Car Warranty Guide

Car warranties help relieve some of the burden of car repairs, but it’s important to choose the right provider. The top companies offer multiple vehicle protection plans and reliable customer service.

Whether you intend to get a new or used vehicle, you need a good warranty to take good care of your purchase. To most of us, our car is the most or second most valuable thing we have. As such, we want to ensure that it is taken good care of. In order to help you make a sound decision when considering the best coverage, this guide provides all of the main info. 

What is a Car Warranty?

A warranty is a promise made by the car manufacturer to help pay for covered components and/or repairs if they fail during your coverage, as specified by the auto maker. While confusing, some factory warranties also apply to pre-owned vehicle that are factory certified.

All cars come with free factory warranty coverage for limited time and mileage. After that, an extended car warranty can help cover repairs that are due to a mechanical breakdown. Damage from accidents isn’t covered by a car warranty – that’s what your car insurance company is for. 

Car owners can get extended warranty plans from manufacturers or from third-party providers as vehicle service contracts. For example, you can get a Volkswagen extended warranty from Volkswagen, or you could get a protection plan from Endurance or CarShield instead. 

Extended warranties can be customized in a number of ways. Basic extended car warranties cover the powertrain (engine, transmission and drivetrain), while high-level plans almost match factory bumper-to-bumper warranties.

You can choose specific time and mileage limits to suit your driving habits, as well. If you have a breakdown under warranty, the warranty company will pay for the repair, minus a deductible, and it may cover a rental car and reimburse you for towing, too.

Car Warranties Explained

If you intend to buy a vehicle for the first time, you might not be sure how this all works. But that should not worry you since we are here to help ease the tension. It is accurate to state that nowadays, cars have become more reliable and durable. Compared to the past, modern cars can go past 150,000 miles without experiencing major mechanical complications.

Car Warranty 101

However, you must bear in mind that cars have also become more sophisticated. The engine relies more on electronic systems to perform. As such, without careful maintenance, a lot of things could go wrong.

Car Warranty Types And Coverage Differences

There are many different extended warranty plans on the market, some of which may fit your needs more than others. Below are the types of extended warranties:

Types of Factory Warranties

When it comes to car warranties, the only warranty that is a literal warranty is the written guarantee from the automaker, which is required by law, that promises to repair your vehicle is various parts fail during a specified period.

If you are the second owner of a vehicle, the new car warranty may have been transferred to you if you purchased before the original warranty expired. Below are the types of factory warranties:

• Factory Limited Warranty–  come with the vehicle when it is purchased and cover most systems on the vehicle except basic maintenance and powertrain components. They are the most comprehensive and shortest of new car warranties. Limited warranties range from 3 years/36k miles to 6 years 72k miles.
• Factory Powertrain Warranty- covers all the main components that make a car run, including the engine, transmission, front/rear drive system, and related components (gaskets, seals, driveshafts, axles, transfer case, and differential. Factory powertrain warranties cover fewer components and last longer than the factory limited warranty. Range from 10 years/100k miles to 4 years/50k miles.
• Lifetime Limited Parts Warranty– covers a small amount of basic parts for the entire lifetime of a vehicle. Can range to to 200k miles or longer.
• Emissions Warranty- covers repairs related to emissions components that are outside of the vehicle owner’s control. Manufactures in the US are required by law to provide emissions coverage for 5 years/50k miles.

Other Factory Warranty Types

• Drivetrain Warranty- covers the same parts as powertrain warranty except the engine.
• Corrosion Warranty- corers repairs related to issues related to rust or perforation; range from 4 years/50k miles to 12 years and unlimited miles.
• Factory Accessory Plans- covers factory-made components such as protective paint films, wheel locks, and interior electrical/tech (radio, lights, blu-ray, tablet holders etc.)
• Electric Vehicle & Hybrid Warranty- government required coverage for essential hybrid and electrical vehicle components; ranges from 8 years and 100k miles to 10 years and 150k miles.
• Maintenance Plans- covers costs for regular planned maintenance (often tire rotation, oil and transmission fluid changes, or replacement filters) as stated in the ownership manual.

Extended Warranty Types

Extended car warranty companies offer a wide variety of plans, ranging from basic plans that extend the original powertrain warranty to plans that cover nearly every component on the vehicle. Below are the 4 basic types of extended warranties:

• Bumper-to-Bumper- covers everything in a powertrain warranty plus electrical, a/c, and technical components, usually every component on the vehicle unless excluded.
• Powertrain- covers the most essential parts needed to make your vehicle run; different than their manufacturer powertrain warranty in that it lasts as long as the service contract.
• Named Component– only covers parts specifically stated in the contract.
• WRAP- often purchased after the limited bumper to bumper coverage expires; supplements the powertrain coverage, essentially restoring most of the coverage that the vehicle had under its limited warranty.

Other Extended Warranty Types

• Wear-and-tear-warranties: covers many parts need to be replaced from regular usage like filters, tires, brakes, fuses etc; not offered by most factory warranties but some 3rd party plans cover wear and tear parts.
• Powertrain “Plus” Plans: intermediate plans that cover more than a traditional powertrain warranty and less than a bumper to bumper plan. In addition powertrain components, covers engine components (water pump, oil pump, connecting rods), transmission components (transmission mounts, vacuum modulator, torque converter), and drive axle components (hub bearings, axle shafts, universal joints).
• Premium Plans– covers more than traditional bumper-to-bumper plans, including anything related to heating and a/c, enhanced electrical and high tech, suspension, braking steering, and fuel delivery; high tier plans often include added perks like rental car reimbursement, trip reimbursement, roadside assistance, and discount/rewards programs.

Alternative Options For Coverage Vs. Extended Auto Warranties

In addition to traditional extended warranty providers, insurance companies offer alternative coverage types in the form of car insurance and mechanical breakdown insurance. Below is a comparison of these options with extended warranties:

Car Insurance: While car insurance provides reimbursement for damage or medical bills that occurred during a car accident, theft or environmentally caused (usually weather) incident, it doesn’t cover vehicle repairs related to normal use.

Unlike service contracts, car insurance is federally regulated and required in most states. Car insurance providers usually offer coverage in other insurance areas (health, home, rental) because insurance companies (including MBI providers) are required to have the same casualty and property license that other insurance areas require.

Mechanical Breakdown Insurance: Some insurance companies offer mechanical breakdown insurance (MBI). Like extended warranties, mechanical breakdown insurance pays for auto costs related to wear and tear and routine maintenance. While mechanical breakdown insurance typically less costly with more payment options than extended car warranties, the coverage is typically more limited.

Extended Car Warranties (Comparison): Instead of covering damage incurred in major instances, warranty companies normally offer services only pertaining to vehicle maintenance needed as a result of normal use. Because car warranties only cover issues related to vehicle normal use, they are most specialized, which allows them to offer more coverage options and better service.

What Does “Exclusionary” Mean?

In terms of contract language, there are two main categories of warranty coverage: exclusionary and stated component. Exclusionary plans can cover thousands of components, so it’s easier to list the parts not covered instead. Anything that isn’t listed on the contract is covered.

Stated-component contracts are the opposite. They list every covered item or group of items. These contracts cover fewer parts than exclusionary plans.

Bumper-to-bumper warranties are exclusionary contracts. Powertrain warranties are stated-component warranties. You can find factory and aftermarket warranties that offer both types of coverage.

What Makes a Good Car Warranty

While it’s important to know how long bumper-to-bumper and powertrain warranties last, there are also some other things to think about. Many auto manufacturers include perks like roadside assistance along with warranty coverage.

Here are a few added benefits you might find from different companies.

• Roadside assistance: This usually covers towing, jump-starts, spare tire installation, fluid delivery and lockout services. Some warranties only reimburse drivers for roadside costs.
• Rental car and trip interruption: Warranties can provide rental car allowances during repairs and reimbursement for lodging and food when a breakdown happens far from home.
• Towing: At the very least, most contracts provide towing reimbursement in the case of a covered breakdown.
• Free maintenance: Some manufacturers, like BMW, provide a period of free scheduled maintenance.
• Wear item coverage: Companies can cover wear items like brake pads and filters for a specified term.
• Wear and tear: Some warranties include coverage for wear and tear, but this is rare.
• Tire coverage: Tires could be covered by the auto or tire manufacturer.

Watch Out for These Disadvantages

There are also some things you should check during your car warranty comparison, whether it’s from a factory or third-party provider.

First of all, it’s important to know when the warranty starts and ends. Some warranties begin at the in-service date, while others begin on the purchase date. Be aware that a warranty expires when either the time limit or mileage limit is reached. So, a warranty of 5 years/60,000 miles could expire in three years if you hit 60,000 miles first.

When looking at third-party providers, read the contract and see what the maximum payout is.  A good contract will pay for repairs up to the market value of your vehicle. Some plans have a lower limit.

For example, one plan may only pay out $5,000 in total over the course of the warranty. While you might not use the entire $5,000 allowance, certain catastrophic repairs could cost much more than that. It’s better to have a higher payout limit just for the added security.

Another thing to consider is if the warranty company will pay the repair shop directly or if it will reimburse you after you’ve already paid for the repair. Obviously, the first option is preferable.

A good warranty will remove as much stress as possible during a breakdown. It will provide easy-to-access roadside assistance. The warranty should have clear instructions for obtaining coverage and also authorizing emergency repairs when the claims office is closed.

Consider an Extended Warranty Next

To cover your car after its factory warranty expires, you can get an extended warranty. These go by different names, but true extended warranties are offered and backed by the manufacturer. In fact, many warranties sold by dealers are really vehicle service contracts backed by another company.

Factory warranties are great, but they all expire. And many expire on or before 60,000 miles. After that, repairs can become expensive, especially repairs to the powertrain. RepairPal estimates a full transmission replacement can cost between $5,401 and $5,696. Of course, that’s an extreme example, but repairs like that can be necessary.

Extended warranties can also come with perks like roadside assistance, trip interruption and rental car coverage. Dealer-backed plans often require drivers to visit a dealership for repairs, but third-party warranties let drivers go to any mechanic certified by the National Institute for Automotive Service Excellence (ASE).

Are Extended Car Warranties Worth the Cost?

Not everyone will agree on whether an extended warranty is worth it. From a financial perspective, an extended car warranty can be a good idea if you don’t have enough savings to use on unexpected car repairs, or if you can’t access credit and pay it off quickly.

Extended warranties can also give you peace of mind that repairs are covered. In exchange, you’ll make a monthly payment (unless you pay for the warranty in full). There’s always the possibility that you’ll pay more than the repairs covered by the end of the warranty. At the same time, it could save you from paying for a $2,000 transmission repair out of pocket.

Most extended auto warranties can be transferred to subsequent owners, as well. Having an extended warranty can be attractive to buyers when you sell your car to a private party.

This guide covers the essentials of car warranties, including how they work, their different types, coverage length, and cost.

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Car Warranty Guide

Car Warranty Meaning

A warranty is an agreement stating the dealership you bought your car from that will cater to repair your car for some time. Note that the contract is not about paying for all sorts of damage your car might encounter. That’s why it is important to know the policy well. Therefore, the warranty will not cover damages resulting from accidents or using the car in a way that the manufacturer not specified. Additionally, you warranty will not take care of normal use.

How Does A Car Warranty Work?

New vehicles typically come with a warranty, where the manufacturer covers repair costs that come up with the vehicle, especially issues resulting from factory issues. Similar to an insurance plan, if something goes wrong, when you take your vehicle to be repaired, covered repairs are paid for, which can save you thousands in out-of-pocket costs.

Let’s say you purchase an extended warranty and then experience a breakdown. What are your next steps?

• The first thing you’ll do is gather your warranty documentation and get an estimate for the repair from an approved auto shop.
• Next, you’ll submit a claim to the warranty company. They will confirm whether the repair you need is covered. The warranty company will also tell you if they’ll pay for the repair directly, or if you’ll pay the bill and get reimbursed. This depends on your specific warranty.
• Then, you can take your car in for the repair, same as always—except you’ll be sure that it’s covered and your budget will remain intact. Your provider may even cover rental car bills, if necessary.

Car Warranty Vs. Car Insurance

Whiles warranties and car insurance both cover repairs for your vehicle, they are not exactly the same. For instance, warranties typically cover mechanical breakdowns and car insurance covers major incidents like collisions and damage resulting from things like theft and environmental causes..

Vehicle Warranty Vs. Guarantee

The major difference between a warranty and a guarantee is that a guarantee is a more informal and broad promise of customer satisfaction and a warranty is a specified list of components and repairs that are covered resulting from terms specified in the warranty.

Car Warranty Coverage

What’s important in your extended warranty coverage is that it includes repairs from normal, everyday use. This is different from your factory warranty, which likely only covered issues from faulty factory components or error.

What Does A Car Warranty Cover?

A warranty covers repairs for your car’s systems. Exactly what this includes is determined by your warranty and the level of coverage you choose. In general, warranties either are comprehensive and cover almost everything, or they cover the most important system—the powertrain.

Car Warranty Exclusions

Normally, warranties don’t cover regular maintenance, such as oil changes, new tires, tire rotations, inspections, new filters, and windshield wipers.

How Long Does A Car Warranty Last?

The car company determines the mileage of a warranty for new cars. As such, the duration of the warranty will vary among manufacturers and car dealerships. The terms can also vary based on the car model you are talking about.

Typical Car Warranty

The average coverage period is for 3 years and/or 36,000 miles. This means that you are covered for specified repairs for the first 3 years you own the car or the first 36,000 miles you drive it after purchase, whichever comes first (usually mileage comes first).

Car Warranty Period

Some terms cut across and can be used to gauge how long a coverage is supposed to last. Most of the time, you should expect the warranty to last three years or 60,000 miles, depending on the one the comes first.

Some car manufacturers, however, provide warranties with longer terms, so you need to shop carefully. Most individuals find that their coverage runs out before they hit the 8,000-mile mark. In such cases, their cars operated for three years but didn’t cover long distances, which makes sense based on the nature of the contract.

Subaru, Mitsubishi, Alfa, Toyota, Hyundai, Romeo, and Renault provide warranties of up to five years for new cars they sell in places like the UK. Hyundai even goes ahead to include unlimited mileage. Many buyers fall for such marketing stunts. Such deals are worth it if you need that long warranty.

In some cases, long warranties might come with stringent terms, so be sure to check the contract before you opt-in.

Types Of Warranties On Cars

When shopping for an auto warranty and comparing plans, you’ll see different terms and warranty types that all cover different components of your vehicle.

Car Warranty Plans

Here’s an overview of the most common types of warranty plans:

Bumper-to-bumper Warranty

Bumper-to-bumper warranties cover all vehicle mechanical systems, except for a few components explicitly listed as non-covered. Bumper-to-bumper coverage typically includes many items other warranties don’t.

Powertrain Warranty

The powertrain is what makes your car run and includes the engine, transmission, front and rear drive systems, and similar components. A powertrain warranty protects fewer components of your car but usually lasts longer than other types of plans.

Wear-and-tear Warranty

Most warranties do not cover things related to the natural wear and tear of driving—but good extended warranties do. This means that if a part of your car deteriorates from normal, everyday use, its repair or could be covered.

Maintenance Plans

A maintenance plan is similar to a prepaid service plan, but with more coverage. Like a service plan, it covers routine maintenance like oil changes, inspections, and basic maintenance, etc But unlike a service plan, this also covers some auto items that deteriorate with natural wear and tear—things like fuses, lights, and brake pads. It’s important to note that tires are covered in a separate warranty that comes directly from the tire maker, so they typically aren’t covered in a maintenance plan.

Emission Warranty

According to the EPA, emission control warranties cover emission related failures that are beyond your control. By law, manufacturers have to provide broad emission warranty coverage for cars younger than five years old or that have less than 50,000 miles (whichever comes first). If your car was made after 1972, the emissions warranty information will be in your owner’s manual.

Factory Accessory Plans

These plans are extended coverage specifically for factory accessories. Examples of factory accessories include alloy wheel locks, protective paint films, illuminated door sills, and tablet holders.

Rust or Corrosion Warranty

A rust or corrosion warranty (sometimes called an anti-perforation warranty) helps with problems related to rust-through. If you live in the north where streets are often salted in the winter, or by an ocean where rust damage is common, this could save you tons.

Car Warranty Providers

The two types of auto warranty providers are manufacturers and third party providers (or extended warranty companies). Below are descriptions concerning both.

Manufacturer Car Warranty

Manufacturer car warranties are car warranties provided by the automaker when one purchases the vehicle. These generally come in the form of new car factory warranties, CPO warranties, and factory extended warranties.

Aftermarket Auto Warranty

Many companies can sell you a third-party or aftermarket warranty. This is the same thing known as the after-market warranty. They have warranties for cars that are up to 12 years old. Note that cars that expensive cars when new, older vehicles, and newer cars with high mileage will have higher premiums.

If you check the market well and find a policy that you are happy with, feel free to go for it. The company will then reimburse you for any issues within the period of warranty. However, it is vital to understand that third-party warranties come with many exclusions compared to factory warranties, although the latter also tends to come with more options.

Vehicle Service Contract Vs. Warranty

While aftermarket vehicle service contracts are typically referred to as “extended warranties”, they aren’t technically warranties. Along with being provided by car warranty companies and having more options, differences between a vehicle service contract and a warranty are highlighted in the list below:

Car Warranties

A warranty is a contract stating that the manufacturing company or the dealership you acquired your car from will pay your vehicle bills for some time.

Factory Car Warranty

A factory auto warranty is provided by the auto-maker, who agrees to pay for specified fixes and or parts resulting from defects. You must note that all types of cars come with a manufacturer’s warranty. However, to get a compensation, you must go through one of the brand’s dealers.

Extended Car Warranty

An extended warranty provides coverage for a vehicle after the original factory warranty expires. While some extended car warranties are offered by the car brand, you will typically need to purchase a this type of extended warranty within a specified time frame. That said, this type of warranty is typically provided by a company dedicated to selling and administering extended warranties. When purchasing an extended car warranty, make sure to read the VSC so that you understand all your options before signing.

Vehicle Service Contract

Extended warranties provided by third party companies are called a vehicle service contracts. In a vehicle service contract, a company agrees to pay for vehicle expenses that incurred as a result of normal use. Buying an extended warranty from a third-party provider tends to be less expensive than an extended warranty from the automaker. Some plans come with added benefits like roadside assistance.

Car Warranty Cost

The price of an auto warranty can be based on these factors and personal details:

• Your car’s age
• Your car’s mileage
• Coverage level
• Your driving habits
• Your provider
• If you choose to add things like roadside assistance

Car Warranty Prices

There are tons of plans available with varying levels of coverage. Compare plan details to find one that’s just right for your needs. If purchased from the dealer, plans are about $1,000 to $1,500. These extended warranties tend to be more expensive than going through a third party.

Getting The Best Price

The best way to get a good price is to negotiate the details. For new and certified pre owned vehicles, the price of the warranty is built into the vehicle’s price. Often, you can purchase an extended warranty from the dealer when you buy a car, in this case, talk to various dealers to scope out your options and details and see if you can haggle for terms on an extended warranty or premium protection plan.

Benefits Of A Car Warranty

• Save money. Did you know warranties are cheaper than many common expenses?
• No surprises: Breakdowns rarely happen at a convenient time. A warranty allows you to be financially prepared.
• Better Maintenance: People often drive their cars longer than the original warranty lasts. An extended warranty protects you for years to come.
• Peace of mind. Knowing you’re covered and not having to stress out-of-pocket repairs.
• Extra Benefits: Added perks like roadside assistance.

Is A Car Warranty Necessary?

The average car owner keeps their vehicle for 6.5 years, but many factory warranties only last for three years, meaning that without an extended warranty, your car is unprotected for more than half of its life. What’s more, extended car warranties pay for themselves after just one major repair. Being covered has the potential to save you a lot of money. Ultimately, the value of an extended warranty depends on the reliability of your car and the cost of its repairs. You can review the many extended warranty plans here, to find the best value that suits your specific needs.

Is A Car Warranty Worth It?

Depending on your situation, a car warranty can definitely be worth it. An extended warranty can be a good idea if you don’t have a significant emergency fund set up or if you can’t borrow on credit and pay repair costs back quickly.

Many drivers also appreciate peace of mind that repairs are covered whether they use the full value of the plan by the end of the term or not.

In our research, we found most warranty plans from top companies fall between $585 per year of coverage. Monthly payments are usually between $50 and $150 per month. Making a payment like that can be much easier than paying for a $1,000 or $2,000 repair out of pocket. 

Conclusion

Whether you intend to get a new or used vehicle, you need a good warranty to take good care of your purchase. If you intend to buy a vehicle for the first time, you might not be sure how a warranty works.

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