Car Warranties

How is it different from a factory warranty?

A manufacturer's warranty comes included in a new car's price. It promises to fix certain defects or failures, and it often covers your car for a set number of months or miles, whichever comes first. A used car may still have warranty coverage.

Manufacturers, dealers and independent companies sell service contracts separately. Check when the contract starts, not just when it ends. Paying for overlapping protection probably won't help much. You can also shop after buying the car, though eligibility restrictions may apply.

What does an extended car warranty cover?

A service contract may pay for specified mechanical and electrical repairs beyond your factory coverage. Even coverage sold as bumper-to-bumper almost always has limits and exclusions, so make sure what the seller tells you matches what's written in the contract.

Common exclusions and limits include:

• Routine maintenance, such as oil changes and tire replacement, although some contracts include maintenance services.
• Accident damage and normal wear and tear.
• Repairs outside the listed coverage. A mechanical-breakdown contract may exclude a worn-out component.

Get the coverage in writing before paying. Match the salesperson's promises against the exclusions, not just the brochure.

What affects the price and your repair bill?

What you'll pay is usually based on whether your car is new or used, its make and model, what's covered and how long the contract lasts. Broader coverage generally costs more. You may also owe a deductible, the amount you pay when the car is serviced or repaired.

Before signing, check:

• Whether towing and rental expenses are fully covered or capped.
• Whether mileage reduces the amount paid toward a repair.
• Who must approve repairs or towing before work begins.
• Which repair shops you're allowed to use.
• Whether you have to follow the manufacturer's routine maintenance recommendations, since skipping them might void the contract.

Use the same coverage requirements when you compare extended warranty quotes, rather than comparing price alone.

Who stands behind the contract, and are those calls real?

The company responsible for your coverage isn't necessarily the manufacturer, and it might be a company you don't know. Many dealer-sold contracts use an independent administrator, the company that decides whether to authorize claims. Find out who pays claims and who approves them. A contract's value depends on the business behind it.

Ask your state consumer protection office about complaints. Treat unexpected calls or mail saying your warranty is expiring with caution. The sender may imply a connection to your manufacturer or dealer that doesn't exist.

Think twice before buying from a telemarketer. Get the complete contract and verify the claimed connection before paying.

Is it optional, negotiable and cancelable?

Yes. A service contract is optional and generally can't be required for an auto loan. Ask whether your loan includes optional charges. You can walk away from pressure to buy.

The price is negotiable when you buy the vehicle. Ask for a better price and read the cancellation terms before signing. You have the right to cancel and end coverage, but that doesn't mean every cancellation produces a full refund.

In Washington, state law is what sets the refund when you return a contract you haven't made any claims on. The Washington refund window above is a state rule, not a nationwide promise. Check with your state consumer protection office if you're unsure.

Is an extended car warranty worth it?

It depends on the contract's cost, exclusions and fit with your plans. Check when your factory warranty ends, how long you'll keep the car and how you'll use it. If you might sell before the contract ends, ask about transfer rules and fees.

Weigh the price and deductible against setting money aside for repairs. You could pay more for the contract than you receive in benefits. Once you've checked for overlap and read the terms, you can compare car warranty plans against those needs.