When buying a used car, one of the most important decisions you’ll face is whether to invest in a dealership extended warranty. While a used car might be more affordable upfront, it often comes with a higher risk of unexpected repairs. A dealership extended warranty offers peace of mind by covering certain repairs and issues that may arise after your purchase. This added protection can save you from expensive repair bills and help you avoid stress in the long run.
However, not all extended warranties are the same, and understanding what’s covered, the cost, and the terms of the warranty is crucial before making a decision. In this blog, we’ll explore the benefits of a dealership extended warranty, how it works, and whether it’s worth the investment for your used car.
What is a Dealership Extended Warranty?
A dealership extended warranty is a service contract offered by a car dealership that provides coverage for repairs and maintenance after the manufacturer’s warranty has expired. Most new cars come with a manufacturer’s warranty that covers certain repairs for a limited time, typically lasting a few years or until a certain mileage is reached. However, when you purchase a used car, that warranty is often no longer valid or has already expired.
The dealership extended warranty steps in to fill this gap, offering protection beyond the basic manufacturer’s warranty. It can cover repairs for mechanical breakdowns, electrical issues, and other car components that could fail after the original warranty ends. Depending on the plan, it may also include roadside assistance, rental car coverage, and more.
Unlike the manufacturer’s warranty, which is typically included in the price of a new car, an extended warranty is an additional purchase. It’s designed to offer peace of mind, especially for used car buyers who may face unexpected repair costs.
Do Used Cars Come With Warranties?
Used cars typically do not come with warranties, unless there is remaining coverage from the original manufacturer’s warranty. Most automakers provide bumper-to-bumper warranties that typically last between 3 years/36,000 miles to 5 years/60,000 miles. Powertrain warranties, which cover key components like the engine and transmission, can last from 4 years/60,000 miles to 10 years/100,000 miles. So, depending on the age and mileage of the used car, some factory coverage may still be in place.
Additionally, certain states require used car dealers to provide a limited warranty. For instance, in California, dealers are required to offer a 30-day/1,000-mile warranty on cars sold through a buy-here, pay-here dealership. Some states also have a short grace period, like a 3-day window, during which the dealer is responsible for any issues. However, outside of any remaining factory warranty or state-specific laws, most used cars are sold “as-is,” meaning no warranty is included.
It’s important to review the buyer’s guide provided by the dealer for details about any included warranty or coverage. Lemon laws also apply in many states, offering legal protection if the dealer fails to fix a major issue after multiple attempts, but this isn’t considered a warranty.
Common Coverage Areas:
A dealership extended warranty covers a variety of important areas to help protect your used car from unexpected repair costs. Some of the most common coverage areas include:
- Engine: This is one of the most important parts of your car. The warranty may cover repairs for engine-related issues like overheating or malfunctioning parts.
- Transmission: The transmission helps your car change gears. If it fails, it can be very expensive to fix, but an extended warranty can help cover these costs.
- Electrical System: Modern cars have complex electrical systems. The warranty may cover problems with wiring, the battery, alternator, and other electrical components.
- Air Conditioning and Heating: Climate control systems are essential for comfort. An extended warranty can cover issues with your AC or heater, saving you from costly repairs.
- Suspension: The suspension system helps provide a smooth ride. If parts like shock absorbers or struts wear out, the warranty may help with repairs.
- Fuel System: Problems with the fuel pump, injectors, or tank can be expensive. The warranty may cover these types of repairs.
- Roadside Assistance: Many plans include roadside help, like towing, tire changes, or fuel delivery if you run into trouble on the road.
These coverage areas can vary based on the dealership and the warranty plan, but they provide extra protection to keep your used car running smoothly.
Common Exclusions Dealership Warranty:
While a dealership extended warranty can offer great protection, it’s important to be aware of potential exclusions. These are areas or situations that may not be covered by the warranty. Some common exclusions include:
- Regular Maintenance: Routine maintenance tasks like oil changes, tire rotations, and brake pad replacements are usually not covered. These are considered part of normal car upkeep.
- Pre-existing Conditions: If a problem with the car existed before you purchased the warranty or was noticeable at the time of purchase, it may not be covered.
- Cosmetic Damage: Issues like scratches, dents, or fading paint are typically excluded from coverage, as they don’t affect the car’s mechanical functioning.
- Negligence or Misuse: If the car is damaged due to improper use, neglect, or accidents, the warranty may not cover repairs. For example, driving the car off-road when it’s not designed for it could void coverage.
- Wear and Tear: Some parts that naturally wear out over time, like tires, wiper blades, or batteries, might not be covered under an extended warranty.
- Aftermarket Parts: If your car has aftermarket parts (parts not made by the original manufacturer), repairs or replacements to those parts may not be covered.
It’s essential to read the terms and conditions carefully to understand what is and isn’t included in your specific extended warranty plan.
Benefits of a Dealership Extended Warranty on a Used Car:
A dealership extended warranty on a used car offers several benefits, giving buyers peace of mind and protection against unexpected repair costs. Here are some key advantages:
Protection Against Expensive Repairs: One of the main benefits of an extended warranty is that it helps cover the costs of expensive repairs. Without this coverage, major repairs like engine or transmission issues can be very costly, but the warranty can help reduce these financial burdens.
Peace of Mind: Knowing that your car is covered for unexpected breakdowns can reduce stress. You won’t have to worry about paying for repairs out-of-pocket, which can make owning a used car more affordable and less stressful.
Comprehensive Coverage: Dealership extended warranties typically cover many important car components, such as the engine, transmission, electrical systems, and air conditioning. This broad coverage helps ensure that you’re protected from a range of potential issues.
Added Value for Your Car: Having an extended warranty can increase the resale value of your used car. Potential buyers may be more willing to purchase a car that’s covered by a warranty, as it offers them additional protection.
Roadside Assistance: Many extended warranties include added perks like roadside assistance, offering services such as towing, battery jump-starts, and flat tire changes, which can be incredibly helpful in an emergency.
Convenience: Dealership warranties often provide easy access to repairs through the dealership’s network of trusted mechanics, saving you time and effort in finding a reliable repair shop.
Potential Drawbacks to Consider:
While a dealership extended warranty offers many benefits, it also has some drawbacks that buyers should consider before making a decision:
Additional Cost: One of the main drawbacks is the extra cost. An extended warranty is an additional purchase on top of the cost of the used car. Depending on the plan and coverage, it can add up to a significant amount of money.
Limited Coverage: Not all dealership warranties cover everything. Some may exclude certain parts or services, such as routine maintenance, cosmetic repairs, or damage caused by accidents. This means you could still face unexpected costs.
Complex Terms and Conditions: Dealership extended warranties often come with complex terms and conditions. It can be difficult to understand exactly what is and isn’t covered, which may lead to confusion or surprises when you need to make a claim.
Limited Coverage Duration: While the warranty extends beyond the original manufacturer’s coverage, it may not last as long as you expect. Once the warranty expires, you’ll have to pay for repairs out-of-pocket.
High Deductibles: Some warranties have high deductibles, meaning you might have to pay a large portion of the repair costs before the warranty kicks in. This can reduce the overall value of the coverage.
May Duplicate Existing Coverage: If your used car already has some form of warranty (like a remaining manufacturer’s warranty or a third-party plan), the dealership warranty may overlap with it, resulting in unnecessary extra cost without providing significant added protection.
Limited Flexibility in Repairs: Dealership extended warranties often require you to use specific repair shops or service centers. This could limit your choices and might be inconvenient if a preferred shop is not included in the network.
How Much Does it Cost on a Used Car?
The cost of a dealership extended warranty on a used car can vary widely depending on several factors, including the car’s make, model, age, mileage, and the level of coverage you choose. Here’s a general breakdown:
Average Cost Range:
Basic Plans: $1,000 to $2,500 for limited coverage that includes essential components like the engine and transmission.
Comprehensive Plans: $2,500 to $4,000 for plans that cover a broader range of systems, such as electrical components, air conditioning, and more.
Factors Influencing Cost:
- Vehicle Type: Luxury or high-performance cars tend to have more expensive warranties due to higher repair costs.
- Coverage Level: Plans with extensive coverage or additional perks, such as roadside assistance or rental car reimbursement, will cost more.
- Deductibles: Lower deductibles mean higher upfront costs for the warranty but reduce repair expenses later.
- Dealer Markup: Some dealerships add extra charges to the warranty price, so it’s worth negotiating or shopping around.
- Vehicle Age and Mileage: Older cars or those with higher mileage are seen as higher risk and may come with more expensive warranty plans.
Before purchasing, compare plans and costs from the dealership and third-party providers to ensure you’re getting the best value for your needs. Always read the fine print to avoid hidden fees.
Is a Dealership Warranty on a Used Car Worth It?
Deciding whether a dealership warranty on a used car is worth it depends on your situation and the specific warranty being offered. Here are some factors to consider:
When It May Be Worth It:
- If you’re concerned about unexpected repair costs, a warranty can provide financial protection and reduce stress.
- If the car you’re buying has expensive parts, such as a luxury or high-performance vehicle, the warranty may save you significant money in case of major repairs.
- A well-designed warranty that covers critical components like the engine, transmission, and electrical systems can be a good investment.
When It May Not Be Worth It:
- If you’re buying a reliable car with a solid maintenance history, you might not need the extra protection.
- Some warranties are expensive and may not provide enough value for their price.
- Limited coverage, high deductibles, or restrictions on where you can get repairs done can make the warranty less appealing.
Calculate the warranty cost and compare it to potential repair costs for the car. If the warranty offers significant protection at a reasonable price, it might be worth the investment. However, always read the terms carefully to understand what’s covered and excluded.
Factors to Consider Before Purchasing:
When deciding whether to purchase a dealership extended warranty, it’s essential to weigh several factors. Here’s what you should consider:
- Older cars or those with higher mileage are more likely to experience mechanical issues, making an extended warranty more beneficial. If your car still has some factory warranty coverage, you may not need additional protection right away.
- Evaluate the cost of the warranty against potential repair expenses. If you’re on a tight budget, a warranty can provide peace of mind by reducing the risk of unexpected repair bills. However, ensure the cost fits into your financial plan.
- Frequent driving or driving in challenging conditions (like extreme weather or rough terrain) increases wear and tear on your car. A warranty can offer valuable protection if your vehicle is more likely to require repairs.
- Not all dealerships offer the same level of service. Research the dealership’s reputation and ensure they have a strong track record for honoring warranties and providing quality repairs.
- Read the fine print carefully. Pay attention to what’s covered, excluded, and any additional fees like deductibles. Make sure the warranty aligns with your needs and expectations.
Considering these factors will help you make an informed decision and determine whether a dealership extended warranty is a worthwhile investment for your used car.
Alternatives to Dealership Extended Warranties:
1. Consider Third-Party Warranty Providers for Cost Savings and Flexibility
Third-party providers often offer more competitive pricing and greater flexibility compared to dealership warranties. They may allow you to customize your plan based on your specific needs, such as choosing coverage for only high-cost repairs like the engine or transmission. Additionally, these warranties can sometimes be used at a broader network of repair shops, giving you more convenience.
2. Explore Manufacturer-Certified Pre-Owned (CPO) Programs for Built-in Protection
Certified Pre-Owned (CPO) vehicles often come with extended warranty options provided directly by the manufacturer. These programs ensure the vehicle has undergone rigorous inspections and typically include coverage that extends beyond the original factory warranty. While CPO cars might cost more upfront, the added protection and reliability can be worth the investment.
3. Opt for Emergency Roadside Assistance for Basic Protection Needs
If your primary concern is covering roadside emergencies like towing, jump starts, or flat tires, emergency roadside assistance programs may be a simpler and cheaper alternative. Many auto insurance companies and organizations like AAA offer affordable plans with nationwide coverage, providing peace of mind without the need for a full warranty.
4. Build an Emergency Fund for a Flexible Repair Solution
Instead of purchasing a warranty, you could set aside money in a dedicated emergency fund for unexpected car repairs. This approach gives you full control over how the money is used and eliminates concerns about exclusions or denied claims. Over time, an emergency fund could save you money compared to paying for a warranty, especially if your car remains reliable.
Safeguard Your Investment With American Dream Auto Protect’s Extended Warranty:
Protect your investment and drive with confidence with American Dream Auto Protect! When it comes to extended warranties for used cars, we’ve got you covered with comprehensive, flexible, and affordable plans tailored to your needs. Avoid the stress of unexpected repair costs and enjoy peace of mind knowing your vehicle is protected from costly breakdowns.
Our plans include coverage for essential components like the engine, transmission, and more, so you can focus on the road ahead. Unlike dealership warranties, we offer transparent terms, competitive pricing, and a nationwide network of trusted repair shops.
Don’t wait until it’s too late, invest in your vehicle’s future with American Dream Auto Protect. Whether you’re buying a used car or looking to extend your coverage, we’re here to help you make the smart choice. Call us today or visit our website to get a free quote!
Frequently Asked Questions:
What is the difference between a dealership extended warranty and an aftermarket warranty?
A dealership extended warranty is offered by the car dealership, often backed by the manufacturer, and may require repairs to be done at the dealership or approved locations. Aftermarket warranties, provided by third-party companies, usually offer more flexibility in repair locations and coverage options but may vary in reliability and service quality.
Can I purchase a dealership extended warranty after buying the car?
Yes, many dealerships allow you to buy an extended warranty after the initial purchase. However, it’s often more expensive if purchased later, so it’s worth considering at the time of purchase.
Does a dealership extended warranty cover regular maintenance?
No, most extended warranties do not cover regular maintenance like oil changes, tire rotations, or brake pad replacements. These are considered routine upkeep and are the owner’s responsibility.
Is a dealership extended warranty transferable if I sell the car?
In many cases, dealership warranties can be transferred to the new owner, but this varies by provider. Transferability may increase the resale value of your car, so check the terms and conditions of your warranty.
What happens if I cancel my dealership extended warranty?
You can usually cancel your extended warranty and receive a prorated refund based on how much of the warranty term has been used. Be sure to ask the dealership about their cancellation policy before signing up.
Are all repairs covered under a dealership extended warranty?
No, extended warranties typically have exclusions such as wear-and-tear items (e.g., tires, brake pads) and cosmetic damage. Review the warranty terms carefully to understand what is and isn’t covered.
How do I know if my used car still has factory warranty coverage?
You can check the car’s vehicle identification number (VIN) with the manufacturer or ask the dealership to verify remaining factory warranty coverage.
