Written by:
Alexandra Carver
Alex is a MarketWatch Guides team writer that covers automotive and personal finance topics. She’s worked as a content writer for over a dozen car dealerships across the U.S. and as a contributor to several major auto news websites.
Edited by:
Rashawn Mitchner
Rashawn Mitchner is a MarketWatch Guides team editor with over 10 years of experience covering personal finance and insurance topics.
It may seem like you can’t go used car shopping at a dealership without being offered an extended warranty at the same time. But you might wonder, “What is a used car warranty?” and “Do I really need one?” It may or may not be a good idea, depending on your situation, but you may have more options than the dealership’s offering.
In this article, we at the MarketWatch Guides team will explain what a used car warranty is and how coverage plans work. We’ll also explain what a used vehicle warranty covers, when is and isn’t the best time to get an extended warranty on a used car and share quotes from some of the best extended car warranty companies.
Key Takeaways:
- Depending on where you purchased your vehicle, it could already be covered by a used car warranty.
- The parts and systems protected by a used car warranty vary by the coverage plan.
- Used vehicles that are sold “as is” are unlikely to be protected by a warranty.
What Is a Used Car Warranty?
A used car warranty offers exactly what you’d imagine: long-term coverage for used vehicles. Plans come in various forms, from third-party factory warranty extensions to certified pre-owned (CPO) warranties offered by car dealerships.
No matter where you purchase it, a used car warranty should cover the cost of repairs to or replacements of a predetermined set of vehicle parts. If your car breaks down, you can take it to a dealership or any repair shop certified by the National Institute for Automotive Service Excellence (ASE®), depending on your contract. If necessary repairs are covered by the warranty, your provider or administrator will pay the repair facility directly or send you a reimbursement check — minus the deductible.
Do You Need a Warranty on a Used Car?
When it comes to used car warranties, certain things can be confusing. This is especially true in cases where a used car is still covered by a manufacturer or dealer warranty. The section below will provide information on deciding if buying a used car warranty is worth it.
How To Decide on Buying a Used Car Warranty
This section will explore some things worth knowing about extended car warranties.
1. Check the Buyers Guide for Warranty Details
Most information about used car warranties is available in a “Buyers Guide.” Dealerships are required by the Federal Trade Commission (FTC) to display this information for all cars for sale. It’s usually found on the car’s display window.
The Buyers Guide will provide information on whether the vehicle comes with a warranty or is being sold in as-is condition. Purchasing a car in as-is condition means that if you run into any issues or the vehicle needs repairs, you’ll have to pay for them out of pocket.
On the other hand, if your vehicle comes with the original warranty or extended coverage, the Buyers Guide should include all the information you need. This includes which parts are or are not covered, or the percentage of repair costs the dealership must pay as part of the warranty.
Some states restrict what vehicles can be sold in as-is condition or have different rules regarding these types of sales. Here are some states that have particular regulations and restrictions regarding as-is sales:
You can contact your state’s attorney general’s office to find out what rules apply in your state.
2. Look Into the Factory Warranty
When you purchase a used vehicle, there’s a chance that the initial factory warranty from the automaker still applies. You can likely find this information under the “systems covered/duration” section of the Buyers Guide.
To get full use of the initial manufacturer warranty, you’ll want to know what the plan covers and whether it’s transferable. Ask the dealership where you purchased your used vehicle for all warranty documents. Once you know what’s covered in the factory warranty and the term and mileage lengths, you can contact your vehicle’s manufacturer to ensure the information is accurate.
Most initial factory warranties last for three years or 36,000 miles, though some powertrain warranties can last up to 10 years or 100,000 miles.
3. Read Your Warranty Booklet
If your used vehicle comes with a warranty, coverage may be limited. Your warranty booklet can provide specifics on the used car warranty and explain who is responsible for repairs. Remember to review all fine print in your contract to find out which components may be excluded from coverage and ensure all your questions are answered.
You’ll also want to know who exactly is backing your used car warranty, since some dealerships sell contracts from third-party warranty companies. You can research policies and company reputations on consumer sites like the Better Business Bureau (BBB), Trustpilot and Google Reviews.
4. Explore Your Alternatives
If your vehicle does not currently have a used car warranty, there are alternatives to purchasing one. These include:
- Putting money aside for vehicle repairs: If you decide against a used car warranty, consider stowing some cash away for any emergency that may happen down the road. The good news is that if there’s nothing to repair, you can save the money to purchase your next car.
- Lease a car: If you decide to lease a car, your vehicle will likely come with a warranty that covers repairs. This means you won’t have to worry about paying massive out-of-pocket expenses.
What Does a Used Car Warranty Cover?
Before you opt for a used car warranty, it’s important to decide what level of coverage best fits your needs and budget. Most companies and manufacturers offer a variety of plans that range from comprehensive to bumper-to-bumper coverage and down to basic powertrain plans.
Nearly every warranty excludes regular maintenance needs like tire rotations and oil changes as well as coverage for wear and tear components. You won’t receive protection for damages due to accidents or severe weather either, as that’s the responsibility of your car insurance provider.
Used Car Warranty Plan Types
Most used car warranty companies offer a few different types of extended warranty plans. These include:
- Used car bumper-to-bumper warranty: Covers almost all vehicle components save for a few exclusions
- Used car powertrain warranty: Covers the engine, transmission and drive axles, which are the most essential parts of your vehicle and the priciest to repair
- Used car drivetrain warranty: Covers the car’s transmission and drive axles but excludes its engine
- Anti-perforation warranty: Takes care of repairs to most body panels with holes, though it excludes surface corrosion
- Corrosion coverage: Covers repair costs related to rust and other corrosive damage
How Much Does a Used Car Warranty Cost?
Cost is a significant factor in considering whether you should buy an extended warranty on a used car. Some companies offer lower monthly payments than others, and some offer lower total costs than others. Are you looking to keep a tight monthly budget or get the best value overall?
To give you a better idea of how much a used car warranty costs, we got quotes from five of the top warranty companies. Each quote is for a 2016 Chevrolet Equinox with 90,000 miles on it and a $100 deductible. All are powertrain warranty contracts, meaning they’d cover your car’s engine, transmission and drivetrain.
Depending on the condition of your used car, it may be eligible for more comprehensive coverage options from different providers. You may even qualify for a bumper-to-bumper warranty, which is the highest level of coverage available.
What Affects Used Car Warranty Costs?
The total price of a used car warranty is typically affected by the following factors:
Here are a few more details about the elements that affect extended car warranty costs:
- Vehicle model year: Older vehicles typically cost more to protect than new cars.
- Vehicle mileage: Warranties for high-mileage vehicles tend to be costlier than for models with low mileage.
- Car make and model: Luxury vehicles and sports cars often require more expensive repairs and maintenance, which increases the cost of warranty coverage.
- Deductible: The higher your deductible, the lower the cost of the warranty.
- Coverage level: Your chosen level of coverage will affect the amount you pay. Powertrain coverage is likely to be cheaper than an exclusionary plan.
Is a Used Car Warranty Worth It?
Because of age, used cars are sometimes at an increased risk for mechanical issues than newer vehicles. Used car warranty plans for older vehicles can be worth it as they can protect you from unexpected and expensive car repair costs.
Should You Buy an Extended Warranty on a Used Car?
There are a few things worth considering as you’re deciding whether or not you should purchase an extended warranty on a used car:
- Vehicle reliability: One of the best ways to find out whether or not you purchased a reliable vehicle is to look up your model’s reliability rating and read customer reviews to see what other car owners have said.
- Vehicle mileage: Higher-mileage vehicles have a greater chance of mechanical failure and may benefit from an extended warranty.
- Vehicle transferability: Having an extended warranty on your used vehicle might increase the resale value of your vehicle if you decide to sell it on the open market. However, it won’t increase your trade-in value at the dealership.
- Benefits: If you want roadside benefits, trip interruption coverage, towing, rental car reimbursement and coverage for oil changes, a used car warranty is a great way to get these perks and protection for your vehicle at the same time.
How Do Used Car Warranties Work?
If your used car is covered under warranty and breaks down, you’ll want to take it to a repair shop for diagnosis. In most cases, your plan or contract administrator will pay the repair shop directly minus your deductible. However, only the components and parts that are covered under warranty will be paid for.
Do Used Cars Come With a Warranty?
At the dealership, the Buyers Guide will let you know whether or not a used vehicle has a warranty. If a used car currently has some of the factory warranty left, you don’t need to buy a warranty right away.
Some dealers offer their own free warranties that are usually short and last a few months or less. This is really just a small perk that shows the dealer will cover repairs on any problems that come up in a short time.
Lemon Law for Used Cars
Only California, Connecticut, Massachusetts, Minnesota, New Jersey, New Mexico and New York have robust lemon laws for used cars. These laws essentially require used cars to come with a warranty depending on the condition of the car. The dealership must repair any problems the vehicle presents for a specified period of time. If the dealer keeps trying to fix recurring problems and nothing improves, the dealer is required to give you a new vehicle or refund you.
Is There a 30-Day Warranty on Used Cars?
Whether or not a used car will have a 30-day warranty depends on the state where you live and where you purchased your car. In the U.S., there are no protections at the federal level requiring a 30-day warranty on a used car.
There are various types of used car warranties that could be listed on the vehicle when you purchase it. These include “as-is,” “warranty of merchantability” (where the vehicle is running like it is supposed to), “warranty of fitness” (meaning it is safe to sell) and the factory warranty still being applied on the vehicle.
In addition, some states have a grace period where you can change your mind and return the vehicle, but this is not required under federal law. We recommend checking with your dealership for their particular policy on returns and service after the purchase.
Do Warranties Transfer on Used Cars?
In most cases, the vehicle protection provided by a warranty on used vehicles can be transferred. You will need to contact the dealership or warranty company that you received your warranty contract from. You’ll need to let them know that you sold your car or that you transferred the warranty within the first 30 days of owning the vehicle.
In addition, most used car warranty companies will allow you to cancel your warranty coverage within the first 30 days. You’ll typically receive back whatever down payment you placed toward your plan or the cost of the plan in its entirety if you paid in full up front.
Auto Warranties for Used Cars: The Bottom Line
A used car warranty covers the cost of certain vehicle repairs and replacements after a mechanical breakdown. As with warranties for newer vehicles, there are many different types of coverage plans to choose from. Some used cars come with a factory warranty, but models that are sold as-is may benefit from an extended coverage plan.
Used Car Warranty Companies
When looking for the market’s best used car warranty companies, it’s smart to compare quotes and warranty options from a few coverage providers. We’ve thoroughly researched the industry’s top extended auto warranty companies, and we rate Endurance and Carchex as two of the leading options.
Endurance: Most Comprehensive Coverage
Endurance offers six levels of coverage that last for up to 200,000 miles. Each plan comes with added benefits like roadside assistance, towing services and rental car coverage.
When you purchase an Endurance vehicle service contract, you’ll receive one free year of Endurance Elite Benefits. This package is designed to provide you with peace of mind by offering perks like key fob replacement and total loss replacement.
Read more: Endurance car warranty reviews
Carchex: Great Industry Reputation
Carchex offers flexibility to car owners, with five levels of protection for vehicles up to 20 years old with a maximum of 250,000 miles on their odometers. The company’s Titanium plan is similar to a factory warranty while Powertrain Plus protects critical parts like your transmission and engine along with the air conditioning and electrical systems.
Read more: Carchex reviews
Used Car Warranty: FAQs
Below are frequently asked questions about used car warranties:
Our Methodology
Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best extended car warranty companies. We collected data on dozens of auto warranty providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the companies that scored the most points topping the list.
Here are the factors our ratings take into account:
- Reputation: Our research team considers availability, ratings from industry experts and years in business when conferring this score.
- Coverage: Companies that offer a variety of choices for warranty coverage, long contract terms and added benefits are more likely to meet consumer needs.
- Cost: Auto warranty companies with affordable rates and multiple deductibles scored highest in this category.
- Transparency: This score is based on contract transparency and the availability of a money-back guarantee.
- Customer experience: Based on customer satisfaction ratings and our extensive shopper analysis, we consider the responsiveness, friendliness and helpfulness of each warranty company’s customer service team.
Our credentials:
- 500+ hours researched
- 50 companies reviewed
- 2,000+ consumers surveyed
*Data accurate at time of publication.
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