So you’re looking for a used car but are worried about paying for expensive repairs in the near future if something goes wrong. Don’t fear, because this is where a good warranty can come to the rescue. Although warranties often won’t pay for themselves–companies are in the warranty business to make money, after all–they can pay for a large portion of your costs should you need a repair.
Warranties from a Dealership
The dealership will often offer to sell you a warranty beyond any statutory warranty obligations they have to you. However you need to check the fine print on what the warranty covers and the terms governing the claim on the policy. Unfortunately some of the warranties sold in dealerships force you to
1. Service the vehicle with them only
2. Service more frequently than the manufacturer recommends in their service schedule
3. Limit the amount per claim of any given part
4. Give the warranty company the right to decide if they will pay some all or none of the claim even if its covered in their booklet… Yes its unbelievable that this could be the case but it is in the terms and conditions of one of the largest dealer warranty providers T&Cs
The good news, though, is that you can get a genuine warranty product from other sources so do some research before you commit to a vehicle.
Used Car Warranties
Dealerships will offer 90-day warranties, which can give you some peace of mind in the short term. For long-term peace of mind, you can buy a factory extended warranty from a dealer or an after-market warranty from a company that offers them. Often, manufacturers will partner with companies that sell these aftermarket warranties.
Proceed with Caution
Be careful when shopping around for a company that offers used car warranties. There are some scammers and businesses that use high-pressure sales tactics to get you to sign a warranty. Additionally, a lot of insurance products are not good for payout. They may find a way to decline the pay policy or give you cheaper premium values. Keep in mind that companies that do this are not genuine insurance companies.
Go with Licensed Agency
Make sure to go with a product that is issued by a genuine insurance agency that is licensed by major insurance companies. Choosing an experienced company is a good idea as well. You may also want to read online reviews about the companies you are considering, but don’t let that be the sole factor in your decision.
Get Full Coverage
We strongly recommend getting a warranty that has comprehensive coverage. Avoid getting a product that has a claim limit, because when you need to get something repaired, you’d have to pay the excess amount beyond the limits.
Aside from choosing a warranty from an experienced company that is licensed by major insurance companies, we suggest the following additional tips to ensure that you get best possible warranty for you:
- Find out what warranty insurance options are available before even going to dealership to buy the car.
- Don’t be fooled if the company tells you that the warranty price quoted is for “today only.” That is rarely, if ever, the case.
- Don’t buy a warranty without looking at the contract first.
- Make sure the company pays for repairs directly as opposed to just promising to reimburse you later.
- Find out which car components the warranty covers.
- Make sure to work with genuine insurers who are regulated by insurance industry ombudsman.
- Look at the terms and conditions and the Product Disclosure Policy prior to signing the contract.
- Find out if the policy has an excess. If so, what is it?
A used vehicle warranty can be a wise investment if it fits within the criteria outlined here, especially if you don’t have a lot of money saved up and would be devastated if you were faced with a huge repair bill.