Before you make the major purchase of a new car, there is an important promise you should read. It is called the new car warranty - the manufacturer's or seller's promise to stand behind the product. Warranties vary in the amount of coverage they provide. The Magnuson-Moss Act of 1975 requires that warranties be available for you to read before you make a purchase.
Most new cars come with a manufacturer's warranty, which usually covers the car for at least one year or 12,000 miles. Today, some of these warranties last much longer. You may decide to buy a demonstrator model - a car that has never been sold to a retail customer but has been driven for purposes other than test drives. If so, be sure to ask when warranty coverage begins and ends. It could start when you purchase the car, or it might have begun earlier, when the dealer put the car into service.
Other things to watch out for when dealing with a new car warranty:
• Check to see if any parts of the car or types of repair problems are excluded from coverage.
• Some warranties require you to pay for labor charges
• Check the warranty to see when it expires.
When you buy a car, you may be offered a service contract. Although often called extended warranties, service contracts are not warranties. Warranties are included in the price of the car. Service contracts come separately from the car at an additional cost. To decide if you need a service contract, you should consider several factors: whether the warranty already covers the repairs that you would get under the service contract, whether the car is likely to need repairs and their potential costs, how long the service contract remains in effect, and the reputation of the company offering the contract.
Extended car warranties, which add hundreds of dollars to the cost of a car and are hugely profitable for the dealer because they often go unused, are usually hawked by the finance and insurance department. This is a contract you can cancel painlessly. Ford Motor Company, for example, lets you drop its extended warranty service contracts within the first 15 days for a fee, which varies from state to state, but is usually no more than $30. Chrysler and General Motors will forget the whole thing happened and give you a full refund within the first 60 days.
To minimize the chance of a problem with your new car warranty, take these precautions:
• Consider the reputation of the company offering the warranty. A warranty is only as good as the company that offers it.
• Before you buy, read the warranty. See exactly what protection the warranty gives you.
• Save the sales slip and file it with your warranty. You may need it later to document the date of your purchase, or in the case of a warranty limited to the first purchaser, to prove that you were the original buyer.
• Perform any maintenance or inspections required by the new car warranty
• Use the car according to the manufacturer's instructions. Abuse or misuse of the product may cancel your warranty coverage.
By Greg Hitchcock.