Among the many top reasons to buy a new vehicle, the warranty you get is surely one of them. Essentially, for several years, you're worry-free, and most of the issues you might have with your car will be fixed, free of charge, with a visit to the dealership.
Of course, thanks to all the improvements in the way cars are designed, engineered, and assembled, we're in a sort of heyday for reliability; cars are often trouble-free—other than routine maintenance and maybe a few minor niggles—for five years or, in most cases, well beyond that.
Today's new-car warranties for mass-market mainstream and luxury vehicles come with basic warranties that range from three years or 36,000 miles up to five years or 60,000 miles, and powertrain warranty coverage that stretches as long as ten years or 100,000 miles for some brands (Kia and Hyundai). And as part of that coverage, most automakers now offer roadside assistance, too.
It’s obviously a good idea to know what your warranty covers before you need it. In the case of the bumper-to-bumper warranties, pretty much anything short of a failure caused by an accident, or obvious or deliberate abuse—such as running the engine without adequate oil, or driving the car into a lake—will be taken care of at no cost to you, by the dealer (who sends the bill for parts and labor to the manufacturer who built your vehicle).
Normal wear and tear: usually still out of your pocket
Be aware, however, that routine service—such things as oil changes, brake pad replacement, tires (which have a separate warranty issued by the tire company), and other parts such as those, which are subject to normal wear and tear, are generally not covered by the new car warranty. You still have to pay for them out of pocket. That includes, by the way, the clutch in vehicles equipped with a manual transmission—which is often considered a "normal wear and tear part."
Bottom line: No matter what the warranty, subject your vehicle to driving styles that almost everyone would agree are exuberant or excessive (track time, or drag-racing), and if there's evidence you'll be footing the bill.
The bumper-to-bumper warranties are supplemented by powertrain coverage that extends—longer and to much higher mileage in most cases—but it only covers core engine, transmission, and drive components. So if your alternator fails, for instance, you're probably still going to pay.
After the new-car warranty is over...
Once the manufacturer's bumper-to-bumper and powertrain warranties have expired, you're on your own. This is where extended warranties come in.
Most manufacturers also have key information about their warranties and what is or isn't covered as part of their consumer websites (here from GM, for instance).
The very nice thing about new vehicle warranties is that they are manufacturer-backed, which means you have recourse to the automaker (GM, Ford, Toyota, etc.) in the event your local dealer is giving you grief or not handling a problem to your satisfaction. There are manufacturer-supported regional customer service representatives that you can call if such a situation arises; the customer service rep can mediate on your behalf with the dealer or service manager to resolve the difficulty. Contact information is usually contained in your owner's manual, or with the paperwork that came with your vehicle.
But no guarantee is forever — and once the manufacturer's bumper-to-bumper and powertrain warranties have expired, you're on your own. This is where extended warranties come in.
Extended warranties: Rarely as advantageous as they sound
In theory, extended warranties are a great idea. They pick up where manufacturer's warranties leave off, extending either the mileage interval or time period during which the vehicle and its systems are covered. Extended warranties can also usually be added to late-model used vehicles as well—and can be a valuable bit of security over an "as-is" purchase.
In truth, extended warranties are rarely the good deal they sound when being sold. Most used-car dealerships will try to sell you an extended warranty that can cost hundreds, or even thousands, of dollars, and many of these are nearly useless because of their extreme limitations in coverage.
With any of these, carefully study the fine print to check that the warranty doesn’t cover only a few major components. Most of these are ‘limited’ (versus full), which implies that the dealership will only cover a portion of the repair costs. If you're buying a used car from a dealership, make sure you have a full warranty for a time after the sale (and read the small print), but save the money and say no to extended limited warranties.
Finally, be aware that these extended warranties aren't what they sound to be (extended versions of the manufacturer warranty); rather they're entirely different policies covered by third-party companies. Those that you're sold at a used-car lot might essentially be an insurance policy, while some of those true extended warranties offered by your new-car dealership aren't run by the automaker itself, but more often a captive finance arm (Ford Credit versus Ford Motor Co., for example).
Also keep in mind that dealerships make a significant 'cut' of what you pay for the policy—often nearly as much as their profit margin on the car—so it's in their interest to sell you on it.
When your warranty might not be honored
Whether you have the new warranty or an extended one, some things will be the same—and those are the typical exclusions. Some or all of your vehicle warranty might not be honored if you have:
- No proof of maintenance. What the automaker is looking for here is that you followed the proper service intervals in your owner's manual, and that the work was done by either the dealership or by a qualified independent mechanic. As much detail here as possible is a plus—including the brand and part number of replacement parts, and the type and viscosity of oils and replacement fluids.
- A salvage title. This means that you've been in an accident severe enough for your insurer essentially to cut you a check for the value of the vehicle and write it off. It's up to you whether you want to fix it or not (potentially with compromised safety), but the vehicle will be branded with this for life—and without its new-car warranty. Keep in mind that most used-car coverage or extended coverage will also be null and void on a salvage-title car—it's truly drive at your own risk.
- Unknown mileage. If your odometer has been inoperable for some time, or (for a used car) that a vehicle history report suggests that your car might have been 'clocked' at some point, your warranty might be void.
- Damage from natural disasters. If your car has been submerged in a flood, damaged by an earthquake, or been affected by a fire that wasn't started by the vehicle itself, your warranty might no longer be valid. Check directly with the manufacturer, and if it is, take this up with your home and car insurance.
- Been on the racetrack. Even if it's just a few hours over a few weekends here and there, you could be voiding your warranty—or most often, whatever the automaker deems related—the moment you head out onto a closed course and anything that might be considered a 'competition event.'
If you have doubts about coverage, the glovebox is a good place to start. Read your owner's manual, or the warranty booklet that came with it, for more details, and check with the manufacturer.