If you’ve purchased used car from a dealer, you will likely be asked if you want to purchase an extended warranty. Most dealers offer at least a 30-day warranty on the vehicle to cover basic repairs from your new purchase, but you’ll be responsible for purchasing an extended warranty if you want to cover the cost of repairs beyond any manufacturer’s warranty.
The dealer may encourage you to purchase an auto extended warranty on the date of your vehicle purchase, but you are not required to do so. Feel free to pick up the paperwork about their offer, but remember that you can purchase a warranty contract of your choice at any time. Here are some more tips for buying an extended vehicle warranty:
What Is an Extended Vehicle Warranty?
The first thing to keep in mind that extended warranties aren’t insurance policies; you may still be required to pay for some repair services even with warranty coverage. There are only a few comprehensive warranty programs that will cover the full cost of repairs on your pre-owned vehicle, and even these may have a high deductible that requires you to pay for a portion of the work upfront.
You’ll find dozens of extended vehicle warranty programs online, so it pays to shop around for the best rates and review all of the different coverage options. There are two types of extended warranties available; mechanical breakdowns and ‘wear and tear’ warranties.
One of the biggest mistakes used car buyers make is to purchase a full warranty that only covers mechanical breakdowns. Wear and tear warranties are most suitable for used cars, because they cover failures that are the result of vehicle performance. However, you’ll want to find a program that covers both types of problems to ensure you can get the most benefit from your claim.
Extended Warranty Buyer’s Checklist
You’ll need to look for the following nine key features of an extended auto warranty when comparing different programs:
1. Is it transferable? If you plan to sell your car before the warranty period expires, you don’t want to lose the money you invested in the warranty. Look for the fine print that explains your rights to transfer the contract upon sale of the vehicle.
2. Are you eligible for extended benefits? Some extended vehicle warranty providers offer car rental and towing services as part of the coverage program. Find out if these are included with yours.
3. Where do repairs need to be done? Some extended auto warranty providers require you to take your car only to a certain mechanic, while others will let you get the car serviced at any ASE Certified shop. Make sure your options aren’t limited to places that are out of your neighborhood.
4. Is there a money back guarantee? Almost all legitimate auto warranty providers offer a full refund within a 30, 60 or 90-day time period. Some may offer a partial refund for warranties that are terminated after the basic refund period. Read the fine print to find out what your options are if you choose to terminate the contract.
5. What are the exclusions? Many people buy auto warranties that provide ‘comprehensive’ coverage, only to find out later that small (but expensive) items are excluded from the list. Simple things like upholstery, light bulbs, interior hardware and brake drums or rotors are always on the ‘exclusions’ list. This means you’ll be responsible for the full cost of repair or replacement of these items, but some auto warranties list other items that may be covered by their competitor.
Bottom Line: Do your research when you’re thinking about purchasing an extended warranty for your used vehicle, and don’t be pressured into signing up for a warranty from the dealer. Dealers often make commissions on sales they generate from a particular auto warranty provider, so they have a vested interest in having you sign up the day of the sale.
Take your time to get quotes from different providers online, and review the fine print to make sure you fully understand what is – and isn’t – covered.