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5 Questions to Ask before Buying a Used Car Warranty

26 January 2016

Nino Clement

You've found the perfect used car, and you're ready to sign on the dotted line and drive it home. There's just one more detail to iron out: the salesman wants to know if you would like an extended warranty. Whether you're familiar with the ins and outs of car warranties or you have no idea what the pros and cons are, you certainly don't want to spend money where it's not needed, but you also don't want to be stuck with a repair bill that could have been paid for by the warranty. Here are five questions to ask before making a decision about what you need.

1. Are you buying a certified pre-owned (CPO) car?

Used cars are either certified or they're not.

What difference does it make, you ask?

Well, in most cases, CPO cars go hand in hand with a limited warranty. This is because they've already been through rigorous inspections and any needed repairs, as well as carefully examined for any potential problems. Many mechanics will even put the vehicle through a 150-point inspection, giving you confidence that you probably won't encounter trouble with your "new" car any time soon. The manufacturer offers these extended warranties because they know they can back what they're selling.

Often, in addition to the warranty, you're given a host of other advantages, such as free oil changes for a certain length of time, roadside assistance, reimbursement on rental cars, and even three months of free satellite radio in some instances. According to PopularMechanics.com, any car in need of a major overhaul or massive repairs will not be approved as certified pre-owned.

These details should give you the peace of mind that comes with a CPO car and its accompanying warranty.  

2. Are you buying a regular, non-CPO car?

If you're not investing in a certified used car, rest assured you can still obtain an extended or aftermarket warranty. It pretty much comes down to whether or not you can afford the warranty and if you feel as though it brings you the peace of mind you need.

If you plan on trading cars every few years, you probably don't need it because you probably won't make the cost of the warranty back, unless you're buying a car that's notoriously unreliable. According to Endurance, a private warranty company, the average extended warranty costs anywhere from $350–$750 per year and only covers certain repairs.

If you ultimately decide to go for it, your best bet is to get a manufacturer's warranty—either from the manufacturer itself or through the dealer—as opposed to obtaining it on your own through a third party. The reason for this is that if repairs do become necessary, you can be sure they will be handled by a reputable repairman from an authorized dealership. You also won't have to worry about delays or getting repairs approved—something that has been known to happen with third-party warranties.

3. Is the warranty transferable?

Suppose you decide to sell the car before the warranty has expired. It sure would be a bonus if you could tell the potential buyer that the warranty is transferable. Unfortunately, some companies put the brakes on this sort of thing which could make a huge difference to your buyer. Others, however, will let you transfer it to the new owner for a fee.

If you're sure you're going to keep your car for a lifetime, this factor may not carry much weight, but it's certainly something for many to consider.

4. How much is the deductible?

You can have the best warranty in the world, but if your deductible falls outside your budget, it won't do you much good. The good news is that it's not hard at all to find a CPO car with a zero cost deductible. PopularMechanics.com cites some car manufacturers charging anywhere from $50 to $150, but $0 to $50 seems to be the prevailing standard.

It's also important to read the fine print. Make sure you'll only be charged your deductible amount once each time the car needs repairs, even if two different issues covered under the warranty are being repaired during that visit.

5. Are you planning to make major modifications to your car?

In most cases, it's perfectly fine to change your own oil or tires or put in a new air filter. Lots of people—particularly avid DIYers—enjoy getting their hands greasy on their own set of wheels. However, if you're planning on doing something major, like replacing the engine with a turbocharged one or even adding hydraulics, you may end up voiding your warranty altogether. 

To learn more about used car warranties, speak with a representative from a company like Auto Max.

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