How Does The Extended Warranty Work On A Used Car?

August 14, 2020

Buyers often feel confident when they buy a brand new car because if anything goes wrong, they’re covered by the warranty. But for a used car, the warranty may not be in effect anymore, so what warranty options exist for used car buyers?

With a used car, the clock on the warranty has already started counting down or it could be expired. And if you don’t have a warranty, you could be saddled with costly repairs.

Think about this: An average cost to replace a failed transmission is between $1,800 and $3,400 with used or rebuilt parts. A new radio could be more than $1,000. Even a simple suspension repair is in the hundreds of dollars.

But just because the warranty is already expired (or will be soon) doesn’t mean you’re stuck paying for expensive repairs out of pocket. On occasions like these, you may be thankful you took out an extended warranty. 

But how does an extended warranty differ from a new car warranty? 

What does a new car warranty cover?

When a car is purchased brand new from the dealership, it’s covered by the New Vehicle Warranty. It might also be referred to as ‘comprehensive warranty’ or ‘bumper-to-bumper’ warranty. It’s included in the vehicle purchase price and protects new car buyers against any unforeseen defects. 

A new vehicle warranty is broken down into separate categories. 

  • The New Vehicle Warranty (aka comprehensive, aka bumper-to-bumper) covers the complete vehicle against problems due to manufacturer defect, minus a handful of maintenance or wear items. For most carmakers, the new vehicle warranty is set at three years or 60,000km from new, whichever comes first. Components not included under any standard bumper-to-bumper warranty include tires, brakes, belts, and hoses.
  • The Powertrain Warranty covers major components that are required for the vehicle to power its own movement. Powertrain coverage is often longer than the bumper-to-bumper coverage (up to five years and 100,000 km). Some carmakers have powertrain coverage up to 10 years or 160,000 km. The powertrain consists of the engine and transmission and a few related parts. 
  • The Emissions Warranty is a federally-required coverage for components that directly affect a car’s emissions. Items like the powertrain control module and catalytic converter are commonly included.

If you buy a used car that is less than three years old and has clocked fewer than 60,000km, the new vehicle warranty is usually still in effect. The same goes for the powertrain coverage. But what happens if you want more coverage, or if the car you have your eye on is no longer covered by any warranty? That’s where an extended warranty comes to the rescue.

What does an extended warranty cover?

Unlike a factory warranty, extended warranties are flexible. You can purchase a plan that fits your needs to a tee. There are variables to choose from such as how many years you want coverage (24 months, 48 months, etc.) and distance limitations. The level of coverage is, again, a choice you get to make for your needs. Like a new vehicle warranty, different levels of extended warranty exist. 

The best coverage is a comprehensive warranty or extended service contract that very much mimics the factory coverage. It includes most components on the car like the powertrain, most electrical parts, mechanical repairs, cooling system, fuel system, and more. Different tiers exclude some components to help keep the cost down. 

The most basic extended warranty you can get is extended powertrain coverage. If you want a warranty that will cover just the major components – the engine, transmission, differential, transfer case, and related parts – then this is for you. 

What types of extended warranty protection exist?

Although not every extended warranty provider offers the same benefits, here’s what you can expect from the better warranty companies in Canada. 

    1. Vehicle Repairs

    Protection from the cost of unexpected car repairs is the main reason people buy an extended warranty. It includes the labour to correct the manufacturer defect and the parts required for the reparation. Depending on the plan, some necessary fluids or associated parts are not covered, so you may have a portion to pay.

    2. Roadside Assistance

    If you experience a problem that leaves you stranded with an undrivable car, the extended warranty will cover the cost of a tow to the repair shop. Many plans also include fuel or oil delivery and battery boost services.

    3. Rental Car Coverage

    Unplanned repairs at the garage can leave you without wheels to get around. Many extended warranty contracts include rental car reimbursement if your car needs to stay in the shop overnight. It’s often limited to a maximum of five days, and only if the repair is covered by the warranty.

    4. Tire & Rim Warranty

    New vehicle warranty doesn’t cover damage to your tires or rims. But some warranty providers also include road hazard coverage for tire punctures and blowouts and any related rim damage. 

How to make a claim

If you have a problem that you suspect is covered by your extended warranty, it needs to be diagnosed by an authorized repair facility. Your dealership or vendor is usually a good place to start but if that’s too far to go or you’re out of town, you can call the company’s customer service line to enquire about your next steps. 

A mechanic will diagnose your concern and the service advisor will register the issue with a claims adjuster. They’ll let you know if the repair is covered or not and if there’s a portion you have to pay. In almost all cases, a deductible applies to every visit. 

When is it a good idea to purchase a warranty?

There’s a ton of value in having the protection of an extended warranty on your car. An average policy could be between $1,500 and $4,000. But when is the best time to add the coverage? Usually, it’s a good idea to organize warranty protection when you purchase the car. You can usually add the cost of an extended warranty to the total amount you’re financing rather than paying it in one lump sum.

Drive confidently with Canada Drives

Canada Drives not only connects you to the most reliable new & used vehicles in your area, but we also make it easy to navigate the world of vehicle warranties for your peace of mind. Connect with Canada Drives today to see what great deals you’re eligible for.

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