Extended Warranty for Used Car: Smart Move or a Waste of Money

There’s a general belief that nothing manufactured can be truly perfect. Anything with two or more moving parts is prone to defects or failure over time. To counter this lack of guarantee, carmakers offer a standard warranty for their offerings. 

While a standard warranty is free and restricted to a certain time frame and kilometres, auto manufacturers offer a paid warranty that extends beyond that. This is an extended warranty. You can avail this extended warranty even for used cars. Here we tell you if and why you should go for an extended warranty for your used car.

What is a warranty?

New cars always carry a risk of potential breakdown that can happen due to human error during manufacturing or defective parts. Car makers and even used car platforms now offer a standard warranty to counter this. A warranty (for both new and used cars) is a written promise to repair or replace a broken or defective part free of cost. A standard warranty period for new cars typically lasts around three years or 1,00,000 kilometres, whichever comes first.

For example, if your new car’s AC stops working, the manufacturer will repair or replace the AC under warranty, at no extra cost to you.

What is a new car extended warranty?

Most carmakers offer an extended warranty, which comes into effect once the standard warranty expires. This is beneficial if you accumulate a lot of kilometres because, as the car ages, it experiences more wear and tear, and the likelihood of a breakdown and costly repairs rises. Duration and coverage of new car extended warranties vary from manufacturer to manufacturer.

Lifetime warranty: Myth or reality

Yes, carmakers in India like Volvo offer a lifetime parts warranty for their cars, while OEMs like Mahindra and MG offer a lifetime battery warranty for their electric vehicles. That said, there are several caveats, meaning a lifetime warranty may not be as comprehensive as it sounds, but it can last way longer than standard warranties, ensuring long-term peace of mind.

Having a lifetime warranty in place can greatly elevate post-purchase peace of mind. And this is why CARS24 now offers a Lifetime Warranty for all inventory-listed pre owned cars; a never-heard-before move in the global used car industry that ensures every buyer gets access to a seamless post-purchase experience.

Difference Between Guarantee and Warranty?

A guarantee is a promise to replace or refund the cost of the whole product in case of a part breakdown. A warranty generally entails repairing or replacing the defective part instead of replacing or refunding the whole product. 

For example, in the event of a car breakdown, a guarantee would entitle you to a replacement vehicle or a full refund for the car. If the car is under warranty, a technician will repair or replace the defective part instead of the whole car. In the case of automobiles, no one offers a guarantee on their products, but a free standard warranty is the norm. 

Types of warranty in new and used cars

The types of warranties can be categorised into the following main groups:

Manufacturer's Warranty

A manufacturer's warranty is the standard warranty that comes free with a new car. This type of warranty covers almost the entire car (called a Bumper to Bumper warranty). This warranty primarily covers manufacturing defects.

Certified Pre-Owned (CPO) warranty

This warranty covers used cars and is a critical tool to ensure absolute peace of mind, even while buying a used car. Most major used car portals offer a limited Certified Pre Owned Warranty for the used cars sold by them. This is often bundled with the purchase price of a used car and is a basic testament to the quality of the used car being sold.

Extended Warranty

An extended warranty is a paid feature that goes into effect once the Manufacturer’s warranty expires for a new car. Generally, this warranty has limited coverage; it is an essential feature to cover your car’s maintenance costs in the long run. This warranty can feature add-ons such as free Roadside Assistance.

In the used car market, since a majority of used cars often have the manufacturer's warranty period already run out, an extended warranty for a used car covers limited repairs for a specific period of time post-purchase and is generally applicable once the CPO warranty period lapses.

Third Party Warranty

A Third-Party Warranty is a warranty on used cars provided by a third-party provider instead of a carmaker or dealer. While it is important to have an extended warranty on your used car, do proper research into the vendor to ensure the possibility of fraud when it comes to claim settlement. 

What does an extended warranty for new cars cover?

An extended warranty generally covers the same things as a standard warranty cover, and may include additional protections depending on the add-ons selected. Here are some of the usual parts covered. 

Bodywork warranty 

Also referred to as Bumper to Bumper warranty, this warranty covers sheet metal and paint defects on the bodywork, rust spots, body panel gaps and misaligned body panels. 

Powertrain warranty

The powertrain warranty covers engine and transmission parts in terms of issues like low fuel consumption, power loss, abnormal engine noise and oil and fuel leakages. The warranty does not cover the usual wear and tear. 

Hybrid and Battery Warranty

These apply to hybrid cars and EVs and cover electrical system issues like reduced battery range, reduced performance, higher charging times and of course battery and electric motor failure. In conventional vehicles, battery warranties typically have shorter durations and limited coverage.

What does a new car's extended warranty exclude?

Generally, the extended warranty for new cars does not cover normal wear and tear parts like tyres and clutch plates unless they are found to be defective due to manufacturing faults. Here are some parts that are not covered under standard warranty:

• Tyres. 
• Brake pads and drum shoes. 
• Clutch plates. 
• Drive and pulley belts. 
• Windshield wipers.
• Engine, gearbox, brake oils. 

Warranties, be it new or used, also do not cover routine maintenance like oil changes and wheel alignment, besides damage to parts caused by an accident, vandalism or natural calamities such as flooding or fire. Also, in most cases, a warranty is void if there are modifications done to the car or if the car is not serviced according to the scheduled service intervals. 

The New Era of Used Car Warranties: 30-Day Repair Assurance, 12-Month Standard Warranty and Lifetime Warranty

While new cars offer extended and standard warranties that provide buyers with not just post-purchase confidence but also peace of mind, used cars have long struggled with unreliable warranties with limited coverage. But now, with CARS24 redefining used car warranties, buyers now have access to a reliable warranty experience with unparalleled coverage. 

30-Day Repair Assurance

• 30-day or 1,500 km repair assurance for every inventory-listed used car at no added cost.
• Covers major mechanical systems: Engine, Transmission, Cooling & AC, Electrical, Fuel Systems.
• Includes minor wear-and-tear parts: Brakes, Clutch, Suspension, Tyres.

• Offers unlimited, cashless repairs with no hidden fees, no deductibles, and no fuss.

   

Standard 12-Month Warranty

• A standard 12-month warranty for all inventory-listed used cars.

• Coverage spans key components of the Engine Assembly, Transmission, Gearbox, and Drivetrain.

   

Lifetime Warranty

• World’s first and only Lifetime Warranty Plan, offering long-term protection at a nominal cost.
• Industry-leading coverage valid up to 12 years from registration or 1,50,000 km (whichever comes first).
• Protects vital components of the Engine Assembly, Transmission, and Drivetrain.
• Cashless repairs at CARS24-certified workshops using OEM or equivalent parts.

Reasons to buy an extended warranty

There are a lot of reasons to buy an extended warranty for your car, whether it is a new car, or a used car. Also, CARS24 offers extended warranty on second hand cars for up to 3 years or 45,000 km, covering the maximum number of parts, providing a hassle-free used car ownership experience. Here are some of the reasons to opt for an extended warranty:

Additional Security

An extended warranty safeguards you from heavy expenses in case of an unexpected breakdown. Also, some policies offer Roadside Assistance and Towing facilities, so you are not stranded anywhere. 

Low Service Costs

An extended warranty covers most long-term repairs, so you spend less on service in the long run. Also, since the warranty covers these repairs, you do not tend to neglect them, which keeps your car in top-notch condition. 

Potential Savings

An extended warranty saves you money in the long run as it covers repairs that a standard warranty would otherwise not cover. As time passes, these savings add up and surpass the additional premium you paid for the extended warranty. CARS24's warranty covers the maximum number of components, and provides the industry's highest kilometres driven coverage at 45,000 km, making sure your investment is safe for longer.

Better Resale Value

An extended warranty is an add-on which enhances your car’s resale value. It acts like an asset when selling your car. With warranty coverage still active, buyers usually tend to offer a substantially higher value.

More Warranty Coverage

Some extended warranties go beyond the scope of standard warranties, not just in terms of coverage. In some cases, they also provide protection for certain components that a standard warranty does not cover. 

Things to look out for when buying an extended warranty

It is always a good idea to closely inspect the warranty coverage details. Here are some points you should keep a lookout for:

• Check if the extended warranty is bumper-to-bumper or Limited coverage. The former will be more expensive but will ensure peace of mind in the long run. 
• Check the coverage duration. An extended warranty generally covers 6 years / 1,50,000km for new cars and 1 year / 15,000km for pre owned cars, with platforms like CARS24 even offering Lifetime Warranty with coverage of up to 12 years (from registeration) or 1,50,000 km
• Check for the scope of coverage, the parts that are covered and more importantly, the parts that the warranty does not cover. 
• Check whether the warranty includes electrical repairs along with mechanical parts. 
• Check for claim limits and deductibles. There are set limits for the maximum amount per repair as well as deductibles that you have to bear in order to make a claim. 
• Keep an eye out for add-ons. Some manufacturers offer roadside assistance, while some cover labour costs as well. 
• Check if the warranty is transferable. It is useful, especially in case you plan to sell your car in the future as this enhances your car’s resale value. 

Why get an extended warranty for used cars?

The biggest reason to go for an extended warranty is peace of mind. Here’s a list of other factors why an extended warranty makes sense:

• A used car has undergone more wear and tear than a new car and, therefore, may require slightly more maintenance. An extended warranty can cover the cost of critical components, reducing overall ownership cost in the long run. 
• An extended warranty ensures you spend less on repairs, which reduces running costs. That’s more savings in the long run. 
• Having a transferable extended warranty improves your used car’s resale value, in case you plan to sell it in the future. 

Common Misconceptions about Extended Warranty

Here are some common misconceptions about extended warranty:

Extended Warranty is a Waste of Money

It is not if you end up driving a lot. The more kilometres you rack up, the more you recover the upfront costs for an extended warranty. 

In fact, if you own a car known for higher repair costs, you end up saving a lot in terms of repairs with an extended warranty. 

Extended Warranty Covers Everything

It is important to understand the scope of the extended warranty, what is covered and what is not. While extended warranties cover bodywork and powertrain wear, the scope of coverage is not as comprehensive as a manufacturer's warranty. 

An Extended Warranty is Expensive

While the upfront investment in an extended warranty plan may seem hefty, it helps you save much more in the long run. Extended warranties help you eliminate unnecessary expenditure on maintenance and repiars.

Extended Warranty is Barely Used

The benefits of an extended warranty extend beyond saving on repair costs. Besides peace of mind and the convenience of Roadside Assistance and free towing, an extended warranty enhances your car’s resale value as well. 

Conclusion

Extended warranty is as important as insurance when buying a car. While insurance covers external damage, warranty covers internal damage. Warranty covers a lot more than money, it offers convenience and enhances resale value. Extended warranty is as important for used cars as it is for new cars. 

A used car has covered more kilometres and undergone more wear and tear so it has a higher probability of mechanical breakdowns. Extended warranty is a smart investment that ensures that you don’t pay a lot for repairs in case of an unexpected breakdown. An extended warranty serves a purpose similar to insurance, offering protection against unexpected repair costs. While you cannot predict an accident, you’re glad to have insurance when you get into one.