5 things to know about used car warranties

Car salesman talking to a couple after they test drove a carImage: Car salesman talking to a couple after they test drove a car

In a Nutshell

When you’re shopping for a used vehicle, you might have an option to buy a used car warranty. But what exactly does a used car warranty cover? To figure out what your warranty might cover, first see if a manufacturer’s warranty still exists and is transferrable, or if an extended warranty is available. And be sure to tally up the potential costs before you sign a contract.
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If you’re in the market for a used car, you’ll probably want to know what — if anything — might be covered by a warranty in case you need repairs in the future.

New cars typically come with manufacturer warranties. But if you’re buying a used vehicle, it’s crucial to check if there’s some sort of warranty and what it might cover. You’ll want to examine any warranty closely to see whether it’s worth the extra cost, if it’s one you’d have to purchase separately.

When we refer to “used car warranties,” we simply mean any kind of warranty you might get for a used car — whether it’s backed by a manufacturer or dealer.

Buckle up as we examine some important things to know about used car warranties.

  1. Look at the Buyers Guide for warranty details
  2. Check if the manufacturer’s warranty still applies
  3. Read the details of the warranty coverage
  4. Are extended warranties worth it?
  5. Explore the alternatives

1. Look at the Buyers Guide for warranty details

Information about any used car warranty should be available in what’s called a “Buyers Guide.” Dealers are required by the Federal Trade Commission, or FTC, to display this in used cars that are for sale. You can usually find the Buyers Guide displayed on the car’s window.

The Buyers Guide says whether a vehicle comes with a warranty or is being sold “as is.” Buying an as-is car means that if you run into any issues or your vehicle needs repairs after driving it off the lot, you’re likely out of luck. If the car does come with a warranty, the Buyers Guide should include the percentage of repair costs the dealer is required to pay as part of the warranty — if it’s required to pay for any of the repairs at all.

A number of states restrict what vehicles may be sold as is or have different rules around these types of sales. For instance, if a used car is selling above a certain price, an as-is sale might not be allowed — and some states require different disclosures on the Buyers Guide for an as-is sale.

Here are some states with different restrictions and rules around as-is sales.

Connecticut Massachusetts New York
Hawaii Minnesota Rhode Island
Kansas Mississippi Vermont
Louisiana New Hampshire Washington
Maine New Jersey West Virginia
Maryland New Mexico District of Columbia

You can look up your state attorney general’s office and contact them to find out what as-is sale rules apply in your state.

Here are a couple of other things to keep in mind about Buyers Guides.

The Buyers Guide is king …

If the Buyers Guide from the dealership says your car is covered by a warranty but your contract says the sale is as-is, the dealer must honor the terms in the Buyers Guide. What’s stated in the Buyers Guide trumps anything that might be contradictory in your contract related to warranty coverage.

… unless the seller is a private party.

If you’re buying a used car directly from a private party, they’re usually not required to post a Buyers Guide or provide a warranty — it’s possible that there may be implied warranties but you may not want to hang your hat on this. You’d need to sign a written contract providing for what you agree to be covered.

2. Check if the manufacturer’s warranty still applies

There’s a chance that a manufacturer’s warranty still applies when you buy a used vehicle. You may be able to find this under the “systems covered/duration” section of the Buyers Guide.

To reap the benefits of any warranty that’s included, you have to know what’s in it and confirm that it’s transferrable. Ask the dealer for the vehicle’s warranty documents. Once you look over what’s covered, along with other details like the expiration date/mileage, you can reach out to the manufacturer to verify it’s accurate.

A car manufacturer’s warranty often covers a vehicle’s first three years or 36,000 miles, though powertrain warranties may last longer.

3. Read the details of warranty coverage

If your vehicle does come with a used car warranty, the coverage may be limited.

The warranty should give specifics on the vehicle service contract and explain who is legally responsible for the repairs. Look over the fine print to get all the details and make sure all of your questions are answered before you buy your vehicle.

You’ll also want to check who you’re buying the warranty from, since in some instances the dealer may be selling a contract from a third-party warranty company. You can research the company’s auto warranty policies and BBB rating from the Better Business Bureau.

Fast Facts

Can I lose my car warranty if I don’t go to the manufacturer or dealer for repairs?

A manufacturer or dealer can’t claim that your warranty is void because another repair shop did work or maintenance to your vehicle. But the dealer or manufacturer can require you to use certain repair facilities if the repairs will be free under the warranty.

4. Are extended warranties worth it? It depends.

When you purchase a used vehicle, you may have the option to purchase a service contract, also known as an extended warranty. With a service contract, the dealer agrees to perform or pay for certain repairs or services on the car. You can buy the coverage for an extra cost.

Here’s some guidance for gauging whether an extended warranty is worthwhile.

  • Transferability — If you’re looking into a service contract, determine first whether any of the original bumper-to-bumper and powertrain warranties are transferable, says Matt DeLorenzo, senior managing editor at Kelley Blue Book. If so, how much time and how many miles are left on that coverage?
  • Requirements for who performs repairs — Be sure to read over your service contract carefully before deciding to pay for one. Look for whether the service contract states that you need to have repairs and routine maintenance done at the dealer or not. You’ll want to make sure that the details and requirements of the service contract work for you.
  • Cost of warranty versus cost of common repairs — While an extended warranty may give you peace of mind, it can also be expensive, often ranging from $1,000 to $3,000 up front. Once you get a quote from a dealer, figure out how much common repairs cost, and what exactly your warranty covers.
  • Vehicle dependability — DeLorenzo recommends considering the quality and dependability ratings of a vehicle. “Cars that are further down the quality rankings might be prone to certain repairs, so it’s best to check out a vehicle’s track record and then determine the type of extra coverage that you might need,” he says.

5. Explore the alternatives

Feeling unsure about getting a used car that doesn’t come with a warranty? Thinking that the cost of a warranty might not be worth it?

Consider these other options.

Put money aside for repairs. If you can stash away some cash, it can help cover whatever might need to be fixed down the road. And if it there’s nothing to repair, you can keep saving the money for your next car or use it for some other need.

Lease a car. If you go this route, your leased car may come with a warranty that covers repairs. In turn, you may not have to worry about being hit with a major unexpected expense. There are pros and cons to leasing a car, but it can be a cost-effective alternative to buying.

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Bottom line

When you buy a used car, check carefully to see if a warranty is available and what type of warranty or service contract it is, and what it may cover. If there isn’t one, you’ll want to examine the details closely to see if an extended warranty is the best choice for your financial situation — or if you’ll be able to manage paying for any repairs without a warranty at all.

About the author: Jackie Lam is an L.A.-based money writer who is passionate about helping creatives with their finances and cultivating community among entrepreneurs. Her clients include Fortune 500 companies and FinTech startups, and… Read more.