Warranties & Extended Warranties

AAA Membership - Though not really a warranty, this plan insures that you won't be stranded if you break down.  I highly recommend joining the Automobile Association of America.  Any vehicle a member is driving is covered, whether he or she owns it or not.  Pay the extra $30 for their AAA Plus Roadside Assistance Plan: for about $60 a year you get free towing up to 100 miles, free jumpstarts, and a lost key or lock-out service.  At minimum, AAA offers trip planning, hotel and car rental discounts, special auto financing, low-interest credit cards, traveler's checks, and an excellent travel agency.  This is the only true bargain in this whole industry.  (Note: I have no financial stake in AAA.  I plug them here because I believe this service is worth it.)

Warranties in General - The purpose of a warranty is to save you major expense in case of mechanical failure or breakdown of the particular vehicle covered.  A basic warranty covers major components: engine, transmission (or transaxle), and final drive.  The best warranties also cover antilock brakes (ABS), heating and air-conditioning systems (HVAC), air-bags (SRS), overheating - regardless of the cause, and most of the accessory and computer systems.

Manufacturer's Warranty - This applies to new vehicles, and goes with the car even if it changes owners.  A full manufacturer's warranty provides all service necessary, free of charge to the owner.  It also allows for diagnosis of all covered systems, and removal and reinstallation of all covered parts within a system.  Many dealers provide a loaner car during both scheduled and emergency service procedures.  Lemon Law legislation allows the consumer in most states to choose either a replacement or a refund if the vehicle can't be repaired after a reasonable number of attempts. 

Used Car Warranties - These vary from state to state, dealer to dealer, and car to car.  Low-mileage late-model cars may have some of the original manufacturer's warranty remaining, usually transferable to the new owner.  Or it may have a manufacturer's certification, permitting service work to be done by any same-make dealer in any location, in contrast to a dealer's certification, which is usually only good for getting specific work performed at that dealership.  There may be only a thirty-day warranty, and it may only cover inspection items (parts that have to work for the car to pass inspection).  In most cases, the terms are spelled out on the warranty disclaimer window sticker.  Coverage may run from 3 months/3,000 miles to 12 months/12,000 miles (the "/" meaning "whichever occurs first.")

There may be no warranty at all: you buy the car "as is."  When buying as is or from an individual, you can get a stand-alone warranty directly from a warranty seller, or go it alone. 

In-House Warranties - Many independent dealers offer in-house warranties (covering only work done there).  Coverage varies, so make sure yours covers the major components (engine, transmission/ transaxle assembly, drive train).  Have the salesperson list the systems and components that are and aren't covered, directly on the warranty document that you both sign and receive.  Some independent dealer garages offer a free 6-month 50/50 warranty on used cars, providing they do the service work.  They charge the usual rate for parts and labor, then cut the invoice total in half (thus dealer pays 50%, customer pays 50%).  This arrangement benefits both parties: the garage breaks even on warranty repairs (50% generally covers the cost of parts), and you only pay if something actually breaks.  If your dealer doesn't offer a 50/50 warranty, suggest it. 

Implied Warranties - The Federal Trade Commission and all states have laws concerning implied warranty, meaning that anything you buy must function for some reasonable period of time as it was designed to do.  Don't rely on the implied warranty.  Dealers are required to post a buyer's guide in the window of each vehicle offered for sale, notifying you either that there is a warranty or that it's being sold "As Is," with no warranty of any kind.  Dealers are required to list all known problems on the buyer's guide.  In my 30 years in the business I've never seen this filled in.  It's possible to get a problem resolved under the terms of an implied warranty, but chances are you will have memorized the phone numbers of your attorney and the state consumer protection agency before that happens.  If you hear a "clunking" noise when you put the car in gear and the salesperson tells you they'll take care of it, get it in writing.  If the warranty doesn't specify that the drive train is a covered component, the dealer is under no legal obligation to repair it.  And if the disclaimer states that there is no warranty on the vehicle, the dealer doesn't have to repair or replace anything, with the possible exception of safety-related inspection items, once the car is sold.  If you buy an "As Is" vehicle, once you drive it off the lot, it and whatever problems it may have belong to you.

Extra Cost Extended Warranties, Do You Need One? is on the next page >

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