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. Carmarkers offer a standard warranty to counter this. A warranty is a written promise to repair or replace a broken or defective part free of cost. A standard warranty period 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 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 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. 

In the case of all three carmakers, the parts and battery warranty is exclusive to the first owner and is void once the car is sold or ownership changes hands. Volvo’s warranty also does not cover regular wear and tear of parts, just parts failure due to material or manufacturing defects. MG’s warranty will be void if you use charging setups not approved by the carmaker. 

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 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.

Extended Warranty

An extended warranty is a paid feature that goes into effect once the Manufacturer’s warranty expires. 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. 

Certified Pre-Owned (CPO) warranty

This warranty covers used cars and is a critical tool to ensure 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. Some portals like CARS24 go a step further by offering extended warranty at a nominal cost, over and above the standard free warranty.  

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 an Extended Warranty Not Cover?

Generally, the extended warranty 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 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. 

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. For e.g. if you opt for the CARE+ plan from CARS24 when buying a used car, not only do you get an extended warranty of up to 3 years or 45,000 km, but these plans also come with RSA services, annual car service, and buyback guarantee, safeguarding your investment in a used car.

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. E.g. the CARE+ package for used cars from CARS24 comes with annual service inclusive of the price, mitigating your expenses for maintenance, and ensuring a smooth driving experience.

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. If you opt for the CARE+ package from CARS24, you also get assured buyback, so you can gain back a good fraction of your investment when you want to part with your used car.

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. 

Add-on Benefits

Some extended warranty policies also cover services like Roadside Assistance, Towing Service and accidental damage. Both are quite useful if you travel a lot with your car. When you opt for CARE+ when buying from CARS24, you can rest assured you will never be stranded, as RSA is inclusive in the price you pay, along with all the other benefits you gain.

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. 
• 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 componenets, 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. 

Additionally, opting for the CARE+ extended warranty package for used cars from CARS24 provides:

• 360-degree protection for your car, with warranty plans that span up to 3 years or 45,000 km, covering the maximum number of parts. This eliminates any costs related to repairs and maintenance, ensuring your used car serves for years to come without any pocket-heavy expenditure.
• Enjoy the benefits of the included annual service for your used car, and mitigate your running and maintenance costs, and experience a smooth driving experience without any additional expenditure.
• Never worry about being stranded because of a breakdown, as CARE+ plans come with 24x7 roadside assistance, inclusive of the price, ensuring you’re always moving, no matter what. 
• With buyback assurance, your investment in your used car is as safe as ever. Enjoy guaranteed prices when you want to sell your used car, safeguarding your investment and enhancing peace of mind.

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.