As cars get older, it’s more likely for their parts to wear down and stop working. So if you ever wondered what is the point of a used car warranty? The answer is quite obvious. It is there to cover potentially expensive and unexpected repairs of a used vehicle once the factory warranty ends.
Like the automaker’s warranty issued through the dealership when you purchased your new vehicle, an extended warranty provides coverage to certain parts of your car as well as labor to fix certain parts of a car if they break down by normal use. Repair costs due to accident, neglect, or misuse.
The particular car parts that are covered varies from contract to contract, so make sure to read the fine print. Some extended warranties only cover major parts of a car such as the transmission and the engine. Other contracts may be defined as bumper-to-bumper warranties and cover every car part with some exclusions.
While sometimes it is recommended to get a used car warranty to cover unexpected repairs, it is important to note that it is not the best fit for everyone. Before deciding if you should get a used car warranty, here are its common advantages and disadvantages that you need to know:
Advantages of a Used Car Warranty
- No need to pay for expensive repairs out of pocket. There is always a chance that your vehicle could suddenly need costly repair. The older your vehicle gets, the higher the chance that it breaks down. If you cannot afford to pay a $1,000 repair bill out of pocket, a trusted used car extended warranty provider will cover the repair bills for you, excluding a small deductible. Most providers will also cover the towing cost, roadside assistance, and rental car reimbursement This is a good factor to keep in mind when answering what is the point of a used car warranty.
- Peace of mind. If you have a used car warranty, you only need to worry about paying the warranty cost minus the deductible in case something happens to your car. Your warranty is your insurance for car repairs which protects you from bank-breaking bills. For some car owners, a used car warranty is worth the extra money for the security it provides.
- You can hold onto a used car for many years knowing it has protection. If you love to keep your used car for many years, a used car warranty will help you with that as it will cover repair costs that might otherwise push you to sell your car. The sooner you get an extended warranty, the sooner you can lock in a low rate.
Disadvantages of A Warranty for A Used Car
- Extended warranties or used car warranties do not cover everything. It is not a guarantee that the provider of the warranty will pay for every repair your car may need. After your vehicle breaks down, your claim is still subject to approval. It could be denied by the claims administrator if your contract doesn’t cover the part or the breakdown. This is why it’s important to carefully read the contract before signing up for coverage, and the point of a used car warranty will be put on display here.
- They can be costly when you end up not using the coverage. It is probably not worth it to buy a used car warranty when you have thousands of dollars in savings to cover car repairs. While paying for $1,000 to $3,000 repair costs is not something you want to do, you could still save more money in the long run by not buying a used car warranty.
- Chances are you will not be keeping your used car for a long time. If you are planning to buy a different car soon, then it may not be worth it to purchase a used car warranty since you probably won’t be able to use it. Most extended warranties can be transferred and can make your car more attractive to potential buyers, but it won’t significantly increase the resale value of your vehicle.
Are warranties on used cars worth it?
The answer to this question depends. A warranty on a used car can be worth it depending on your needs and budget. Some people may prefer to shell out money for car repairs as they happen, while others may not be able to pay unexpected expenses out of pocket. In this case, a used car warranty is worth it because you can afford to make small monthly payments over time.
If your vehicle doesn’t experience any major problems, you may spend more money on a used car warranty than on car repairs. What is the point of a used car warranty you ask? A used car warranty can give you considerable peace of mind. Here are some more guidelines to help you gauge whether a used car warranty is worthwhile:
Transferability – If you are considering a service contract, check first if any of the original powertrain and bumper-to-bumper warranties are transferable and how much time or how many miles are left on the coverage.
Requirements for who will make the repairs – Make sure to carefully read the service contract before deciding to get one. You should know if the service contract indicates that you need to have routine maintenance and repairs done at the dealer or not. This is important for you to know whether the details and requirements of the service contract will work for you.
Cost of warranty in comparison to the cost of common repairs – A used car warranty may offer peace of mind, but it can also be costly, often ranging from $1,000 to $3,000 upfront. Once you obtain a quote from the dealer, calculate how much common repairs cost and what exactly your warranty covers.
Vehicle dependability – Find out the quality and dependability ratings of a car. Cars that are on the bottom of quality rankings might be prone to certain repairs. You should check out the track record of the vehicle and then determine what type of extra coverage you might need. Also the question of what is the point of a used car warranty will be pretty simple here.
Important Things You Should Know Before Getting A Warranty
New cars usually come with manufacturer warranties. However, when buying a used car, it’s important to know if there is some type of warranty and what it might cover. You’ll want to check any warranty closely to see if it is worth the extra money.
To give context, used car warranties mean any kind of warranty you might get for a used vehicle.
Check the Buyers Guide for Warranty Details
Every dealer is required by the Federal Trade Commission (FTC) to display a Buyers Guide in used cars that are for sale. The Buyers Guide includes information about any used car warranty. It is usually displayed on the window of the car.
The Buyers Guide says whether a car is being sold as-is or has a warranty with it. Purchasing a car as-is means that if you get into any problems or your car requires repairs after driving it off the lot. If the car has a warranty, the Buyers Guide should include the percentage of repair costs the dealer needs to pay as part of the warranty if ever it is covered. These prices are a factor to consider when asking what is the point of a used car warranty.
Certain states restrict what cars may be sold as is or have different rules around these kinds of sales. For example, if a used vehicle is selling above a certain price, an as-is sale might be prohibited and some states need different disclosures on the Buyer’s Guide for an as-is sale.
Check with your state attorney general’s office and reach out to them to find out what as-is sale rules are applicable in your state.
If the Buyers Guide from the dealership indicates your car is covered by a warranty but the contract says the sale is as is, the dealer is required to honor the terms in the Buyer’s Guide. What’s indicated in the Buyers Guide tops anything that might be contradictory in your contract in relation to warranty coverage.
However, if you’re purchasing a used car directly from a private party, the case is different since they’re typically not required to post a Buyers Guide or provide a warranty.
Check If the Manufacturer’s Warranty Is Still Applicable
When wondering about what is the point of a used car warranty, keep in mind it’s possible that a manufacturer’s warranty is still applicable when you purchased a used car. You may find this under the systems covered/duration part of the Buyers Guide.
To get the benefits of any warranty, you should know what is included and confirm if it can be transferred. Ask the dealer for the warranty documents of the car. Once you check what’s covered and other details such as the expiration mileage/date, you can contact the manufacturer to confirm its accuracy. This is one of the points of a used car warranty.
Read the warranty coverage details
The coverage may be limited if your car has a used car warranty. The warranty should provide details on the vehicle service contract and specify who is legally responsible for the repairs. Read the fine print to know all the details and make sure all questions are answered prior to buying your car. This is noteworthy when asking what is the point of a used car warranty.
You’ll also want to know who you are buying the warranty from because in some cases the dealer may be selling a contract from a 3rd-party warranty company. Check the company’s car warranty policies and rating from the Better Business Bureau.
Check for Alternatives
Not sure if getting a used car with no warranty is a good idea? Then, consider the following options.
Put money aside for car repairs. If you already set aside money for repairs, it can help cover the expenses. And if there is nothing to fix, you can keep saving the money for your next vehicle or use it for other needs.
Lease a car. If you take this route, your leased car may have a warranty that covers fixes. Sequentially, you may not have to worry about being hit with a serious unexpected cost. Of course, leasing a car has pros and cons, but it can be a more cost-effective alternative option to buying a used car.
What is the best warranty for a used car?
The big question is what is the point of a used car warranty, but note there is no perfect warranty for every used car. Different drivers have different coverage needs and may get different quotes depending on location, the car they drive and other factors. The only way for you to find the best warranty for your own used car is to shop around and do a comparison. But here are some of the best extended car warranty companies:
- Endurance – Best for High Mileage Cars – provides one of the best car warranty plans for old and high mileage cars, offering 4 tiers of coverage for model years as old as 1958 and with up to 200,000 miles on the odometer.
- Carchex – Best Warranty Plan Options – have 5 different plan tiers to select from, each providing many coverage options. This company offers the widest range of coverage.
- Concord Auto Protect – Best Customer Support – provides the best customer service with 24/7 phone support, online support, email support, and Facebook chat support. When there’s an issue, Concord lets their customers go to any repair facility in their area as long as it is certified by the National Institute for Automotive Service.
- Liberty Bell Auto Protect – Most Comprehensive List of Makes Accepted – Most companies cover 40 makes, but Liberty Bell covers up to 46, from Acura to Volkswagen. Liberty provides 3 plans that cover the basic range of parts and breakdowns you’d expect from an auto warranty company. Their Prime plan stands out thanks to having GPS Navigation protection as a standard instead of an add-on.
- Infinite Auto Protect – Best Basic Plan – This company’s warranty plans are good candidates for the title of best overall. Their Foundation option acts like a powertrain warranty, but at the same time covers differential and cooling assembly.
Conclusion on What is the point of a Used Car Warranty
The point of buying a used car is for coverage when unexpected repairs arise. This can come in handy, especially due to the fact that as the car ages, it is likelier to have more issues. However, a used car warranty is not for everyone. When purchasing a used car, check to see if there is still a warranty applicable and what type of warranty or service contract it has, and its coverage. If it doesn’t come with a warranty, you’ll want to weigh the pros and cons to see if a used car warranty is the best option for your financial situation.