Under The Hood

Buying A Used Car? Everything You Need To Know About Warranties

Improvements in build quality and material technologies mean that cars indeed have a longer life today than ever before. Almost always, this period is much longer than any factory warranty typically covers. Hence, investing in an extended warranty can help you dodge expensive bills down the lane.

An extended warranty offsets the cost of repairs and mechanical breakdowns and helps guarantee the reliable performance of your used car. It makes sense that we want to keep our cars as long as possible. But there is the unwritten disclaimer that you do NOT intend to bleed a fortune on repairs.

Why Do You Need An Extended Warranty?

As a rule, extended guarantees are a must-have when you are purchasing a vehicle “as-is” from a dealer or private seller. With the right plan and provider, your used car can benefit to nearly the same exact warranty coverage as if you were buying the vehicle new. Moreover, the warranty helps you breathe easier when you are buying a used car since your auto warranty can kick-in any time to save you from lofty and unplanned out-of-pocket costs.

They pick up where the manufacturer’s warranty ends and cover the cost of all outlined repairs and part replacements on your vehicle, should something go wrong. It is highly advised to purchase an auto warranty if the vehicle has recorded more than 100,000 miles and/or if you foresee heavy use for the vehicle in the future.

It would be advantageous to determine the level of coverage, payment structures, and additional benefits that best fit your specific needs to manage your warranty plans and expectations. For instance, multiple drivers on the same car can create performance issues to the engine, which should caution one to purchase a powertrain warranty for the vehicle. Alternatively, if routine maintenance is not your forte, it must feel terrible to be stuck with heavy repair bills without a warranty to cover for the damages from missed oil changes and lack of care.

Further, it is important to navigate through your extended warranty paperwork very carefully to spot commercial clauses to avoid being denied claims or services in the future. Review the contract carefully to learn who is legally responsible for fulfilling the terms of the warranty and ensure that detailed information is available regarding terms of the warranty, deductibles, and other payments. Another catch to watch for is whether the extended warranty is transferable. It will be important to choose a transferrable lease if you plan on reselling or re-gifting the vehicle during the warranty period.

Read below to learn more about choosing the right extended warranty for your used vehicle.

Let us begin with the basics.

What does it mean to buy a used car “As is”?

To buy a vehicle “as is” means to purchase a pre-owned vehicle in “with all issues known and unknown.” “As is” is more than a mere bill of sales language since it relieves the seller of all responsibility regarding a used car, both its physical and mechanical condition. It’s a legal term with clear cut dentitions and adaptions across all the fifty states, such that in NY, NJ, Maryland, Massachusetts, Minnesota, Mississippi, New Mexico, Rhode Island, Vermont, West Virginia, and the District of Columbia, “as is" sales are banned on many used vehicles. Hence, when you buy your vehicle “as is” from a dealer, don’t forget to pay attention to some of its grave undertones; “sold ‘as is’ to you, repair ‘as you like’.”

The situation can get trickier since dealers in most states can use the words "as is" in a written notice to buyers to eliminate even the Implied Warranties- The unspoken promises and obligations of the seller to the buyer, resonating the basic premises of trust inherent in any transaction. Such that, when buying a used car from a dealer, implied warranties are guaranteed without time limits, unless specifically capped in the contract, and services are irrefutable since it is automatically inherent any written warranty contracts. An archetypical example of an implied warranty is the Warranty of Merchantability.

Through the warranty of merchantability, the seller implies that the product will be functional and conforms to buyers’ expectations of its utility. Further, A Warranty of Fitness for a particular purpose is applicable to vehicles, which have been promoted and sold as optimally designed for particular purposes, be it sporting, farming or road trips. While the warranty of merchantability is not a blanket clause to insure against all functional issues, it can be used to seek resolutions to all defects and damages that have been identified to exist at the time of sale.

While an implied guarantee is not needed to be explicitly stated, it cannot be evoked in the absence of a written contract between the buyer and seller. Word of mouth would not suffice with implied warranties if identified defects were not stated verbatim in the Buyers Guide, and if there is no extended warranty contract. In this case, the seller will have sufficient grounds to refuse any post-sale service or repairs on the vehicle. Sounds like a risky deal? Well, it can be if you do not have an extended warranty on your used car.

What Type of Warranty Do You Need?

Warranties come in a lot of shapes and sizes. There is the luxury to cherry-pick; some are warranties for your whole vehicle, others for some of the vehicle’s systems or the engine, or others cover cost to replace specific components.

A Full Warranty includes a wide range of terms and pre-conditions; beginning that anyone who owns the vehicle during any specified warranty period can avail the prophesied services. These services would be free of charge, and the warranty holder is entitled to a choice of replacement or full refund if the dealer fails to repair the vehicle after a reasonable number of attempts.

Under a full warranty service, the buyer is required to do no more than informing the dealer of the issues, unless the dealer can prove that the buyer’s onus. Further a full warranty inherently offers implied warranty with no time limits. Certain vehicle systems might be covered under full or limited warranties. For instance, a powertrain warranty covers the cost of repairs or replacement of the vehicle’s engine, transmission system, and drivetrain, should they become malfunction or damaged.

Some good news to the informed Illinois drivers to add to their wisdom of warranties: Illinois is to pave the way to a legal solution to protect consumers buying used cars!

Following new legislation, which took effect on July 1, 2018, the state of Illinois mandates all used car dealers to provide limited powertrain warranty on all sold used cars for the first 15 days or 500 miles, whichever comes first. This is a revolutionary leap from the days car dealers could sell vehicles to buyers on the pretext of “as-is” sales with no written warranty.

If You Decide To Graduate Into A Warranty Wonk, Here Is More Info For Your Appetite.

Service Contracts Vs Extended Warranties

Though service contracts are, often, swept under the blanket category of extended warranties, it is important to differentiate between them. The primary difference between the two is that service contracts are additional purchases while warranties are often included in the original sale. Hence, service warranties come at an additional cost depending upon the services covered in the contract.

However, do note that if you buy a service contract from the dealer within 90 days of buying a used vehicle, you are automatically offered all implied warranties on the vehicle even if the vehicle is bought “as is”. It expands the scope of the service contract.

Wondering Whether You Need A Service Contract for Your Used Car?

- You might consider investing in a service contract if you expect the car to require additional repairs in the near future and have an informed estimate of future costs of repairs. Compare this out-of-pocket expense with the expense of purchasing a service contract.

Remember, there is often deductibles, application fees and other costs associated with a service contract based on the amount and terms. However, do not hesitate to purchase a service contract if your mental math predicts substantial gains from availing a contracted service to resolve future issues with the vehicle's performance.

- Review your extended warranty to ensure that all important services and systems are covered. Some warranties dictate that routine maintenance and services are mandated to be provided by the dealer. Hence, be also wary of duplicating services already covered in the warranty. Purchase

a service contract only if you believe that relevant protections are not offered in the extended warranty.

- Avoid scams and stay clear of fraudulent businesses. Always ensure that the company providing the service contract is respectable and has a reputable history of service. Research the company on the internet and among peers, and contact the provider for detailed information on the terms of the contract. Always be informed about their refund and cancellation policy, and inquire whether there are any additional cancellation fees.

- Be cautious of the period of the contract. A service contract is often a worthwhile investment if you plan on keeping the vehicle past its manufacturer’s warranty. A service contract will offer further protection and services to your extended warranty, if available. However, a contract might not be the most cost-efficient option if you plan on selling the vehicle during the contract period.

Finally, a few more things about warranties to keep in mind – if you buy your car from a private seller.

• Private sellers are not bound by their respective state’s Used Car rules. States do not recognize implied warranties on privately sold vehicle unless specified in a written contract.

• Certain warranties and service contracts might not be transferrable. At times, there can be additional costs associated with altering contracts.

It is always a good idea to have the vehicle inspected before purchase since private sales are typically an “as is” transaction and private sellers are not legally obliged to provide any post-sales warranty.

Due Diligence When Buying A Used Car

At Swap Motors, we require that all cars are thoroughly evaluated before entering our marketplace our auction. We provide third party objectivity by creating our seller's listings. We take tons of photos, videos and provide a detailed wear and tear report, in addition to a FREE CarFax Report. We take pride in creating a transparent experience for our buyers, as we know it makes a world of difference.

Curious? Check out our marketplace here