Used Car Extended Warranties – What to Look For
New car warranties have been around since the dawn of the car dealership, but used car extended warranties are comparatively new. Many people are already well-acquainted with new car warranties and often believe that used car warranties work in much the same fashion, though that is not always the case. Anyone considering a used car warranty needs to read the fine print and understand exactly what they are getting if they hope to avoid spending money on a used car warranty that will prove to be next to useless.
Here is what to look for when shopping for used car extended warranties:
• Time, miles, or both – Just like new car warranties, used car extended warranties expire based on time, mileage, or a combination of the two. In most cases, it is a matter of whichever condition is reached first. Often used card extended warranties come with the promise of coverage for years or months, but an unreasonably low number of miles. Using automobile leases and insurance estimates as a guideline, it would seem reasonable to suggest that the average car owner drives approximately 30 to 35 miles per day on average. Thus, a 1 year used car extended warranty should last between 11,000 and 13,000 miles unless your specific driving needs exceed that of the average car owner.
• What is covered and how much – Just because a used car extended warranty says that it is good for 1 year or 10,000 miles does not mean that everything is covered for 1 year and/or 10,000 miles. In fact, most warranties, including new car warranties, take their nomenclature from the longest portion of their warranty. So a 10 year/100,000 mile warranty does not typically mean that bumper to bumper coverage is available for 10 years and/or 100,000 miles. Instead, it generally means that only one component of the coverage lasts the titular duration, and other coverage ends well before this point. Even items that are covered are not necessarily covered in full. Again, read the fine print on any extended warranty for used cars.
• Deductibles – A deductible is the amount of money that has to be paid by the vehicle owner whenever the vehicle needs covered repairs. Used car extended warranties come with several different types of deductibles, just like new car warranties. There is a major difference in how the deductibles can be calculated with used car warranties, unlike new car warranties. Used car warranties may have deductibles based on either the repair or the visit. This means that if 10 items need repairs in a single visit, an end user might need to pay ten deductibles or one deductible.
• Transfers – Not all used car extended warranties are transferable, and those that are transferable may have certain limitations. For example, some extended used car warranties can only be transferred to a spouse or immediate relative, while others cannot be transferred under any condition. This might play a significant role in the decision making process if the vehicle is likely to be resold before the expiration of the used car extended warranty.
• How is coverage handled? In many cases, used car extended warranties will require owners to spend money out of their own pocket only to be reimbursed later. This can be a serious problem for those who are looking for used car warranties that are meant to be a form of financial risk management. If the owner has to pay the premium for the warranty and the out of pocket expenses, they may be biting off more than they can chew in the financial sense. This could result in a broken vehicle that waits to be repaired, while a job is lost and the children cannot get to school.
• Who is offering the warranty? Try to determine who is offering the used car extended warranty, and understand that they are a business. Budget warranties from no-name companies are probably worth far less than their associated price tag. Bigger name firms that appear on the Standard & Poor’s list tend to be more expensive, but it is easy to determine the quality of the company behind the warranty.