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Used Car Warranties: To Buy Or Not To Buy
Buyers of used cars often wonder whether it is worthwhile to purchase a warranty to cover mechanical failures which occur soon after the vehicle is purchased. This aspect of the car-buying process can cause confusion and frustration. Below is an explanation of what warranties are, what they cost (if anything), and what IS and what IS NOT covered in a warranty.
A warranty as it applies to a used car is a contract between a buyer and seller and, in many cases, between the buyer and a third party -- the third party being a private warranty company independent of the dealer. The purpose of a warranty is to save the buyer major expense in the event of mechanical failure or breakdown of the vehicle covered. A good warranty will cover the major components of the vehicle -- engine, transmission, drive train, and axle. If a warranty does not save money, set the money aside for future repairs.
Promises, Implied Warranty and "As Is" Law
It is critical to put the seller's claims about the fitness of a vehicle, repairs already done, or prospective repairs in writing. Take notes during conversations about specific vehicles. When a seller or dealer makes a promise, write it down and have the seller sign the agreement on the spot. This is also a way to learn a lot about the seller. If the seller signs, the deal can go forward. If the seller won't sign, perhaps there was never any intention to fulfill the agreement.
The old adage "get it in writing" was probably coined to describe used-car warranties. The Federal Trade Commission (FTC) and every state in the country have laws covering implied warranty. Implied warranty is the government's way of saying that anything you buy must function for some reasonable period of time in the manner for which it was designed. With a used vehicle, "reasonable" is ambiguous enough to cause the kinds of concerns that lead consumers to consider the purchase of an extended warranty.
Consumers should not rely on the implied warranty. The Federal "As Is" law requires dealers, but not private sellers, to post a window sticker on each vehicle for sale. It must include the warranty disclaimer spelling out details about what is and or if a warranty is even available for a particular vehicle. Dealers are required to reveal all they know about problems with the vehicle. This information is supposed to be clearly listed on the back of the used-car window sticker. This part of the "As Is" law is designed to help with the nebulous nature of implied warranty. More importantly, the "warranty disclaimer" will have a section spelling out that it supersedes any and all implied warranties, and it will be one of the documents signed when consummating the purchase.
If there is a slight "clunking" noise in the transmission, and the dealer tells you "oh, if it becomes a problem, we'll take care of it" -- put it in writing. If it isn't spelled out on the disclaimer that the transmission assembly is a covered component, the dealer is under no legal obligation to repair it. It is possible to get a problem resolved under the terms of an implied warranty, but chances are you will have memorized the phone numbers of your state consumer protection agency and attorney before that happens. If the disclaimer states that there is no warranty on the vehicle, then the dealer is under no obligation to repair anything, with the possible exception of safety-related items, once the car is sold.
In-House Warranties And What They Cover
Dealers themselves cover the repairs on In-House warranties are those warranties where the dealers themselves cover the repairs. The agreement is with the seller directly and generally no third party is involved. The coverage provided by these In-House warranties varies greatly. The only way to be sure what a used-car warranty covers is to have the systems and components that are and those that are not covered listed on a document that you and the dealer both sign. Make sure to receive a copy. Generally, if the dealer is going to assume responsibility for warranty repairs, only the major components of the vehicle (engine, transmission/transaxle assembly, and axle assemblies) will be covered.
In most cases, a used car has the terms of the warranty spelled out on the warranty disclaimer window sticker. The coverage can run anywhere from 3 months/3,000 miles to 12 months/12,000 miles. This is a whichever-occurs-first situation. If the warranty is for 12 months/12,000 miles, at the end of 12 months, or once you have put 12,000 miles on the car, the warranty period is over. If you have owned the vehicle for eight months, but have driven 14,000 miles, the warranty is no longer in effect.
