How To Buy an Auto Warranty

The purchase of a car, new or used, is one of the largest investments that most of us make. You may choose to protect yourself and your investment by purchasing a warranty or extended warranty for your vehicle.

Some of the benefits of a warranty include:

  • Financial piece of mind, as the warranty will protect you against high repair costs.
  • A rental car while your vehicle is being repaired (not always offered).
  • Increased resale value, as most warranties are transferable.
  • Different options on the warranty, including what is covered.
    • Mechanical Breakdown - The most common warranty is for mechanical breakdown, meaning that something within the vehicle simply broke down through no fault of the vehicle owner or normal wear and tear.
    • Wear and Tear - Wear and Tear warranties are typically more expensive and will cover your vehicle in the event of normal wear and tear. For example, your brakes wear out at 40,000 miles or tires need their normal replacement. Some warranties will also cover for routine maintenance and oil changes.

If you buy a new car from a dealer, the car will come with a warranty included in the price. These warranties are defined by both timeframe and mileage and will expire when the first of the two is met. They can range from 12 months or 12,000 miles to 7 years or 70,000 miles, depending on the manufacturer.

The purchase of a used car from a dealer can also net you a minimal warranty, or the remaining original warranty on the vehicle, depending on the age and usage of the car. Be sure to ask the dealer what warranty, if any, is included in your purchase price.

If you do not receive a warranty at the time of purchase, you are not out of luck. There are two common methods to purchase an extended warranty for your vehicle.

  1. Purchase from the dealer. Most dealers will also offer you an extended warranty with your purchase. When sitting down to discuss the finances, loan and purchase price, you will have the option to extend your warranty and to include it in the principle balance of your loan. Most dealers will also offer you a limited time frame in which you can return to add the extended warranty to the loan if you decide later that you would like to have extended the coverage.
  2. Purchase online from a third party vendor. A quick Google search will net you a number of companies that offer extended vehicle warranties. Visit their site and follow the steps to get a quote for the extended warranty. Some example sites are and, which can be used to obtain quotes for service.

Watch out for potential red flags when you are making your purchase. Some things to watch out for include the following.

  • If you get multiple quotes, which is recommended, one of the quotes is abnormally low.
  • The seller of the warranty is a dealership and requires that all work be done at their dealership.
  • The exclusion list on the warranty includes both mechanical and wear and tear damages.
  • Watch out for a warranty company that only accepts cash as a form of payment.

As always, before entering into a contract, be sure that you are clear on all the terms and conditions of your auto warranty. If you have questions, be sure to ask them prior to signing the contract as most will carry early termination penalties if you decide later that you do not like the cost or requirements of the warranty.


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