Buyer’s Guide To Used Car Warranties

  • An extended warranty is a way to offset unexpected repair costs.
  • There are numerous used car warranties on the market, but which one is best?
  • Shopping for the right coverage can be tricky and confusing. Start by reading our guide.

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Whether you recently purchased a used car or have owned one for several years, protecting your investment is important. While many prove to be reliable for years, used cars can be particularly prone to breakdowns and repairs due to aging, improper maintenance from previous owners, and defects hidden at the time of purchase.

An extended warranty provides you with peace of mind that – even if you don’t have certainty your used car wasn’t sold to you as a “lemon” – you won’t face serious financial stress when unexpected repairs and issues do arise.

Below, we share everything you need to know about protecting your vehicle through an extended used car warranty. As you begin shopping for an extended warranty, you’ll quickly notice the high number of providers, whether that’s the dealership or a third-party extended warranty company, such as CARCHEX. Our guide can help you figure out how to pick the best provider for your used car.

How Used Car Extended Warranties Work

The extended warranty industry at large can be confusing, thanks to jargon, unfamiliar terms, and lengthy contracts.

It’s helpful to know extended car warranties, including those designed for used cars, are actually vehicle service contracts. A warranty provided with a new car by the manufacturer is technically a warranty, and a third-party warranty is technically a service contract. However, these terms are used interchangeably by consumers and companies in the third-party warranty industry. 

Selecting A Provider & Coverage

You have the option of purchasing a used car extended warranty through your car’s manufacturer or through a third-party provider, like CARCHEX, Endurance, or Protect My Car, among dozens of others. Ideally, the provider you select will be affordable, offer flexible payment options, be known as reputable throughout the industry, and offer a variety of vehicle contracts.

Once you select a provider, you’ll decide on a coverage level. While coverage plans vary from company to company, most third-party warranty companies offer tiered plans that range from comprehensive to basic coverage for the vehicle’s most essential systems, like the engine and transmission.

Main Types of Used Car Warranties

While third-party warranty companies may give their plans unique names, most fall into a few categories:

  • Powertrain: This type of warranty covers the most essential parts of the drivetrain, including the engine, transmission, and related components. These are normally the least expensive types of warranty as they only protect this essential system.
  • Stated Component: Stated component warranty contracts outline the components of the vehicle that are covered by the plan. They tend to be middle-of-the-road options for drivers who don’t want to pay for comprehensive coverage but want more covered than just the powertrain.
  • Bumper-to-Bumper: These plans closely mirror the original factory warranty and have a short list of exclusions. As the name implies, they tend to cover the majority of components between the vehicle’s front and rear bumpers. The contract will typically list what isn’t covered as opposed to every single part that is.
Buyer's guide to used car warranties

Using Your Extended Warranty

Once you sign the contract, there will be a short waiting period, usually either 30 or 60 days, 1,000 miles, or both. After that, any issues you experience under your contract will be paid for by the warranty provider. For example, if you experience engine issues covered under your warranty, you’ll take your vehicle to an in-network repair shop, where the repair will be diagnosed. A claim will then be submitted to your warranty company. If the warranty company determines the repair is covered, they’ll pay for the repair before or after it’s complete. 

Depending on the terms of your contract, you may be required to pay in full for the repair and wait for reimbursement. Alternatively, your provider may pay the repair facility directly for you. Similar to insurance plans, most used car warranty plans require customers to pay a deductible for each claim, which can range from $50 to $200, although some warranty providers, like CARCHEX, offer plans with $0 deductible. Plans with lower deductibles have higher monthly payments.

Extra Benefits of Used Car Warranties

To provide more value for customers, most used car warranty companies include things like 24/7 roadside assistance and other benefits in all of their plans. However, the true value of these added benefits varies greatly from provider to provider. For example, if two used car warranty contracts include rental car reimbursement, one may have a $30 per day cap whereas the other has a $70 per day cap.

To summarize, used car warranties work like an insurance policy for your car. You pay a small, pre-agreed upon amount upfront over the course of several months or years, and your warranty protects you against surprise future repairs for the length of its term, which can range from one year to more than 10 years.

Used Car Warranties: Should You Get One?

Even if you bought your used car from a company you trust, have access to the vehicle’s history, and have researched its reliability score and reviews, no car is 100 percent immune to the occasional issue, as with any mechanical product. 

Protecting your used car investment should be at the top of your list of priorities. To determine whether a used car protection plan is right for you, consider these things:

  • Do you plan to keep or sell the car? If you’re planning on owning the used car for several years, extended warranty coverage can protect you from expensive repair costs. Also, since most extended warranties are transferable, it may increase the car’s resale value.
  • What’s your car’s history? If the car has a history of recurring issues, you may want to seek out coverage. Even frequent problems with minor parts should warrant consideration of a protection plan. Evaluating your car’s history will also shed light on whether a comprehensive, bumper-to-bumper protection plan or a simple powertrain warranty is right for you.
  • Do you have cash set aside for expensive repairs? Engine repairs can cost several thousand dollars, and even repairs to less essential parts can cost several hundred dollars. If the thought of an unexpected bump in monthly expenses makes you anxious, an extended car warranty can protect you.

Whether you purchased your used car from a certified pre-owned dealership or from a friend, driving a car that isn’t brand new can be unnerving, especially if it’s particularly old. A used car warranty is an affordable way to protect yourself from the anxiety of unexpected, expensive repairs.

Buyer's guide to used car warranties

Things To Look For & Know When Shopping For Used Car Warranties

There are dozens of auto warranty providers in the marketplace, so shopping for a warranty can be overwhelming. 

Which plan is best for you? How can you ensure you’re getting quality coverage? Which provider is most affordable? Is the customer service up to par? 

Our Advice: Consider Your Needs

First, think about what you need from your used car warranty. It may help to research your car’s reliability and the cost of common issues and repairs. If you have a documented history of your car repairs, consider that some vehicles show a pattern of having the same issues again and again.

Take a look at your finances and determine whether you can handle the cost of expensive repairs. Using this information, select the level of coverage that will give you peace of mind throughout your ownership of the car. Do you want comprehensive, bumper-to-bumper coverage or protection for just the essential systems?

You’ll also want to evaluate what you’re comfortable paying each month. Consider whether you’d rather have a deductible with each repair or pay more monthly with a low deductible. These decisions are important to make prior to reaching out for quotes.

Here’s a checklist to keep in mind as you consider your needs:

  1. How much can you spend each month on a used car warranty?
  2. What is the mileage and age of your vehicle?
  3. What deductible do you feel comfortable with? Is a $0 deductible option important to you?
  4. Does your vehicle have a history of repairs? A pattern of breakdowns?
  5. How reliable is the make and model of your vehicle? What are the common breakdowns and associated repair costs?
  6. How important are added benefits, like roadside assistance, to you?
  7. Do you want a generous refund policy in case you’re not satisfied with your purchase?
  8. Is it important that your warranty be transferable?
  9. What type of coverage do you want? 

What To Look For With Warranty Providers

When it comes to choosing the best warranty provider, there are a number of important factors to consider. With so many used car warranties on the market, considering these important points will help you make the right decision.

Coverage Options

Have a thorough understanding of the plans and coverage levels offered. Look for companies that offer high-quality, comprehensive coverage that’s insured. The more plans they have, the more you can tailor the coverage to your car. Some companies will just have bumper-to-bumper and powertrain warranties, but others will have options in the middle that may be a better fit for your budget and car.

Positive Reputation & Reviews

The company should also have a solid reputation for following through with the promises included in their contracts, and they should be known for customer service. Partnerships and endorsements from industry leaders can be evidence of this, as can Better Business Bureau (BBB) accreditation and high ratings from the BBB and other review sites. Another good indicator is the number of years the company has in the warranty protection industry.

Here are more used car warranty shopping tips and what to look for in a provider:

  • Strong partnership and endorsements with industry leaders.
  • A positive reputation among customers, as evidenced by multiple review sites and the company’s BBB rating. 
  • A positive relationship with the Better Business Bureau, including accreditation, a positive score, and few complaints.
  • A variety of contracts and plan options that range in term length and coverage and have optional add-ons. The more customization available, the better.
  • Additional perks included with every plan, like roadside assistance, rental car reimbursement, trip interruption services, and an accessible customer service team. 
  • A willingness to walk you through the fine print. The fine print of used car warranty contracts is often the downfall in a relationship between the provider and the customer. 
  • Options for financial flexibility, including monthly payment options, low deductible options, and a willingness to work with you to find a good price.
  • The number of years in business shouldn’t necessarily sway your decision one way or the other, but companies with more experience will better understand customers concerns and preferences.

Peruse a few review websites to see what customers are saying. Does the company seem to put customers first? If you notice a pattern of serious complaints, like difficulty cancelling plans or claims not being paid for, it can be a red flag.

Buyer's guide to used car warranties

What’s The Difference Between A CPO Warranty & An Extended Warranty?

When you purchase a certified pre-owned (CPO) car, it will usually come with at least a year of bumper-to-bumper coverage backed by the manufacturer. Every CPO vehicle undergoes a multi-point inspection by the original manufacturer to ensure the car is in excellent condition. If the car passes the inspection, it’s sold as a certified pre-owned vehicle and a CPO warranty is included with purchase.

A CPO warranty is marketed as one of the benefits of certified pre-owned cars, but the cost of this warranty is baked into the price of the vehicle. While CPO warranties are backed by the manufacturer, this fact also tethers you to the dealership for covered repairs. CPO warranties also typically don’t last for the entire time drivers plan to own the car.

In contrast, an extended warranty is not sold with the vehicle. It’s an add-on product you can purchase from the dealership or a third-party company. Not all providers require vehicle inspections prior to the sale. 

Another contrast is extended warranties can last 10 years or more, and you get to decide the length and type of coverage. Also, many third-party warranties allow you to go to your choice of repair shop.

Used Car Extended Warranty Costs

When shopping for used car warranties, get quotes from several third-party companies before you make a purchase. Individual warranty plan costs are usually not available online, as the cost will vary depending on the plan you choose, the term length, your car’s make and model, and other factors.

Once you’ve received quotes from several providers, make sure you understand the total costs, including fixed monthly payments, deductibles, and even fees for violating certain aspects of the contract. An extended car warranty generally costs from $600 to more than $1,000

Keep in mind used, aging cars are generally more expensive to maintain. Owners of older cars are twice as likely to spend more than $1,000 a year on maintenance and repairs, according to the NPD group. A small monthly payment for protection can save you from a costly repair or replacement bill.

Who Should Provide Your Used Car Warranty?

There are hundreds of third-party car warranty companies that provide vehicle service contracts for used cars. Just a few of these names include:

  • CARCHEX
  • CarShield
  • Endurance
  • AutoAssure
  • Protect My Car
  • AA Auto Protection
  • Concord Auto Protect

The surface level similarity of these companies’ plans, prices, and customer service teams can make distinguishing between them difficult. So, which company is best? 

As we’ve mentioned, industry reviews and other important factors, like the price, number of plans offered, partnerships and endorsements, years in the business, and BBB relationship and accreditation should also serve as a kind of report card for these warranty companies. The more “boxes” a car warranty companies successfully checks, the more likely they’re going to be a reliable, affordable, and satisfactory option.

For example, CARCHEX has been in business for 20 years. They have a BBB accreditation, an A+ rating, and less than 100 complaints in the last 36 months. Additionally, CARCHEX has over a dozen endorsements and partnerships from trusted industry leaders, like Kelley Blue Book and SiriusXM, whereas many third-party warranty providers have two or three.

When considering which provider is best for you, a reputation for quality customer service should be near the top of your list. Warranty plans are ultimately a service, meaning your satisfaction relies heavily on the provider’s willingness to support you throughout the contract’s term length. Even if a provider’s plans look appealing, hundreds of complaints and a mediocre BBB rating are red flags.

Why Choose CARCHEX?

With all of these considerations in mind, it’s easy to see why CARCHEX is one of the leading third-party used vehicle warranty providers in the industry. They provide more than 16 contracts, which are divided into five tiers of protection that range from bumper-to-bumper to powertrain coverage.

Additionally, all CARCHEX contracts are transferable, so if you sell your car, the subsequent owner is eligible for the coverage. 24/7 roadside assistance, towing, rental car reimbursement, and other perks are included.

We think CARCHEX makes it easy for customers to shop in an often jargon-rich industry. Their vehicle protection specialists take a consultative approach and have been known to walk shoppers through the differences between contracts to determine which plan is best for their lifestyle, needs, and budget.

If you want to know what a used car warranty would look like for your vehicle, get a free quote from CARCHEX by calling 866-254-0205 or visiting their website.

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