Auto Warranty Tips

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What is an extended warranty?

Extended Warranties

An extended car warranty can be a great way to remove some of the anxiety associated with buying a used car. But did you know you don't have to buy your car warranty from the dealer? Nor does it need to be in place from day one?

You can buy an extended car warranty directly from the warranty company. Doing so should save you a fair amount as there will be no dealer markup on the warranty. You can find more information on extended car warranties at and

Why do I need an extended warranty for my new car?

New Cars and Extended Warranties

If you are closing the deal on a new car, you may be surprised when the dealer tries to sell you an extended warranty. After all, most new cars come with excellent warranties. Extended warranties generally don't kick in until the new car warranty expires, but that's where the rub comes in.

If you have a 36 month/36,000 mile warranty but you put 20,000 miles a year on your car commuting to work, your warranty is going to expire in less than two years. Does that mean you should buy what the dealer is selling? Not unless you like paying twice as much as you need to for services.

*You can spend 15 minutes online and hook yourself up with a top-rated extended car warranty with a warranty company such as or for as much as half the cost the dealer would charge.

What is wear-and-tear coverage?

Wear-and-Tear Coverage

When shopping around for a car warranty, pay attention to whether the various plans include wear-and-tear coverage. Wear-and-tear coverage provides coverage for parts that break and parts that wear out prematurely. Many warranty companies have wear-and-tear exclusions, including many of the things that are most likely to wear out as your car ages such as struts, piston rings, valves and other expensive components.

If you see the term "break down" in a contract, chances are the part literally needs to break in order for it to be covered by the warranty. Ethical warranty companies that offer wear-and-tear coverage will use the term "failure" to indicate coverage of any component that fails to perform as it should—regardless of whether or not it actually broke (that's what you want).

Should I buy the extended warranty from my dealer?

Dealer Extended Warranty vs. Direct Purchase Warranty

If you are buying a used car from a dealer, the salesperson will almost always try to get you to buy an extended warranty at the closing. Unless you've done your homework, you may end up paying twice what you need to for half the coverage you deserve.

The first thing you should know when buying a car is that you don't have to buy an extended warranty at the time of sale (you can buy an extended warranty plan direct from the warranty company after the fact)—you'll save yourself the dealer markup, plus you'll have more time to mull your options.

*For more information on some of the best extended warranty companies, visit

What is covered by an extended warranty?

What's Covered

Make sure you're covered! An auto warranty is a sure bet for peace of mind. However, what do new car warranties actually cover? Each manufacturer has its own warranty terms, however, a new car warranty should protect you against mechanical breakdown and component failure—as well as cosmetic problems such as paint defects and loose trim.

Most new car warranties are in force for a fixed period of time or a set amount of miles (whichever expires first). For example, a Ford Mustang comes with 36 month/36,000 mile basic and powertrain warranties and a 60 month/50,000 mile corrosion warranty. In other words, if you top 36,000 miles before you reach the 36 month mark, your basic and powertrain warranties expire. Conversely, you only have 40,000 miles on your Mustang and it begins to show signs of corrosion after 48 months, you're covered!

What is an exclusionary warranty?

Understanding "Bumper-to-Bumper" and Exclusionary Warranties

When you shop around for an extended warranty, make sure you are comparing true bumper-to-bumper exclusionary coverage. Exclusionary policies cover everything—and that means everything—on the car (excluding certain items that are specifically listed in the warranty). Common exclusions include things such as:

• Moldings
• Weather-stripping
• Maintenance

In other words, the types of things you wouldn't really expect to be covered anyway. Unfortunately, many of the less reputable warranty companies sell so-called "bumper-to-bumper" warranties that exclude major components and systems. Make sure you read the fine print on your warranty or you may end up being skimped on your coverage.

Do I need to do anything special to keep my warranty in force?

Maintaining Your Warranty

One of the beauties of buying a new car is the new car warranty. But don't be fooled. New car warranties generally only cover major systems. You will be responsible for all out-of-pocket routine maintenance costs. In fact, if you fail to properly maintain the vehicle, including keeping your service records, according to the manufacturer's recommended guidelines, you could end up voiding your warranty.

*Make sure you read your owner's manual and understand both the terms of any applicable warranties as well as all routine maintenance requirements required to keep your warranty in force.

Does my car qualify for an extended warranty?

Qualifying for an Extended Warranty

You can buy a used car warranty directly from a warranty company. However, not all cars qualify. For example, will not cover model years more than seven years old or cars with more than 60,000 miles on them. Other vehicles that are ineligible for coverage include those with salvage, rebuilt, or similar titles; exotic and high-performance vehicles; and some hybrids.

*Just like life insurance, the earlier you purchase your used car warranty, the less expensive it is. You can get new and used car warranty quotes at and

If I miss an oil change, will my warranty be voided?

Oil Changes

The oil in your new car is its life blood. Internal friction can decrease performance and cause severe damage to your engine. Regular oil changes are necessary to maintain your auto warranty. Plus, regular oil changes reduce internal friction.

You should have your car's oil changed every 3,000 miles—regardless of whether the manufacturer tells you to do so at longer intervals. Make sure you use the type of oil recommended by the manufacturer, and get the oil filter changed at the same time.

Are battery problems covered by my warranty?

Battery Problems

There's nothing worse than getting stranded when your battery conks out. To avoid this situation, it's a good idea to remember to check your battery each time you have the oil changed. All you need is a good set of eyes. If there is corrosion on your battery terminals, they should be cleaned to ensure smooth starts. However, completely replace your battery if:

• If the battery's casing is cracked
• If the battery cables are frayed
• If there is anything leaking from the battery
• If you can't remember how long your battery has been in your car

*If you have an extended warranty, a new battery may be covered. Check with your warranty company.

How do I pick a good warranty company?

Smart Car Warranty Shopping

If you are considering purchasing a car warranty either from a dealer or direct from the warranty company, there are some key questions you should ask up front to make sure you aren't being taken for a ride. Make sure you ask:

• How long does the warranty last?
• What, if any, is the mileage limitation?
• What's covered?
• What's the deductible amount?
• Who does the repairs?
• Who pays the bill?
• What, if any, maintenance requirements exist?
• Can you cancel without penalty?

You should also check the warranty company out with both the Better Business Bureau and a rating agency such as A.M. Best or Standard & Poor's.

Are transmission problems covered by my warranty?

Transmission Trouble

Automatic transmission isn't a hands-off situation. Automatic transmission isn't the same as maintenance-free transmission. Most people who have automatic transmissions don't ever think to change the transmission fluid, which really should be done every 25,000 to 30,000 miles. In fact, some owner's manuals don't even recommend changing it until you hit 50,000 miles. But by then, the internal heat and friction created by the transmission may have already reduced your transmission's life expectancy.

By virtue of the engine design, a normal transmission fluid change will only change half the existing fluid. Regular professional transmission flushes will clean out all the old transmission fluid and boost the life of your transmission significantly. If you maintain your transmission well, you should have no problems. Still, if your car is more than two to three years old, you may want to consider purchasing an extended warranty from a direct warranty company.

What can I expect to go wrong as my car ages?

Likely Problems as Cars Age

Cars that are three years old are likely to have as many as twice the mechanical problems as cars that are just a year old (things only go down hill from there, even if you maintain your vehicle faithfully). The physics involved in automotive transportation place incredible demands on the car components. If you have a car that is a couple to a few years old, you should consider buying an extended warranty now that will kick in when your existing warranty expires.

The sooner you buy an extended warranty (i.e., the fewer miles on the car), the less expensive it is. If you're wondering what types of things are likely to go wrong as your car ages the answer is, pretty much anything. According to Consumer Reports, 2000 model year car owners reported nearly quadruple the rate of mechanical problems with exhaust, ignition, drive system, cooling, transmission, A/C, steering and suspension, fuel system, body hardware and integrity, power equipment, brakes, and the electrical system as did owners of 2004 model years.

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