Five Things You Should Know About Used Car Warranties
If you're in the market for a car and are seriously considering – or have already decided – to go with a used model instead of a new one, know this:
You've already chosen wisely.
Why? Well, by buying a used car in lieu of a new one, you're already saving yourself massive amounts of money. That's because a new car loses roughly 20 percent of its value the very instant that you drive it off the sales lot.
It's as if thousands of dollars were to literally vanish into the air as you cruise into the sunset, mere minutes after signing the papers.
There's definitely plenty of savviness in buying used. But that's not to say shopping for a reliable, decently priced used car isn't a total walk in the park either. On the contrary, it's all the more crucial for you to do your homework and to choose with the utmost wisdom what type of vehicle you buy and also where or from whom you buy it.
One question to really take into consideration is whether to buy an additional service contract on a used car should any unforeseen mechanical issues arise.
In this article we break down the ins and outs of used car warranties, service contracts and ways that you can best prepare yourself for becoming the owner of a new used car.
What is a buyer’s guide and how can it help me?
First off, as soon as you lay eyes on a possible candidate, be sure to check out the buyers guide for the skinny on any and all warranties that are already included in the price of the car.
What exactly is a buyer’s guide, you ask? The Federal Trade Commission, or FTC, requires dealers to display information on any used car warranty in what is known as a "buyer's guide" for all used cars that are for sale.
The buyer's guide is frequently put in plain view on the car's window. If it's not, request a copy from the sales representative right away.
It also specifies if a car is sold "as is" or with some type of extended service contract. Always remember, if you decide to buy an as-is car, chances are highly likely that any and all unexpected repairs or even a mechanical problem that occurs the second after you happen to drive it off the sales lot, you're on your own.
Buyers guides actually carry a lot of legal weight when compared to sales contracts. Case in point: if the sales contract says the car comes as-is but the buyers guide makes no mention of any warranty or service contract, the dealer has no obligation to recognize what the contract states. So be sure to read and compare both extremely carefully.
Also, only dealers are required by law to provide buyers guides. This is not the case with private sellers. Keep that in mind if and when you should find yourself scrolling through Craigslist.
Do manufacturer's warranties still apply to used vehicles?
The term “manufacturer's warranty” refers to the warranty that came with the car when it was first purchased, which vary depending on the manufacturer. As an example, some – but not all – standard manufacturer’s warranties last for three years or 36,000 miles, whichever comes first. But some additional specific warranties may have an even later expiration date, such as that of the powertrain.
So that means that even if you buy a car secondhand, there's a possibility that its original manufacturer's warranty is still in effect. If so, the buyers guide will let you know, specifically in the "systems covered/duration" section.
If this happens to be the case, it's still a good idea for you to contact the automaker directly to ask about the warranty's transferability before you sign the sales contract.
How do used car service contracts compare to new car warranties?
If a used car does happen to come with a warranty, chances are highly likely that several strings are attached and the liability of both the automaker and the dealer aren't as extensive as if it were a new car. Rest assured, you'll find all the answers in the fine print, so be sure to sift through it all – as tedious as it may be – as if you were panning for gold. Also, be aware that used car dealers often sell service contracts from third-party providers without making it necessarily clear or blatantly obvious. So make sure you clear up any doubts or confusion you may have regarding the specifics before you sign.
Is it good to buy an extended service contract on a used car?
In most cases, when you buy a used car from a dealership, you also receive some sort of service contract at no additional charge. This is a legally binding agreement in which the dealer promises to cover certain repairs or services on the vehicle for the duration of the contract, which varies from dealer to dealer and sale to sale.
Along with service contracts, buyers can usually also purchase added peace of mind by way of an extended warranty. The cost of extended warranties varies depending on the make and model of the vehicle, as well as its age and mileage, but on average they're priced at $350-$700 per year.
If you're able to afford an extended service contract, chances are it's in your best interest to have it as a hypothetical security blanket for your new used car. But if you're still on the fence about whether you should or shouldn't invest the added cash, ask yourself the following:
How much time – if any – remains on the vehicle's original manufacturer's warranty, and is it transferable to you as the new owner?
Does the extended service contract specifically limit where you're able to take the vehicle if and when it needs to be serviced?
Does the cost of the service contract outweigh the cost of potential repairs should they be necessary? How expensive do repairs tend to cost for other models of the same car? Keep in mind, luxury brands like Acura, BMW, Cadillac and Lexus tend to involve higher-priced parts and repairs, generally speaking.
And in all honesty, taking into consideration its make, model, age and mileage, how dependable is the car, realistically? If you’re unable to answer that question confidently here and now, that means more research needs to be done before you decide to commit.
Save a little extra for a rainy day
Regardless of whether you choose to purchase an extended service contract or not, it's never a bad idea to set aside a bit of extra cash for your new used car in case of any mechanical snags down the road.
In the case of Shift, their certified mechanics not only perform extensive 150-point inspections on every car, Shift also provides complete vehicle history reports on each and every model in its inventory.
So you know that when you first drive off in your new used car, it looks and feels as good as new.
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All prices are based on vehicle availability and pricing as of
August 10, 2021
Pricing shown is not guaranteed and does not include taxes or other product fees.