Auto Loan Road Trip - Warranties

By Garrett Lloyd | Apr 4, 2022 7:45:00 AM

A warranty is a promise that a product (in this case, a vehicle) meets certain standards of quality and performance and, if it doesn’t, that it may be repaired, replaced, or returned at no extra cost to the buyer. Whoever is providing you with the warranty is called the "warrantor."

When the details of this promise are stated verbally or in writing, it's known as an “express warranty.” It's highly recommended that you get an express warranty in writing whenever possible. This is often standard when buying from a dealership. A paper-and-ink copy of the warranty will provide you with physical documentation of what it covers, when it expires, and who to contact if there’s a problem with the vehicle or if you have questions. Some auto dealers may even provide you with an electronic copy of the warranty rather than a paper copy.

Warranties are typically valid for a certain number of years and/or up to a certain number of miles. For example, a warranty could state that it expires after five years or once the car reaches 60,000 miles, whichever comes first.

Wear, Tear, and Accidents

It’s to be expected that some parts of your car will need to be repaired or replaced over time as a result of age and usage. The responsibility of paying for these expenses will normally fall to you. This is because most warranties will only cover you in situations where a car part is defective or does not last as long or as well as it's supposed to. Although you may be able to find some warranties that cover the repair/replacement of auto parts due to normal wear and tear, this is generally not the case with warranties that come standard with the purchase of brand-new vehicles. Make sure you understand what your warranty covers and in what situations.

Warranties will not cover damage resulting from accidents. Contact your car insurance provider if you have questions about accident damage. 

Buying a Vehicle "As Is"

If you see a vehicle for sale "as is," that means it's being sold in its current condition and that no new warranty will be included in the sale. By purchasing a car "as is," you assume the responsibility and cost of all vehicle repairs after the sale. A possible exception to this is if the vehicle is still covered under a pre-existing warranty. If it is, find out how much longer the coverage will last and if it will transfer over to you as the new owner. If you find that you won't be covered or that the pre-existing warranty will be expiring soon, you may want to consider purchasing an extended warranty on your own. Otherwise, you'll have to pay for any repairs out-of-pocket. Keep reading to learn more about extended warranties.

Types of Warranties

  • Manufacturer’s Warranty

    With this type of warranty, the automaker acts as warrantor. Most brand-new vehicles come with manufacturers' warranties. Also called a “factory warranty” or “new car warranty,” the cost of coverage is typically included in the purchase price of the vehicle. 

    There are different kinds of manufacturers' warranties. For instance, powertrain/drivetrain warranties only cover a vehicle's mechanical parts, such as the engine and transmission. Corrosion/rust warranties cover a car's sheet metal in case it has to be repaired due to deterioration. Comprehensive or "bumper-to-bumper" warranties cover most of a car’s parts and systems. Many of the manufacturers' warranties that come with brand-new vehicles have bumper-to-bumper coverage. It's also not uncommon for new vehicles to come with multiple warranties, each with their own stipulations.

  • Extended Warranty

    If your vehicle's warranty has expired or you buy a car “as is,” don't worry. You can still get warranty protection by purchasing an extended warranty. Just like manufacturer's warranties, there are many different types of extended warranties (powertrain, bumper-to-bumper, etc.). Additionally, if your car already has coverage but it doesn’t include everything you’d like it to, you can purchase an extended warranty that covers whatever the pre-existing one doesn't. If you’re thinking about buying coverage for a vehicle that you've bought "as is," consider whether or not the cost of an extended warranty will be worth it given the value of your vehicle.

    You've got a lot of options when it comes to choosing where to buy an extended warranty. These options could include a dealership that's selling you a car, the vehicle's manufacturer, your financial institution (if the car is on loan through them), an extended warranty company, or a warranty broker. As you shop around for extended warranties, you may hear them referred to by different names, such as "used car warranties," "vehicle service contracts," "mechanical breakdown insurance," or "mechanical protection plans" (to name a few).

  • Implied Warranty

    Unlike an express warranty, an implied warranty is an unwritten, unspoken promise from the seller to the buyer that a given product will work as it should. For example: You tell a seller that you need a car to commute to work starting tomorrow. Knowing this, they sell you a car that breaks down 15 minutes after the sale. In a situation like this, you could argue that you're covered under an implied warranty. You may be able to speak with the seller to come to an arrangement of some kind, such as a refund (though this may be more difficult to do if the car was sold "as is"). If an agreement cannot be made, you can consider speaking with legal counsel to see if you're protected by an implied warranty.                                                             

Topics: auto loan, buying a vehicle, Auto-Loan-Road-Trip, warranty

Author: Garrett Lloyd