If you bought a new car, you are covered by the manufacturer’s warranty up to a certain mileage or age limit. What happens after you hit these limits? For those who want additional coverage on their vehicles, extended warranties may be an option for used cars.
Understanding warranty extensions
If something happens to your vehicle that your insurance company does not cover and the car manufacturer’s warranty has expired, you must pay the cost of the repairs. For this reason, many borrowers consider buy extended warranty for their used vehicles.
An extended warranty, also known as a vehicle maintenance contract, is essentially additional coverage on your car, and the name is somewhat inaccurate. Extended warranties do not “extend” the original warranty offered by the manufacturer. These are in fact third party service contracts that cover certain vehicle repairs for a specified duration and / or mileage.
For those who rely heavily on their car on a daily basis, service contracts can provide some peace of mind when driving a used vehicle. Extended warranty coverage varies widely, and neither of the two offered by dealers is likely to be the same.
To see what an extended warranty really covers, request a list of inclusions and exclusions from the finance and insurance (F&I) manager of the dealership where you purchase your used car.
What vehicle maintenance contracts can cover
Many service contracts can mimic the original manufacturer’s warranty. Some cover the transmission and engine, as well as the associated parts of these two key systems like gaskets and gaskets. Some extended warranties can cover most parts of your vehicle, including key components (like engine and transmission) and things like air conditioning and maybe even power seats.
As a general rule, these items are generally not covered by extended warranties:
- Regular maintenance
- Brakes, clutches, wipers and lights
- Regular wear and tear (such as interior damage)
- Personal injury (bumps)
Keep in mind that most extended warranty claims come with deductibles and there are usually rules and exclusions that are not included with the manufacturer’s warranty. Often times, the dealership where you purchased the car and the service contract requires that you go to their service center to repair your vehicle under warranty.
On top of that, some extended warranties require you to pay for repairs up front and then make a claim to be reimbursed for the cost later. Make sure you read all the fine print of a service contract and don’t hesitate to ask lots of questions. You are the one spending the money, after all!
When to buy an extended warranty
Manufacturer’s warranties can last for a number of years, or up to a certain mileage. New cars often come with bumper-to-bumper coverage for about three years or 36,000 miles, as well as a powertrain warranty that is normally around 10 years or 100,000 miles.
If you are purchasing a used vehicle, check if it is still covered by the manufacturer’s warranty before considering purchasing an extended warranty.
In most cases, if the car you are buying is not covered by the original new vehicle warranty, the F&I manager will offer you a service contract when you end your contract. F&I managers usually have a whole menu of options that you can consider adding to your car loan.
Before deciding on a warranty extension or one of the available dealer add-ons, be sure to ask questions on the contracts offered and the details of what they cover. If you decide to take one, the costs are usually built right into your car loan payment.
Ready to start buying a car?
When you buy a used vehicle, there is a higher risk that something will go wrong with it down the line. It’s always a possibility with any car you are considering buying, but with a used car it can be hard to tell what the vehicle has really been through. It is even more difficult to predict what might happen in the future.
Extended warranties and cars can be long term commitments, and it can seem difficult to find the right dealership for your situation. When your credit isn’t perfect, finding the right dealership with the right lenders can be even more difficult, but you don’t have to!
Here has Auto Express Credit, we have developed a network of dealers who work with bad credit borrowers. Instead of driving around town and hoping to find a dealership for your credit, fill out our auto loan application form, and we’ll do the research for you. We’ll find a dealer in your area who has the loan resources you need.