What Does A Car Warranty Cover
A car warranty covers defects, or damage that occurs during normal use, and cant be considered normal wear and tear. It pays to replace defective parts with new or reconditioned parts at the companys discretion behind the warranty. It also covers labor.
Should your air conditioning stop working while your bumper-to-bumper coverage is active, that warranty will cover the full cost of replacement. Should your transmission fail during normal driving while the powertrain warranty is active, that warranty will cover the full replacement cost.
But many reasons you could end up in a repair shop are not covered by the standard warranty.
How Long Does A Car Warranty Last
Car warranties operate for a set period of time or a set distance in miles. The typical auto warranty coverage is 3-years/36,000 miles meaning a warranty that covers needed repairs in the first three years you own your car, or for the first 36,000 miles you drive it, whichever comes first.
And for most of us, the mileage limit comes first.
The industry standard of equating one year of warranty coverage to 12,000 miles of driving is a bit outdated. The United States Department of Transportation now estimates that the average American drives 13,500 miles in a year. So, most of us are exhausting those 36,000 miles before three years have passed.
A recent study found that the average new car on American roads is now over 12 years old, so many of us are driving well past the end of our original warranties.
Why An Emergency Fund Is Better Than An Extended Warranty
So, what should you do if your dryer stops drying or your drone loses a propeller? Well, even if the manufacturers warranty is expired, its always worth calling and seeing if they will still cover the repairs or replace the item. Some companies will go above and beyond to make their customers happy, and the worst that can happen is they say no.
Otherwise, thats where an emergency fund comes in handy! Instead of buying a bunch of extended warranties that youll probably never use, youre better off self-insuring by paying yourself the warranty payments. That way, if your TV does break after the normal warranty, you have the money saved to fix it. If not, its your money to keep. Its a win-win!
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Where Should You Buy An Extended Warranty
You have several options if you decide to purchase extended coverage. If you are buying a new car, its almost a guarantee that you will hear a pitch for extended protection plans at the dealership. Manufacturer-backed plans are usually only available at the dealership.
If you decide to go this route, be wary of including the coverage with your car loan. This might not be a good idea for multiple reasons:
- You will likely pay interest on the service plan. Even if the company offers zero-percent interest for a short time, you will eventually pay interest.
- You raise your loan-to-value ratio. You might end up owing more than your car is worth.
If you want to purchase an extended warranty from a dealer, consider paying for it upfront instead of including monthly payments with your loan.
Another option is to purchase an extended warranty from a third-party provider like Endurance. Here are a few benefits of third-party warranties:
- Can choose your preferred repair shop
- Low deductibles and affordable plans
- Additional perks, such as roadside assistance and towing
- Ability to shop for the best coverage and price
- Can choose coverage that best fits your vehicle
- Can purchase at any time
Alternatives To Extended Warranties
The manufacturers warranty should cover major defects within a certain window, usually three years or 36,000 miles, whichever comes first. If you want to stack protection, you can:
- Add mechanical breakdown insurance: Some insurance companies let you add mechanical breakdown coverage to your existing car insurance policy for about $100 a year. MBI policies usually cover big-ticket items, Friedlander says, like the engine, drive train, transmission, brakes, exhaust, and power system your major mechanical components of the vehicle. But MBI usually wont cover typical wear and tear.
- Open a dedicated savings account. It may make more sense to set aside the money you would spend on the policy. Then, make a habit of saving $50 a month for emergency auto repairs, the AAA recommends. If you never use the money, youll still build up your down payment for your next car, Gillis says.
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Extended Car Warranties: The Good And The Bad
When consumers are asked why they choose one auto manufacturer over another, one of the top reasons given year-after-year is perceived dependability and reliability. As this is one of the biggest purchase drivers, manufacturers have responded and are now making automobiles that are more reliable that ever before. This long-term view on the importance of reliability may be why, on average, consumers are also keeping their vehicles longer than ever.
Coupled with the increase in reliability, manufacturers are offering longer original warranties to boost consumer confidence and trust in their brand. Most major brands now carry a warranty somewhere between 3 years, 36,000 miles and 10 years, 100,000 miles. These generous warranties help set a consumers mind at ease with the knowledge that they will not have to pay out of pocket for many major repairs during the first few years they own a vehicle.
Despite these longer warranty periods, a significant amount of consumers are keeping their vehicles well past the warranty expiration date. One of the primary drivers of this may be the availability of extended car warranties. As vehicles become more and more complex with greater electrical and computer integration, repairs become more complicated and expensive. An extended warranty can help protect an owner from paying for repairs out of pocket, but these warranties can also come with drawbacks.
A Reader Seeks Advice About Buying An Extended Warranty For His Audi Q5 As It’s Approaching Its Third Birthday
My Audi Q5 2.0 TDI is rapidly approaching its third birthday. It has covered 17,000 miles and hasnt had any faults so far, while I still have two pre-paid services to use as part of the original purchase. Historically, Ive changed cars every three years, but this one is a keeper as I near retirement, so Im wondering if I should buy an extended warranty for it.
The warranty options offered by Audi all seem expensive compared with some of those offered by specialist warranty companies. What are the important things I need to look out for in an extended warranty, and which level of cover should I consider? Are there any benefits in going with the manufacturers plan, as opposed to a third party?
Jon Gardner
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Consumers Can Tailor Extended Car Warranties To Fit Specific Needs
Auto manufacturers generally sell off-the-rack warranty plans at preset prices. If you buy an extended warranty from a third-party warranty company, you can tailor that coverage to protect you where the factory warranty does not. We recommend checking sources like Consumer Reports, J.D. Power, and RepairPal to determine the cars reliability, paying attention to common repairs drivers encounter and making sure your contract covers those.
Extended warranty prices can often be customized to your budget, so the payments are more manageable than a costly repair would be.
Manufacturer Warranties Vs Aftermarket Warranties
If you decide to buy an extended warranty, you can wait until after the factory warranty has ended or while its still in effect. As such, youll have a longer coverage period.
Extended warranties from a manufacturer are basically an extension of the original factory warranty, which means anything that is included or excluded will stay the same. The only difference is the actual coverage period.
But extended warranties from third-party companies are a bit different. These warranties may have different inclusions and exclusions, as well as different perks and terms since theyre not from the manufacturer.
Factory and extended warranties also have some similarities. For instance, extended warranties also have coverage limits, just like manufacturer warranties. With extended warranties from the manufacturer, the extended period is typically established ahead of time. But with third-party warranty companies, you might get more coverage options and maybe even the ability to tailor the coverage terms for your car.
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The Benefits Of An Extended Warranty
After the manufacturers warranty has expired, you may consider taking out an extended warranty on a used car.
The advantages of this are that you gain the peace of mind of being able to cover the cost of certain repairs to your vehicle for the period of the warranty. Your used car could prove to be troublesome, and a warranty is a way to avoid risk.
However, you need to read your policy carefully to understand exactly what it covers. Youll find that a manufacturers extended warranty generally has fewer exclusions than those from third-party providers.
For example, inclusion warranties only cover specific parts and arent as comprehensive compared to exclusion warranties that include all parts except for ones that are named.
Its also a good idea to look into the reputation of the company thats providing the warranty.
How Can I Tell If My Engine Is Blown
If your automobile has an engine problem or mechanical malfunction, it will give you a few warning indications. Observing excessive exhaust smoke, metal shavings in the oil, a loss of power, or smoke coming from under the hood could indicate an engine issue. If you see any of these indicators, you should not drive the automobile. Try to get an inspection by a mechanic to avoid further damage.
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Carshield Extended Car Warranty
Extended warranties can give car owners peace of mind, helping to cover unexpected repairs. However, there are several providers to choose from. CarShield is one well-known option that claims to offer the ultimate vehicle service protection. For over a decade, theyve covered 1 million vehicles and administered paid claims of over $1 billion dollars. Read
What Things Do I Need To Consider
When deciding whether an extended car warranty is worth it or not, you will need to carefully look at the terms of each policy. Warranties can be confusing to understand, so its important you understand what you would be paying for to help you decide whether it is worth getting an extended warranty.
Used car warranties typically dont offer as comprehensive cover as manufacturers warranties. They can have more exclusions and stricter terms and conditions, so you shouldnt assume that every mechanical or electrical failure your car could get will be covered.
For example, if a part of your car that isnt covered by the warranty fails and damages a part that is covered, not all warranties will pay out. This is known as consequential loss, and is one of the terms to look out for when comparing policies.
More comprehensive car warranties will cover more faults, such as some cover for wear and tear, but they will be more expensive. You would have to weigh up whether the extra cost is worth paying, or if it would be cheaper to simply pay for any repairs yourself if a problem appears.
You should also look at the claims limit of a policy – the maximum amount that the warranty will pay out for repairs – as well as the excess you need to pay whenever you make a claim. This will give you an idea of how much you could still need to pay even if you have a warranty, and so could help you decide whether it is worth paying for a warranty.
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Pro: Dealers Take Care Of The Paperwork And Payment
When buying an extended warranty, those offered through the dealership and sponsored by the auto manufacturer tend to be more expensive, but in exchange for their extra cost, the dealer takes care of all the paperwork and the auto manufacturer pays the dealer directly for services rendered. Additionally, these dealer-provided and OEM-backed warranties usually allow the car owner to get the vehicle repaired at any dealership selling the same brand, anywhere in the country, removing restrictions that are sometimes included with other third-party warranty providers.
Questions To Ask Before Purchasing An Extended Warranty
Before you agree to buy an extended warranty, be sure to ask some of the following questions first:
- When will payment have to be made if a repair is required before or after the repair is made?
- Is there a deductible that has to be paid before a repair is made?
- How long will it be until I am reimbursed?
- Will my car be replaced with new or used parts?
- Can I make another claim for the same part a second time if necessary?
- What exactly is not covered in the warranty?
- What are the rules on regular maintenance in order to ensure the warranty covers repairs?
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Should You Buy A Used Car Warranty
Many new car warranties only last a few years three years is the most common so if you have, or buy, a car older than this, by default you’ll need to cover the cost of repairs yourself. One alternative to this is buying a used car warranty.
Whether youve reached the end of the new-car warranty supplied by your manufacturer or youve just invested in a used car, there’s a glut of third-party warranties available to buy.
Used car warranties profess to give you financial peace of mind by taking care of the garage bill if you encounter any issues with your car, but we’ve found that many come with too-high prices and limiting restrictions.
Find your perfect second-hand car by viewing our used car reviews.
What Is A New Car Warranty
A new car warranty is the guarantee that car manufacturers issue when they sell a new car. Each car maker will have a set warranty that applies to all of the cars that it sells in the UK. The majority of car makers offer a three-year warranty, although the main exceptions to this are Hyundai, Mitsubishi, Renault and Kia .
With an increasing number of buyers now running cars for three years on finance, the three-year warranty has become the industry standard. Manufacturers also add a mileage limit to the warranty to ensure the vehicle is covered for what it determines to be a fair amount of time. So the warranty will last for the time period or the distance quoted, whichever comes first.
The amount of miles you can cover varies according to which manufacturer you choose. Some offer a 36,000-mile limit, while others offer unlimited mileage. As an example of the differences, Mitsubishi’s five-year cover has a 62,500-mile limit, while Hyundai, which also offers a five-year warranty, has unlimited mileage for private buyers. Likewise, Kia’s seven-year warranty has a mileage limit of 100,000 miles, so for some high-mileage drivers, the Hyundai warranty could be more attractive.
If the manufacturer can find the car has been modified, such as the ECU being reprogrammed, a non-standard exhaust system fitted, or if the odometer has been tampered with, then it is unlikely to honour the warranty.
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Extended Car Warranties: When And How To Say No
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Id never buy an extended warranty for a new car. But if someone else asked whether they should buy one, Id have a different answer: It depends.
Over the years Ive talked to hundreds of car buyers and found that the decision to buy an extended car warranty is highly personal and rather emotional. Many are chasing peace of mind, and a warranty can provide that.
But its peace of mind for the dealer, too another chance to make a fat profit.
Either way, its a good idea to make your decision before you enter the sales office at the dealership and get the hard sell. Heres how to get there.
If I Sell My Car Does The Warranty Transfer To The New Owner
Most car warranties transfer with the car when it is sold. Occasionally, transferring a warranty will change its terms. Both Hyundai and Kia, for instance, offer one of the industrys longest warranties on new cars a 10-year/100,000-mile powertrain warranty. However, if the vehicle is sold, only a 5-year/60,000-mile powertrain warranty goes to the new owner with the car.
If youre buying a used car, try to find out when it first sold. Automakers routinely start selling the next model years cars before the calendar year is out, so your 2018 car may have a warranty period beginning in 2017 if it sold early.
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What Is A Car Warranty
A car warranty is a contract that says that your cars manufacturer, or the aftermarket warranty company you bought an extended warranty from, will pay for some repairs to your car.
Some repairs? Warranties cover problems the manufacturer considers defects and kick in when a component doesnt live up to reasonable expectations. So, they dont cover damage from accidents, or when using your car in a way the manufacturer didnt intend for it to be used. They also dont cover normal wear and tear.
