Used Car Warranties
Before you buy, take some time to understand used car warranties and how they'll affect you after your purchase.
What You'll Find Here
Extended Warranties
Certified Used Car Warranties
Other Types of Warranties
Extended Warranties
An Extended Warranty is what the name implies. It extends coverage for mechanical problems once the manufacturer's guarantee runs out. It pays for the repair and replacement of those items covered in the contract.
Some extended warranties provide for 24/7 roadside assistance for emergencies like lock-outs, fuel and fluid delivery, battery jump, flat tire repair, and towing. Some even offer reimbursement for a car rental. Others provide a good deal less.
Be sure you understand the coverage before you sign a contract.
Note that companies offering extended used car warranties are governed by state and federal laws and must be backed by an insurance company that guarantees that the consumer will be able to collect on claims. It's a good idea to ask the seller of the extended warranty to identify the insurance company backing their policy.
Your Obligations
Generally, the warranty agreement requires that the consumer perform scheduled routine maintenance. Failure to comply could void the warranty.
Where to Buy
Most, if not all, auto dealers offer extended warranties on their used cars - either through the manufacturer or an independent warranty company. Generally, they'll offer to roll the cost of the warranty into your monthly payments. Be aware that in most cases, you'll pay more - often a lot more - when you buy an extended warranty through a dealer.
Case in point: Car dealers generally act as the middle man between the warranty company and the customer. One car dealer recently admitted to us that he pays the warranty company approximately $900 for a 12 month/12,000 extended warranty. He then sells it to his customers for $1700. If they balk at the price, he shows what a nice guy he is and lowers it to $1500.
You should know that if you elect to buy an extended warranty through a dealer, the price is negotiable.
Our advice is to go direct to a warranty company or warranty broker to buy your coverage. Yes, they will make a profit on the sale - they are, after all, in business and someone has to buy shoes for their kids. Chances are, however, a warranty purchased through a broker or direct from the warranty company will cost you much less than one purchased through a dealer.
Whom to Choose
It's a good idea to choose a warranty company and/or a broker that handles virtually all makes and models. A broker should be willing - in fact offer - to search the myriad warranty companies to get the best possible price. Finally, once you settle on a warranty company, run them through a Better Business Bureau check.
Certified Used Car Warranties
To help dealers move their used car inventory, manufacturers have instituted a Certification program which, generally, offers warranty coverage - sometimes bumper to bumper, sometimes less - for a pre-owned car up to six years and/or 100,000 on the odometer. [Note the months and mileage and coverage will vary from manufacturer to manufacturer.] The selling benefit is that it provides the customer with a great sense of security that his or her investment will be protected.
What is a certified used car?
A certified used car has been inspected and repaired according to the specifications detailed by each manufacturer. The checklist often has from 100 to 150 items.
Each car must meet these specifications - or be repaired so that they meet them - before being placed on a dealer's used car lot as a Certified Used Car. Although manufacturers' programs vary in specifics, most are fundamentally the same.
We suggest that you take the time to read the warranty and be sure that you fully understand the coverage.
What Do Certified Cars Cost?
The answer is, "more." The reason is that the certification program is really an insurance policy that the dealer - after meeting the inspection requirements - purchases from the manufacturer. Needless to say, the dealer not only passes the cost of the certification on to customer, but in some cases marks it up.
What You Need to Know About Certification Programs
The best certified pre-owned car programs offered by franchise dealers are backed by the manufactures. Some franchised dealers - on their own - will offer what they advertise as certified used-cars. These are not manufacturer programs and the coverage may be substantially less than a factory-backed program.
There are also independent used-car dealers who offer their version of a certification program. You'd be well advised to read all the fine print. Or better, you might find it to your advantage to investigate a used car warranty program from a broker or warranty company.
Other Types of Used Car Warranties Offered by Dealers
As Is
As Is means that you're taking the car as is and that if it should fall apart the moment you get home, that's your problem, not the dealer's.
30, 60, 90 Day 100% Mechanical Warranty
This is probably the best you can hope for with most used car warranties. It covers the mechanical parts in your car.
30, 60 or 90 Day Drive Train Warranty
This warranty covers the engine, transmission and rear axle and nothing more. Some of these warranties come on a 50/50 basis and you should refuse to accept these.
50/50 Warranties
Often dealers will offer to split any repairs for a period of 30, 60 or 90 days. Trouble is, they are the ones who set the prices and you have no idea whether the repair invoice is the true cost of the repair or if you are actually paying the total bill.
Another variation calls for them to pay for parts and you pay for labor. Surprise! The labor is usually higher and when it comes to this type of warranty.
Repairs at Cost
Oh, please! Who's cost? And how do you know the time, labor and parts were actually performed? You don't. Forget this type of warranty.
Implied Warranties
More and more states are passing laws that say a buyer can reasonably expect the car - or for that matter any item you purchase - to perform as designed for a reasonable amount of time without undue problems or expense. You may want to check with your local motor vehicle authorities to get the specifics of the implied warranty in your state.
Sources of Extended Used Car Warranties
