Auto Warranty

Auto Warranty Basics

An auto warranty gives a buyer added protection. If a mechanical breakdown or complete failure occurs, a warranty can cover all or part of the costs. In some cases, wear and tear coverage is also available.

Just as there are many different types of vehicles that you can buy, there are many different types of auto warranties. However, all of these warranties can be broken down and sorted into two major categories: new car warranties and used car warranties.

New Car Warranties

A new car warranty is included in the price of your car. Today, all new autos come with a manufacturer’s warranty. The length of the auto warranty varies and depends upon the make, model, and manufacturer of the vehicle. The most common length for auto warranties is three years, but warranty coverage can last anywhere from one year to ten years. Some new car warranties are also the either/or variety—for example, “five years or 50,000 miles”.

Anytime you buy a new vehicle, you usually have the option of purchasing an extended auto warranty. Because an extended warranty can cost you a great deal extra, you will want to make sure that it is worth the extra before making the decision to purchase one.

Used Car Warranties

Used car warranties are not always available. It often depends on the year, make, and model of the car, as well as the dealer you are buying the vehicle from. To find out what type of warranty may come with your used vehicle, look for a Buyer’s Guide sticker in the window. The Buyer’s Guide sticker is required by the FTC and should be posted on all used vehicles that are sold by dealers. This sticker tells you what type of auto warranty (if any) is available. You should see one of these three terms:

• Warranty. This usually means that the manufacturer’s warranty is still in effect on the auto. However, you may have to pay a fee if you want to obtain the auto warranty coverage.
• Implied Warranties Only. There are two types of implied warranties. The first is a “warranty of mechantability”. With this type of auto warranty, the seller is promising that the product will do what it is supposed to do. In other words, the seller is saying that the vehicle will run. By law, implied warranties require an auto dealer to stand behind their product. If the vehicle doesn’t run, the dealer must fix it. The other type of auto warranty, a “warranty of fitness for a particular purpose” applies only when you are buying the vehicle for a specific purpose, such as hauling a boat. If the dealer says the used vehicle will haul a boat, then it must have that capability. In most U.S. states, used autos are covered by implied warranties under state law.
• As Is or No Warranty. When you buy a used vehicle “as is”, there is no warranty. If the vehicle breaks down, you are responsible for all repairs. However, some states prohibit the sale of “as is” used vehicles. Others have lemon laws that protect consumers from defective purchases. To find out what the law is in your state, contact your Attorney General’s office.

Buying an Auto Warranty

An auto warranty can protect you from having to pay costly repairs on your vehicle. On the other hand, an auto warranty may be just like insurance—you may never need it. Whether you decide to purchase a warranty or not is up to you. You should never feel pressured to do so, and more importantly, you should never purchase a warranty without fully understanding exactly what it will and will not cover.