A car is a significant investment. It’s typically the second largest purchase a person makes in their lifetime, after a home. You rely on your car for nearly every part of your life—you use it to get to work, shuttle the kids, help in your job, facilitate road trips and other adventures, bring home groceries or yard sale purchases, etcetera—and nothing ruins your plans like a problem with your vehicle. When your car is in the shop, it can feel like your entire world comes to a screeching halt.
Everyone deserves confidence that their vehicle will function, even those who invest in a pre-owned vehicle. Knowing there’s a safety net to protect your investment—in the event of a part failing or breaking—will bring you that confidence. So, when you’re visiting your local used car dealer, you might be curious about what warranties they offer. Alternatively, the dealer might offer to sell you their own pre-owned warranties.
When you shop new, there is no choice; the car comes with coverage, and you don’t even have to decide whether or not you want it. But when you shop used, you typically have to pay extra for a warranty. That leaves many wondering things like, is a used car warranty worth it? What kinds of pre-owned warranties are there? What should they cost? Here is everything you need to know about used car warranties.
First, Check If the Original Warranties Are Still Active
Depending on how old a used car is, the original factory warranty could still be active. Most cars roll out of the factory with bumper-to-bumper warranties that range from 36,000 miles (or three years) to 60,000 miles (or five years). They also often have powertrain warranties that can last up to 100,000 miles or ten years. If your vehicle falls within these time frames or mileage limits, you might still benefit from the vehicle’s original warranties.
These warranties follow the vehicle identification number (VIN) of a car—not the owner—so you should be able to easily discover if the vehicle in which you’re interested is still covered by the original warranties. The dealership you work with can help you find this information, too.
The Different Types of Used Car Warranties
If you determine that you need or would like additional protection for your vehicle, you’ll encounter three main types of used car warranties. They are as follows:
Manufacturer-Backed CPO Vehicles – You can purchase a Certified Pre-Owned vehicle through the manufacturer’s CPO program. These vehicles are typically gently used and have no accident history. They also come with a set of warranties provided by the manufacturer, so you don’t have to go shopping around for other providers.
Dealership CPO Programs – Some dealerships offer CPO vehicles for which they create their own warranty packages. These vehicles will also have to meet age or mileage standards, so they’ll likely be gently used.
Third-Party Warranties – Some companies sell stand-alone warranties for used cars. You can pick and choose between different options with a variety of terms. You are not married to any set warranties, the way you are with CPO vehicles.
How Used Car Warranties Work
Used vehicle warranties can work in a number of different ways, not unlike car insurance or health insurance. Some require a set co-pay with every repair. They could also have a deductible, and only after that is met does the warranty kick in. Others don’t require a co-pay or deductible and begin paying for repairs right away; these will typically have much higher premiums than those with co-pays or deductibles.
Some used car warranties require you to pay out of pocket upfront, and then they reimburse you. Others let you file your claim, and they pay the mechanic directly. Ask yourself what payment structure you’d be most comfortable with. If you don’t have the funds available to front large repairs, you might want a warranty that pays the vendor directly.
Keep in mind that warranties are made to cover factory-originating issues; they do not cover repairs related to accidents. Your regular car insurance is designed to cover those. Also, keep in mind that most used car warranties do not cover routine maintenance, such as oil changes and tire rotations.
What Do Used Car Warranties Cost?
There can be a great deal of variance in price from one used car warranty to the next. Some plans are as little as $120 a month, while others could be over $300 a month. Many factors influence price, including the make and model of the vehicle, the age of the vehicle, the mileage on the odometer, and the vehicle’s history report. Some companies that sell used car warranties are also more expensive than others, which is why—if you do choose to go with a third-party warranty company—you shop around and compare prices.
The Different Types of Warranties
There are several common types of used car warranties. If you are going through a third-party seller, you might be able to pick and choose the ones you want or don’t want.
Powertrain – The powertrain warranty covers everything involved in making your vehicle move. So think about the engine, transmission, driveshaft, and front and rear axles.
Bumper-to-Bumper – A bumper-to-bumper warranty covers just about everything not covered by the powertrain warranty. Think brakes, the air conditioner, the suspension, the bumpers themselves, and every other major component between the front and rear bumper.
Anti-Corrosion – An anti-corrosion warranty covers, as its name implies, corrosion—primarily caused by rust.
Anti-Perforation – An anti-perforation warranty covers holes in the body panels that are not caused by accidents.
Should You Get a Used Car Warranty?
This is a question every used car shopper must eventually answer. If you are shopping for a used vehicle, it’s probably because you want to save money—so tacking on extra expenses like warranties can be painful.
The major question to ask yourself is this: Would you be prepared to pay for repairs out of pocket if you didn’t get a warranty? Replacing an engine can cost anywhere from $4,000 to $10,000. Transmissions cost a few grand to replace, too. These are some of the major repairs and replacements to be aware of.
Some drivers know they could pay for these repairs out of pocket if they came up and would rather save the money on the premiums now. Others know they’d need the assistance of a warranty. Consider the age and mileage of the vehicle. Do some research on common issues with the make and model you’re considering, too.
Used Car Warranties Provide Extra Protection and Peace of Mind
Ultimately, a used warranty is another form of insurance, and insurance is always a good idea. Having a used car warranty can help prevent major financial surprises down the line. Some drivers know they wouldn’t be able to afford to repair or replace major components on their own out of pocket; having a warranty can be a form of a forced savings account because, while you pay the premiums, you ensure the funds are there if and when you need them.
Some used vehicles are so new that their original factory warranties are still valid. It’s important to look into this, as you might find you don’t need to buy any used car warranties, or you may only need one kind for now. Like with any policy, shop around, get different quotes, and compare coverage.
