do it while you’re shopping for your used car.  Adding a warranty should be something you consider as a part of your budget while shopping for used cars. There are several different types of warranties out there, and being knowledgeable about which-is-which works to your advantage.

This is a Warranty, Right?

As you narrow your choices of used cars be sure and talk to the auto dealers about what warranties they offer.  You may even want to consider calling local car dealers before you go to their lot.  Prices can vary widely from one dealer to another.  You can most likely call three different lots, and get three completely different prices.  Each price based on the same warranty.

Once you’re on the used car dealer’s lot, ask them about any remaining manufacturer’s or factory warranty left on that vehicle. Occasionally a warranty may transfer to the next owner if there is any left, increasing its used car value slightly.  If any warranty remains, one of the first questions you should ask is how long it’ll last. One year? Three years?  Perhaps it’s not even a length of time, but based on mileage: One Year or One thousand miles. Even if the warranty transfers, don’t assume you’ll receive the full coverage of the original warranty.

What we want to clarify is the warranty you’re purchasing is most likely a service contract.  Some auto repair is covered with a service contract. The service contract will pick up where a factory warranty has ended, but some service contracts can be somewhat limiting. Some of them only allow work to be done by that dealer on their lot! Because many of these automotive service contracts have deductibles, most automakers don’t consider them as warranties.

Certified, preowned used cars are an alternative way to obtain a warranty that is usually included in the price of the car making it an excellent used car value.  A certified pre-owned vehicle has passed a series of inspections that the manufacturer of that brand of vehicle is backing. Most certified, pre-owned warranties have longer powertrain warranties, and a few have bumper-to-bumper coverage. These types of warranties are very attractive for customers, because an automotive manufacturer offers coverage that is honored at that manufacturer’s dealerships.  Third party service contracts are only honored at specific locations, a detail that should be explained thoroughly when you are shopping for your next used car..

In Part 2 we’ll cover more specifics about the various types of warranties/service contracts you can choose from.

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