car warranty comparison

When it comes to choosing a car warranty, there are many different types available at just as many price points. The company that is chosen as well as the selected deductible and coverage amounts will have a major impact on the coverage itself—and the amount that is paid for it.

Factory Warranties

When a car is purchased new, the dealership often factors the cost of the manufacturer’s warranty—also known as the factory warranty—into the purchase price of the car. These warranties vary depending on the manufacturer and the type of vehicle being purchased; the amount of coverage is usually right on target with the vehicle itself. Some manufacturers will even throw in the cost of fuel or regular maintenance as an added incentive to buy, but these warranties are often short-lived and will expire within the first year. Buyers are often able to choose between powertrain and bumper-to-bumper factory warranties at the time of purchase.

Dealership Warranties

Aside from the warranties provided directly from the manufacturer, many dealerships also offer warranties of their own. These can be used in place of or in addition to the warranty from the factory; buyers should compare the warranties thoroughly before making their decision. The dealership will often allow the buyer to finance the warranty premiums for the duration of the warranty itself; dealerships usually do not sell warranties that last the lifetime of the vehicle. The most common coverage period for dealership warranties is one to two years, though many dealerships provide a 30-day warranty—especially if their house mechanics have performed any repairs on the vehicle being purchased.

After-Market Warranties

An after-market warranty can be purchased at any time, either to accompany or replace a factory or dealership warranty. In most cases, the make, model, year and condition of the car will never make a warranty obsolete but it will certainly raise the price of the premium that the customer is required to pay. Newer cars will have less expensive premiums than older cars that are more prone to mechanical failures and breakdowns. The more that a customer chooses to cover, the higher the premium will be. For instance, a bumper-to-bumper after-market warranty for a 2012 Chevy may actually be less expensive than a simple powertrain warranty for a 1992 Pontiac.

Coverage Types

Most car warranty companies offer their clients several levels of coverage to choose from; each one covers more than the next at a higher premium rate. In order to purchase affordable coverage for their cars, customers are often asked to first select the amount of coverage and then select the amount of the deductible they would be able to afford in the event of a breakdown. If the deductible is $1,000.00 per year and the client experiences an issue that costs less than $1,000.00 to repair, the customer must pay for this repair completely out-of-pocket. If the next repair puts the total spent on repairs at more than $1,000.00, the customer pays up to $1,000.00 and the warranty takes care of the rest.

It is important for consumers to understand the different types of warranties that are available to them in order to make an informed decision about which one will best suit their needs. Factory, dealership and after-market warranties are all very different in both cost and coverage.