Many people spend more on their new car than they did on their first home. Others will come close. It is very important for customers to know to what extent the manufacturer's warranty will support their recent investment. Many customers will pay for their car over a long time period and consequently that time will extend beyond the life of most vehicle warranties. So, many consumers will be tempted to protect their purchase by buying “extended warranty” contracts or “service contracts.” Customers should carefully examine whether the contracts that are offered are cost effective.
Most new vehicles come with manufacturer's warranties. These vehicle warranties usually cover the normal wear-and-tear items like tires, brake pads, and filters. You should always carefully examine and compare the specifics in written terms. Typically, these warranties run either three years or 36,000 miles, whichever happens first. Most require an authorized dealer to perform the warranty work. Some manufacturers stipulate that routine maintenance must happen at regular intervals. Others include extras such as corrosion protection and roadside assistance.
Most warranties do not cover cars if they are used as delivery vehicles, taxicabs, or are used for another commercial purpose. The cost of these protections is factored into the buying price. For the most part, more expensive and nicer cars come with a better warranty. A customer also has the option of different levels of protection.
Some companies offer “service contracts” to make up for new vehicle warranties or just as an added protection for used vehicles, since the manufacturer's warranty is usually expired by then. The contracts must be reviewed with prudence. These service contracts do not usually become effective until the manufacturer's warranty expires. Most service contracts are not comprehensive. Many contracts use misleading names or terms. Some companies advertise a “limited warranty service contract” or an “extended warranty” when the contracts neither extend coverage nor provide any warranty at all. Rather, the contracts are simply service contracts.
Customers should be aware of contract definitions, restrictions, limitations, and other exclusions. Consumers should examine closely the service contract terms that deal with reimbursement.
Consumers should pay careful attention to service contract terms that deal with reimbursement. Will the consumer receive replacement value or merely actual cash value? Is there an aggregate value or total dollar limit on the amount the service contractor will pay under the service contract? Consumers should carefully consider whether the total costs of such a plan outweigh the likely benefits.
Sometimes classes of vehicles have defects that are serious but have not been included in a formal recall. If so, manufactures will sometimes advise dealers to correct the problem for free or at a reduced cost by giving a “silent warranty” or a “warranty adjustment.” These allow manufactures to avoid the adverse publicity associated with product recalls.
Federal law requires that any written warranty on a consumer product be made available to the consumer before the sale of the product. It also requires that sellers of consumer products make the text of the warranty document readily available to prospective buyers. Before you make a new or used vehicle purchase with vehicle warranties , you should ask to see the text of the warranty and take time to read all of its terms.
By Jessica Maughan