What Is an Auto Warranty?
An auto warranty, also known as a manufacturer’s warranty or factory warranty,
is a written agreement that promises to pay for specific malfunctions or vehicle defects.
Dealerships include these contracts with the purchase of a new car or a certified used vehicle,
and they expire after a stated number of years or miles.
Most include bumper-to-bumper and powertrain coverage.
Bumper-to-bumper warranties
protect most of a car’s parts between the front and back bumpers and typically last
3 years or 36,000 miles, whichever comes first.
A powertrain warranty is less extensive and protects components like the engine,
transmission, drive axle, transfer case, and differential.
Contracts typically last 5 years or 60,000 miles.
What Is a Vehicle Service Contract?
A vehicle service contract is a vehicle protection plan that helps pay for costly
repairs after the manufacturer’s warranty expires.
These are often marketed as auto protection plans or extended car warranties,
though they’re technically not warranties under federal law.
Coverage varies, so reviewing the contract helps you understand what’s included
and what’s not.
People also ask
What does an auto warranty usually cover?
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Auto warranties typically cover factory defects and mechanical failures,
including bumper-to-bumper or powertrain components depending on the warranty type.
Are vehicle service contracts the same as extended car warranties?
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Vehicle service contracts are often called extended warranties,
but legally they are different and offered by third-party providers.
Auto Warranty vs. Vehicle Service Contract: Key Differences
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Who Provides the Coverage?
An auto warranty provider is the vehicle’s manufacturer.
For example, if you purchase a new Toyota vehicle, then the auto warranty
provider is either Toyota (the manufacturer) or the dealership that sells you the car.
A vehicle service contract provider can be a third party, a dealer, an automaker,
or an insurance company. If you buy a vehicle service contract from a dealership,
the administrator responsible for handling claims and processing payments may differ
from the company that sold you the contract.
📅 When Does Coverage Begin?
Auto warranty coverage starts when the vehicle is purchased or first put into service. Vehicle service contract coverage may begin when you sign the contract, after a waiting period (typically 30 days), or once the factory warranty ends.
🔧 What’s Covered?
Factory warranties typically include bumper-to-bumper and powertrain protection and may offer perks like roadside assistance. Vehicle service contracts vary widely. Some offer extensive protection, while others cover only essential parts. Many third-party vehicle service contracts also include roadside assistance, rental car reimbursement, and trip interruption. Some plans are transferable, which can boost resale value.
💵 Monthly Cost and Deductible
Auto warranties are built into the cost of a new vehicle. You won’t pay out of pocket for covered repairs during the contract term. Vehicle service contracts are separate purchases. Prices vary based on coverage, vehicle type, deductible, and provider. Some require full payment upfront, while others offer monthly payment plans.
⏱️ When You Might Need Each
New car buyers rely on factory warranties during the first years of ownership. Once that coverage ends, a vehicle service contract can provide added protection. Vehicle service contracts are especially valuable for used or high-mileage vehicles. If you want to keep your vehicle long-term but avoid unexpected car repair bills, a service contract can offer peace of mind.
🔍 What to Look for in a Protection Plan
There are several factors you should consider when searching for the right contract. Carefully review the following details before spending your money on an auto warranty or vehicle service contract:
Coverage Terms: What’s included? What’s the length of the agreement? Is there a deductible? Can you transfer the plan?
Claims Process: Who processes claims? The seller, provider, or a third party?
Repair Network: Are you limited to specific mechanics or dealerships?
Exclusions:Common exclusions include pre-existing issues, maintenance, and collision damage.
Fine Print:Read the entire contract. Some conditions may void coverage.
What does an auto warranty usually cover?
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An auto warranty or manufacturer’s warranty typically covers repair costs for mechanical or electrical breakdowns resulting from factory defects. Specifically, automakers will provide bumper-to-bumper and powertrain coverage, but the mileage and time limits differ for each.
Can I buy a vehicle service contract for a used car?
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Yes, either at the time of purchase or anytime after through a third-party provider.
Are vehicle service contracts worth it?
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They can be. If your vehicle is out of warranty and you want to avoid surprise repair costs, a vehicle service contract can provide financial protection and perks like towing and rental coverage.
How to choose the best auto protection plan?
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Your best option ultimately depends on your needs, budget, and details surrounding your vehicle. If you’re buying a new car, then the manufacturer’s auto warranty should cover repair expenses for the first few years of ownership. If you own a used car, you can purchase a vehicle service contract through a third party at any time. Research sellers and pick the plan that best fits your needs and budget.
Choose Coverage That’s Right for You
Research providers, compare quotes, and read customer reviews before signing anything. Auto warranties come with new or certified used cars. Vehicle service contracts are purchased separately and can extend protection once factory coverage ends. If your car is older or sees frequent repairs, a vehicle service contract can be a smart way to reduce your out-of-pocket costs.