Everything you need to know about warranties

Warranties have always been a hot topic in the automotive world. Whether it’s their extensiveness being touted by the manufacturer’s marketing team, or their availability being plastered across a sign at a used car lot, it’s hard to go through a car sale without hearing someone talk about warranties. (Or without wondering, ‘are extended car warranties worth it?) Some car buyers refuse to purchase a car without one, and others will actively avoid them.

Having such polar opposite views can be confusing to those folks who fall somewhere in the middle, so in this article, we’ll be going over all the things that you should know about warranties. To start, it’s important to first go over the various different types of warranties that you’re likely to come across when car shopping. 

Types of warranties

The type of warranty that a car has (if any) is most often related to that car’s age. While there are quite a few different types of warranties, here are the most common: 

  • New-car warranty: A new car warranty is exactly what it sounds like. This is an extensive coverage warranty that comes with a brand-new car. It is backed by the manufacturer of the car, and will typically last somewhere between three and five years and 36,000 to 60,000 miles. 
  • Certified preowned warranty: A certified preowned (CPO) warranty is a warranty that, like a new car warranty, is backed by the manufacturer, only for used cars. CPO warranties are sold with cars that the manufacturer deems in very good condition, and the coverage will usually be similar to a new-car warranty, though it may be less extensive. These are typically only available on cars less than five years old. 
  • Extended warranty: An extended warranty is again backed by the manufacturer, but instead of it being something lumped in with the purchase, this is something that you buy as an add-on. Most manufacturers will allow you to get an extended warranty on cars that are of a reasonable age, and you can choose the type of coverage that you want. It is important to note, however, that these are usually quite pricey. 
  • Aftermarket Warranty: Aftermarket warranties are warranties sold by companies that are not affiliated with the manufacturer. These are highly customizable, and can be purchased for just about any car on the road as long as you’re willing to pay for it. 

The above-mentioned four different warranty types are what you’re most likely to run into both at OEM dealers and used car lots. Additionally, it is important to note that transferability cannot be assigned to a warranty type. Some CPO warranties are transferable to a new owner, while others are not. The same goes for all other warranty types as well. So, if you’re looking into buying a car with a warranty, double check with the warranty company on whether or not that warranty is transferable to you. 

Coverage types

The next important warranty topic to discuss is coverage type. This will vary quite a bit between different warranty providers, warranty types, and, well, the extent of coverage that you choose. So, let’s go over the coverage types you will generally find available. 

  • Bumper to Bumper: Bumper to bumper warranties offer exactly the type of coverage that you would think they do. They cover everything in between the front bumper and the back bumper (read: everything!). Well, just about everything. Certain items will always be omitted even in bumper to bumper warranties—especially wear items like brakes—and some BTB warranties are better than others. However, just because this is the most extensive type of coverage that you can get, that doesn’t mean that you don’t have to read the fine print to be extra careful.
Car wheels and transmission and engine components;  a powertrain.
A powertrain warranty will basically cover everything you see here.
  • Powertrain warranties: Powertrain warranties will only cover the engine, transmission, and drive axle components. The good thing about these types of warranties is that they are less expensive than BTB warranties, but they still cover most of the areas where repairs can be pricey, like the engine and transmission. Like other coverage types, coverage will vary between different warranty providers, however most powertrain warranties will cover most things under the hood and throughout the rest of the driveline. 
  • Corrosion/Rust warranties: Corrosion and/or rust protection warranties are pretty straightforward: they will cover any repairs related to corrosion or rust on the vehicle. For most people this won’t be a major concern, but for certain types of cars in certain climates, these types of warranties can be helpful. 

Conclusion: are extended warranties worth it? 

Now that we know all that we need to about warranties and the different types and coverages, it’s time to answer the question that most of you probably came here for: are warranties worth it?

The answer to this question is, unsurprisingly, that it depends. Whether or not a warranty is worth it depends on the type of warranty, its coverage, and every single little detail related to that car.

If you buy any relatively recent Toyota—like this Camry on TRED—an
additional warranty of any type is unlikely to be needed.

For example, very few warranties will ever approach paying for themselves (this is when the price of warrantied repairs exceeds the price of the warranty) on a five-year-old Toyota. That’s because any newish Toyota is going to be very reliable, and need very few repairs, if any, in the term under which it is warrantied. However, a warranty on a ten-year-old Land Rover could pay for itself within a week.

So, whether or not the warranty you’re considering is worth it depends on the price of the warranty, whether the car is historically reliable, the extent of service records for the car, and how willing you are to roll the dice when it comes to paying for out of pocket repairs. Sometimes a warranty will be worth every penny, and other times it will end up being a complete waste of money. Only you can make that judgement, but the info above should help you do so! 

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