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Auto Warranties


Auto Warranties > Auto Warranty Coverage Types

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auto warranty - overheated engine In a general sense, a warranty is a manufacturer's or seller's promise to stand behind their product.  It is a statement concerning the integrity of their product and their commitment to correct problems if their product fails.  Auto warranties are especially important for consumers because car repairs can be very expensive.  An automobile warranty can soften the financial blow if you end up with a lemon.

United States federal law recognizes two basic types of warranties — implied warranties and express warranties.  State laws deal with implied warranties, which are unspoken, unwritten promises that sellers and merchants make to their customers.  Implied warranties are based on the common law principle of receiving "fair value for money spent."

Express warranties, by contrast, are those that are explicitly offered to customers during the course of a sales transaction.  They are promises and statements that manufacturers or sellers make about their products or about their commitment to remedy defects and malfunctions that may occur.  Written warranties on consumer products such as automobiles are covered by a 1975 federal law known as the Magnuson-Moss Warranty Act.

Automobile warranties are offered to new car purchasers by motor vehicle manufacturers, as a standard feature.  Additional warranty coverage may generally be obtained to extend the length of coverage (months and/or miles) and to provide coverage on additional vehicle components.  Even if you buy a used car, a portion of the manufacturer's warranty may still apply.  Extended auto warranties obtained from third-party insurers may provide added peace of mind for used car buyers, especially when a car's service record or vehicle history is not available.

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36,000 Miles (Typical Drive Train Warranty Limit)

Should you buy your auto warranty from the auto manufacturer or from a third-party company?  Well, the goal of an auto warranty is to ensure that your expensive purchase is covered should something go wrong.  When faced with choosing between the auto manufacturer's warranty or the a third-party company's warranty, it may be tempting to go with the third-party company.  After all, these warranties are generally less expensive.  However, the automobile manufacturer's warranty is usually the safer choice because it is backed up by a company that is likely to be around for a long time.  On the other hand, you never really know about the viability of a third-party warranty company.  When you need your warranty in three, five, or 10 years, will the company still be in business?

Auto warranty coverage is available in three basic levels — power train, standard component, and bumper to bumper.  Auto manufacturers often provide the longest warranty coverage for vehicle power trains and shorter coverage for standard vehicle parts and components.  They may also provide the new car buyer with full bumper to bumper coverage during the first few years of ownership.  For more information about these coverages, see auto warranty types.

business person with car trouble It is very important to read the fine print on your warranty.  For example, many companies are trying to keep up with manufacturers like Honda, Toyota, and Kia by expanding their warranties.  Some are attempting to beat the competition by offering 100,000-mile, five-year warranties.  But before you get too excited, read the fine print.  Many of these warranties are quite "limited," which means not everything is covered.  Read the brochure carefully, including the fine print, to determine if there are any holes.  Lack of coverage typically shows up in areas such as air conditioning, electrical, and navigation systems, as well as DVD players, brakes, cooling systems, and emissions systems.  Reading the fine print is especially important if you are buying a used car or an extended warranty.

Finally, be wary of any auto dealer who says that the lender insists that you buy an extended warranty.  Most lenders don't require this, and it is usually a false claim.  When in doubt, contact the lender directly regarding their policies.

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