What is a used car warranty? A used car warranty is essentially “an insurance product”.
A warranty is in place to cover you for, mechanical breakdowns and the cost of repairing them.
As an ex car dealer, I had to warrant any vehicle that I sold for six months and how I did this and many other dealers, is to put a third-party warranty on the car, at the point of sale. The reason why I do this, is if a fault was to occur, the warranty company will pay for the repair.
Used car warranties can be a jungle, there are many companies to choose from and there are a lot of cow boys out there.
Choosing the correct one is essential, as there is no point paying for a warranty, that won’t pay the repair bill of your car.
When I was a car dealer (the enemy), I only sold vehicles up to five years old and under 50,000 miles. The reason behind this was simple, at this age and miles, the warranties were pretty comprehensive. In other words, they covered you. In my experience, cars out of these criteria, even with the best warranty companies, the cover was inadequate.
So, to save myself a lot of stress and lynch mobs turning up, I only sold young cars.
There are lots of warranty companies that claim, they will cover a car up to 15 years old and 150,000 miles, from the start date of the warranty, for a couple of hundred pounds or less
Two sayings spring to mind, “you get what you pay for” and “If it seems to good to be true”.
Let’s go back to when I said “a warranty is essentially an insurance product”.
What is the one thing we know and love about insurance companies?
Any takers? Go on have a go.
They love taking our money? True, but that’s not the answer I’m looking for.
They love putting our premiums up every year? True, but again not what I’m looking for.
They love putting us on hold for hours? True, but again not what I’m looking for.
They love to have a fully legal reason not to pay out. This is the same as a warranty company. If they have a reason not to pay you, they won’t. This is why I said you get what you pay for.
When you look into the terms and conditions of these warranties, it will state what it does and does not cover. A car that is 15 years old with 150K miles, it’s not going to cover anything important.
So, before you part with your hard-earnt cash, to pay for one of these warranties, make sure you read what is covered!
The main things to cover are the engine, gearbox, running gear (yes even cars have gym clothes), drive shafts and ECU. As long as these are covered, the most expensive parts are insured. If your car is not naturally aspirated, (your car has a turbo / super charger) make sure these are covered under warranty as these cost fortunes to repair.
A claim limit is the maximum value you can claim, per claim, on a repair for your vehicle. Again, this can be a mine field. Some companies offer £300, £2,000, £5,000, up to the value of the vehicle.
This is important to check as a £300 max won’t cover you for much. Some new gear boxes can cost up to £7,000 to replace and £300 is not going to do much towards it.
Claim limits also mean, what’s the maximum you can claim for the duration of the warranty. A lot of warranty companies offer up to the value of the vehicle.
So, let’s say for an example, you bought a year’s warranty on a car that was £10,000. Your warranty states you have a £1,000 single claim limit, but a duration limit of the value of the vehicle £10,000.
You can claim in that year 10 times for repairs up to £1,000 each, or 20 times up to £500 each, but if the repair was £2,000 they, would only contribute £1,000 towards it, or not pay out at all.
So, when choosing a warranty, it very important to choose the correct claim limit. So, for example if you have a Ford Fiesta, the £1,000 claim limit should cover most things, as the repairs on these cars are cheap, but if you have a Porsche 911, that claim limit is not going to cover hardly anything.
Labour rates are also important, because this dictates what garage you can take it to, to be repaired. The labour rate is how much the the garage charges, per hour for working on your car.
Labour rates can vary from £35, £50, £75, £100, £150, £200, £250, £300 per hour.
If the rate is at the lower end, that would be a local garage, in the middle to the high end are main dealers. The manufactures labour rate, can depend what brand it is, for example Ford will charge less per hour than Rolls Royce.
When choosing a warranty this is also important, depending on what vehicle you have.
So, let’s say you have a VW golf, the £35 – £50, will cover you for a local garage, the £75 – £100 will cover you for the main dealer.
So now let’s say you have a Ferrari F430, the £35 – £50, probably won’t cover you, as this is a specialist vehicle and most local garages won’t have the tools and knowledge to work on this.
The £75 – £100, will most likely get you a specialist independent garage, which will have the tools and knowledge.
The £150 – above, will get you the manufacture themselves to work on your vehicle.
How much dose a warranty cost?
There are a lot of factors in this, it all depends on the vendor, make, model, age, millage, the level of cover and how long the warranty last for.
Typically speaking a year’s warranty, with a great level of cover, on a car up to five years old and 50,000 miles, you should expect to pay around £250 – £300.
If you have a car with lots of know faults and problems like, every Land Rover ever built, you could expect to pay double.
4X4’s, cabriolets and Hybrids, you can expect to pay more, due to there being, a lot more things that could go wrong with the car.
Good warranties companies to use.
Over many years of experience here are a list of warranty companies I would recommend.
I have used all three of these and know many dealers that have also. Get a quote off all three and see what’s covered before going ahead.
Manufactures extended warranties
If your car is about to run out of its manufactures warranty, quite often you can stick an extended manufactures warranty on the car.
Again, each manufacture has different terms and conditions, such as,
- Having full main dealer history, to be able to buy an extended warranty
- Having to have the vehicle inspected before (usually charged you for this)
- Claim limits
- What’s covered
So, it’s always best, to check the fine print before buying, also these tend to be quite a bit more money, than a third-party warranty.
Can I transfer my third-party warranty to another person?
Again, this can be a mine field, as each vendor has different terms and conditions.
For example, if you were to sell your car to a private buyer, most companies would allow you to transfer it to the new owner, for a admin fee of around £20 – £30.
If you were to sell your car to a dealer, most companies will void the warranty, as in most of their terms and conditions “motor trade professionals”, are not allowed to take policies out, on vehicles before the point of sale. Even warranty companies hate us.