Demystifying Used Car Warranties

What is a Used Car Warranty?

A warranty is a protection plan that covers certain repairs after you buy a car. Some come free from dealers, others you can buy separately.

Types of Warranties

Dealer Warranty

• Short term cover (3–12 months)
• Varies widely in quality and coverage
• Often has claim limits and exclusions
• May require servicing at the selling dealer

Manufacturer Warranty

• May still apply if car is <3–7 years old (varies by brand)
• Comprehensive coverage of mechanical and electrical faults
• Transferable to new owners
• Requires main dealer servicing to maintain

Third-Party Warranty

• Purchased separately from specialist providers
• Various levels of coverage available
• Can be tailored to your needs and budget
• Quality varies significantly between providers

What's Typically Covered

• Engine components
• Gearbox and transmission
• Suspension (sometimes limited)
• Steering system
• Braking system (excluding wear items)
• Electrical components (often limited)
• Fuel system
• Cooling system

What's Typically NOT Covered

• Wear and tear items (tyres, brakes, clutch, wipers)
• Routine maintenance (oil changes, filters)
• Interior trim and upholstery
• Bodywork and paint
• Glass and light units
• Batteries
• Damage from misuse or neglect
• Pre-existing conditions
• Consequential damage (damage caused by a non-covered part)

Important Terms to Understand

Betterment

If a repair improves the condition of your car (e.g., replacing an old part with a new one), you may be asked to contribute to the cost. This is called "betterment."

Consequential Damage

If a covered part fails and damages other parts, those secondary damages may not be covered. For example, if a timing belt breaks (covered) and damages the engine (consequential damage), the engine repairs might not be covered.

Labour Rates

Many warranties cap the hourly labour rate they'll pay. If your garage charges more, you'll pay the difference.

Claim Limits

Warranties typically have:

• Per-claim limits - Maximum amount for a single repair
• Aggregate limits - Maximum total for all claims during the warranty period
• Vehicle value limits - Claims capped at the current market value of the car

Red Flags in Warranty Contracts

• Vague wording about what's covered
• Excessive exclusions
• Very low claim limits
• Requirements to use specific garages that are far from your location
• Clauses that void coverage for minor maintenance lapses
• Unreasonable betterment charges

Tips for Maximizing Warranty Protection

• Read the fine print before purchasing
• Keep all service records - Missing services can void warranties
• Report problems immediately - Delays can lead to claim denials
• Follow the claims procedure exactly - Get authorization before repairs
• Consider negotiating for a better warranty when buying from a dealer
• Compare third-party options if the dealer warranty is weak

Remember: A good warranty should give you peace of mind, not a false sense of security. Always understand exactly what you're getting before you rely on it.