For most of us, having a car is an essential part of everyday life. Without a car, you can’t go to work, grocery shopping, or have any since of freedom. When it comes to purchasing a car, you don’t have many options. You can either purchase or lease a new car, or go to the used car market to find something. Unfortunately, new cars are so expensive and for many of us, buying a new car is out of our budgets. This is making a lot of people purchase used cars. If you are in the market for a used car, you might want to consider a used car warranty.
In this article we are going to cover everything you need to know about a used car warranty. From the costs, benefits, and disadvantages, we will discuss it!
Why do you need a used car warranty?
Used car’s offer great value. This is especially true because new cars are very expensive, and they depreciate the minute you drive them off the lot. These factors, amongst others, are driving people to the used car market. This is ok! If you are considering purchasing or leasing a new car, or instead buying a second hand vehicle, one thing you must consider are possible mechanical and other issues that could come up.
There are many factors that go into a car purchase. If you have the money to spend, and like new cars, then leasing or purchasing a new car may be right for you. If you purchase a new car, the manufacturer will cover any issues for a certain amount of time.
For instance, many manufactures offer a 3 year bumper to bumper warranty. This means that if anything breaks or goes wrong with the car, they will cover it. New cars also usually come with a longer term, mostly 5 year, powertrain warranty. This won’t cover any of the technology in the car or small things like heated seats, but it will cover the big things. A powertrain warranty covers everything that makes the car go, including the engine and transmission. It may cover other items like the exhaust system. Every manufacturer is different so make sure you read up on what is covered.
If you purchase a used car, chances are that the manufacturer’s warranty, or at least a portion of it, will have expired. You may want to hedge your risks by purchasing a used car warranty. Although these do cost money, they can save you a lot in the end. If you are thinking about buying a used car, definitely look into a used car warranty.
Types of Used Car Warranties
There are several different types of used car warranties. Some are even included in the purchase of a used car. If you purchase a CPO, or certified pre owned, vehicle, then you may get a warranty from the manufacturer or dealer. This is kind of like an extension of the manufacturer warranty are come with cars that meet certain requirements. These can include mileage, year, and more. A CPO warranty is usually free of charge and lasts a certain time frame or certain number of miles. For instance, a CPO warranty may last 2 years or 24,000 miles – which ever comes first.
Another type of used car warranty is one that is not offered by the manufacturer. Instead, it is offered by a third party. A used car warranty can be purchased when you buy a car. Usually a car dealer will partner with a third party that offers the car warranty. Sometimes a used car warranty is backed by the dealership itself. Depending on the type of warranty, and what it covers, it could cost you upwards of a couple thousand dollars. You can choose what your warranty covers, and there are several different tiers of coverage.
The lowest tier may only cover your vehicle for a year and a certain number of miles. The highest tier may be good for 5 years and have no mileage limit (also known as an unlimited mileage warranty).
What does a used car warranty cover?
Not every used car warranty is the same. They may cover your car for a certain number of years, or a specified number of miles. Warranties can also cover different problems with your car.
The most basic warranty should cover your engine and transmission. Warranties that offer more coverage could cover the cost to repair or replace other components of your vehicle. Items covered could include air conditioning, exhaust, brake system components, as well as the myriad of technical components in your car. If you purchase a newer used car that has a ton of technology in it, you may want to get a warranty that covers all of this. These items may include a back up camera, touch screen, blind spot sensors, and more.
A used car warranty can either be inclusionary or exclusionary. An inclusionary warranty will list all of the items that are covered under the terms of the contract. Many of the words in these types of contracts are very specific to reduce the warranty company’s liability. The other type of liability is an exclusionary warranty. Instead of listing all of the parts that are covered, exclusionary warranties only list the parts that aren’t covered. Exclusionary warranties are usually more expensive.
The cost of a warranty and what it covers could also be dependent on the model and make of car you choose to purchase.
Is a used car warranty right for you?
If you decide to purchase a used car, you really should think about a used car warranty. Before purchasing, ask yourself if a used car warranty is right for you. If you purchase a car that is very reliable based on consumer reports and other reviews, like a Toyota or Honda, you may forego a warranty. However if you purchase a vehicle that is prone to mechanical issues, consider purchasing a plan to cover the cost to repair any failures.
You should also consider your financial position. If you have an emergency fund build up to cover any issues with your car, you may not decide to purchase one. However, if you don’t have funds saved that can be put into your car, consider purchasing a warranty. Car repairs can be very costly, and a used car warranty can protect you and your wallet from unexpected break downs.
You will also have to take into consideration the cost of the warranty itself and how you are going to pay for it. If you don’t have the cash to pay for it upfront, many times you can add the cost of it onto the loan you get to buy the car.
Do your research.
Before you purchase a used car warranty, and a used car in general, do your research. Look into common issues with the car and how costly they are to fix. If you purchase a used car with a ton of technology in it, or one that has a complex engine, or is a hybrid, any issues will be costly to fix.
Once you know the kind of car you want, ask your dealer if they offer any warranties. If they do, see if the dealer is backing the warranty or if a third party is. If the third party is, read reviews of the company online. Many car warranty companies are extremally difficult to work with and have many restrictions regarding where you can get your car fixed. At the end of the day, you don’t want to spend all this money on a used car warranty only to not be able to take advantage of it because the warranty company is a pain to deal with.
Buying a Used Car Warranty – Summary
If you are looking into ways to buy a car, and are thinking about getting one on the used market, consider a used car warranty. While they can be costly, they can potentially save you thousands of dollars if there is a major mechanical issue with your vehicle. A used car warranty can be a great way to hedge the risk of owning a used car.