What Warranty Should You Get with a Used Car
Buying a used car can be tricky. It's not always clear whether you're getting a lemon or a great deal. In fact, buying a used car without a warranty can potentially cost you thousands of dollars down the road in unexpected repairs.
I've put together this article to share the decision making process to see what warranty you should get and what type of warranties you should walk away from.
Is It Worth Getting a Used Car Warranty in 2022 and 2023?
A used car warranty is an important part of purchasing a new-to-you vehicle. But what exactly does it include? Vehicle protection plans come in a variety of levels and often include some exclusions. However, these warranties do provide a level of service and protection for many owners.
The term "warranty," technically speaking, refers to the manufacturer's promise to repair or replace parts that break during the life of the vehicle. In most cases, the warranty covers everything except wear and tear.
Wear and tear items include tires, wipers, brakes and oil. These are typically considered under the maintenance of the car and not a warranty issue. Sometimes wearable items like batteries are covered but that is usually for new cars only.
Brands like Mercedes Benz and BMW can sometimes sell vehicle service contracts that cover these wearable items like oil changes and servicing.
But there are different types of warranties, including extended warranties, and even tire warranties. Some manufacturers offer multiple levels of coverage, while others don't offer any at all.
We will discuss used car warranties for cars that are not brand new.
As you're shopping around for a new car, keep in mind that many dealerships offer free extended warranties. If you buy directly from the manufacturer, however, you'll likely pay less for the same coverage.
This type of coverage is the best option since this option is the closest available to the factory warranty. So, if you are able to get an extended warranty for 24 to 36 months from the manufacturer, I would strongly consider it.
Extended Factory Warranty
As mentioned previously, extended factory warranties are good for peace of mind in the future. From my experience, BMW's 2-year extended warranty from CPO'd cars is a solid deal. While this is already baked into the cost of the car, it's like getting bumper-to-bumper coverage on a car that has depreciated after the original warranty period has expired.
A certified pre-owned vehicle is a good purchase if you check all of your boxes in a used car. Plus, the addition of extended warranty coverage is great.
However, third-party warranty company coverage is not the same as the manufacturer. While they might cover major systems, it is not as comprehensive as a factory.
Reasons for NOT Getting a Warranty
1. Car has a good history of reliability
If your car is known for being reliable and being trouble-free then you probably don't need to purchase a used car warranty. However, if you are like me and enjoy European or Domestic makes, then a warranty might make sense. Reliable brands like Toyota, Honda, and Kia are fine without an extended warranty.
2. Residual value of the car is less than $10,000
Used car warranties are not cheap but they can be a good investment for expensive models with uncertain service track records. If your car is less than $10,000, your money is better spent saving for a repair fund versus shelling out $3,000 on average for a used car warranty.
3. You have a local indie shop that you trust
If you have a local auto mechanic that has a good track record, then your money is better spent when the time comes for repairs. As mentioned, on average a car warranty can cost $3,000 and that money can be put towards future repairs.
If you don't fall into any of those categories, then read on...
What Type of Coverage to Expect with a Used Car Warranty?
A used car warranty covers mechanical defects like transmission or electrical issues, but it doesn't cover accidents or damage caused due to misuse. It's not the same as a bumper to bumper warranty as there may be exclusions.
How Does the Warranty Work?
When you buy an extended warranty through a company, you most likely will have a service contract detailing what is covered and what is not.
You will need to pay VERY close attention to the terms.
Warranty work is typically covered if it's explicitly stated in your contract. You have the option of taking your car to an in-network facility or out of network.
However, out-of-network or dealership visits may incur additional fees.
Note: I was able to save a little bit of money with my extended warranty because my out of network diagnostics was $200 at the dealership versus the $300 if I went directly to Mercedes Benz. Another example is BMW, I had a $50 copay with my extended warranty but that was better than the $170 diagnostic fee.
So check with your provider regarding fees in network and out of network.
Once the diagnostics are completed, then the shop or the dealership will submit the estimate to the warranty company for approval. It is up to the warranty company to approve this as they will be reimbursing the shop for the repairs.
If all goes well, the shop will have no issues recouping the payment and you will be able to get your car back after the repairs are done. However, if the terms DO NOT COVER the repairs, you might be out the repair costs.
This can be problematic if you assume that everything is covered under your extended car warranty. It's important that you ask in advance if the repair shops are ok with working with a warranty company. I have found that most dealerships have the experience to work with these companies.
Also, I have found that some indie auto repair shops refuse to work with warranty companies because they refuse to pay the invoice and the owner of the car is left with the bill to settle.
Where Can I Get My Car Repaired?
Like I mentioned above, I have found your car's dealership to be the easiest to deal with. They have factory technicians that will not cut corners and will use factory genuine parts.
I had the option to get it repaired from an in-network shop but my network consisted of PepBoys and Sears Auto Center. Depending on your network, you might be able to find a reputable shop to get the repairs done.
How to Decide If You Should Get an Extended Warranty
If you buy a used car, it’s important to know what type of warranty is included. An extended warranty can be a real benefit if you’re looking to save money, but it’s worth considering whether the benefits outweigh the costs. We'll cover the items that are covered.
Extended warranties are typically offered by manufacturers and dealerships and cover repairs for up to three years or five years.
If there was one area to make sure you are covered, it would be the powertrain warranty.
I know brands like Kia and Hyundai tout 100,000 mile powertrain warranty so check with the manufacturer to see if you are still covered and if it's transferable to the new owner.
Remember most warranties have some exclusions for warranty repairs. For example, many warranties won’t cover wear items such as brakes, steering components, tires, batteries, exhaust systems, power windows, hood latches, door locks, mirrors, headlights, tail lights, fenders, bumpers, trim, glass, interior parts, underhood, trunk, roof, seatbelts, floor mats, carpeting, seats, sunroofs.
Electrical components like instrument panels, radios, speakers, wiring harnesses, electrical connectors, fuel injectors, starters, alternators might have some exclusions.
Other critical items like the following might not be covered either. You will have to check with your terms. wheel bearings, transmission mounts, transmissions, CV joints, driveshafts, axles, differentials, suspension parts, clutches, flywheels, engines, turbocharger housings, catalytic converters, mufflers, exhaust pipes, intake manifolds, valve covers, radiator fans, radiators, cooling system components, coolant, engine blocks, water pumps, starter motors, battery terminals, battery posts, battery cables, battery boxes, battery tray liners, battery straps, battery terminals, battery cables, battery posts, battery tray liners and battery straps.
These exclusionary warranty items can make or break your decision.
There are plenty of other exclusions. If you’re shopping around for a warranty, check out the fine print. And make sure you understand how much coverage you’ll receive.
Common Warranty Questions:
Does my car warranty cover oil changes?
It depends. If you're buying a new car, some manufacturers or dealerships include free oil changes with your purchase. But it is considered a wear item for used cars.
How long is my factory warranty good for?
Most manufacturers give three years or 36 months of coverage. Some even extend it to five years or 60 months. However, you will need to check with the manufacturer.
In fact, you can check out our article about the best new cars that have the best vehicle warranty.
Do I need to take my car in for regular maintenance?
No. Manufacturers don't require routine maintenance; however, they recommend that you schedule regular inspections. These inspections help ensure that your car runs smoothly and safely. They also let mechanics check out your car's components and make sure they're working properly.
What Is a CPO Used Car Warranty? Is It Better?
A certified pre-owned used car warranty is typically bought along with the car itself. This type of warranty covers repairs done under the manufacturer’s warranty. However, it does not cover repairs done outside of the manufacturer’s coverage.
The most common types of warranty options include:
- Warranty for Powertrain Plans - like basic powertrain coverage
- Air Conditioning
- Electrical Systems like Emissions
- Major Engine components like water pump and thermostat
- Corrosion Coverage
Getting Extended Warranty Quotes:
If you purchased your car or vehicle from a private party, then you will still have the option to get coverage. The key here is to find a reputable company that will offer the best coverage options at a reasonable price.
During your search for used car warranty quotes, you will have to submit a VIN or vehicle identification number to the agent and they will cross reference third party companies that offer protection. Typically, these companies are the middle men who would scour their list of vendors and available coverage plans.
However, most of them are limited. The levels of warranty coverage is unclear as most of the time it is over the phone. The sad reality is that most auto warranty providers are crunching numbers to ensure the rates you are given are still profitable to the company. Sad but true.
My experience in getting car warranty quotes was less than desirable but at least I tried. I ended up with a ForeverCar warranty from Carvana since it was a good experience overall. As mentioned before my diagnostics were cheaper than the default dealership costs. I will be providing a full review later of Carvana and Forever Car.
In conclusion, buying a used car is a smart move because it saves you money. However, it's also important to know exactly what type of warranty coverage is left. You might consider buying if you are worried about future repairs. There are two main types of warranties available: manufacturer's warranty and extended service plan (ESP).
Manufacturer's warranty covers repairs made directly by the dealership. This means that if anything goes wrong with your vehicle during its original term, the dealer will fix it free of charge. This is common with certified pre-owned vehicles.
On the other hand, ESPs also cover repairs done by third parties like mechanics and auto repair shops. These plans usually include roadside assistance and labor coverage, which means that if your car breaks down somewhere along the road, you won't have to pay for parts or labor to get it fixed.
But you will need to select a shop that is comfortable working with warranty companies as I did encounter some push back from some auto repair shops that were out of network.
While these plans aren't cheap, they can save you hundreds of dollars over the course of your ownership. So, if you're planning to purchase a secondhand vehicle, it pays to shop around and compare prices from different vendors.