Used Car Warranties: What They Are and How They Work

By Kiah Treece

Used-car warranties are service contracts that cover the repair or replacement of certain vehicle parts and systems. They can provide financial protection against unexpected repair costs beyond the manufacturer’s warranty, reducing out-of-pocket costs and ensuring peace of mind. These warranties vary in coverage and duration, offering tailored solutions to fit different needs and budgets.

What Is a Used Car Warranty?

A used car warranty is a service contract that protects against certain mechanical breakdowns and repairs after purchasing a pre-owned vehicle. These warranties can cover the cost of parts and labor for specific components or systems that may fail due to normal use. Used car warranties often differ from new-car warranties because of the higher likelihood of a claim. 

Coverage options may be less robust than those available for new vehicles, and some vehicles may be too old — or have too many miles — to qualify for coverage. Still, used car warranties offer significant benefits, including reduced out-of-pocket repair costs.

When selecting a used car warranty, it’s also crucial to understand the terms and conditions, including what is covered, the duration of the coverage, and applicable deductibles and limitations. Different warranties offer distinct levels of protection and can vary significantly in terms of coverage, duration and cost.

Types of used car warranties

Used car warranties come in various forms, ranging from manufacturer-certified pre-owned (CPO) programs to third-party extended warranty plans. Manufacturer CPO warranties are often more robust, as they usually involve a rigorous inspection process and reconditioning of the vehicle before the warranty is issued. Third-party warranties offer flexibility and can be purchased separately or as an addition to dealer-provided coverage.

There are also several types of used car warranty plans available through providers. Here’s a brief overview of common types of used car warranties:

• Used-car powertrain warranty: A powertrain warranty typically covers essential components such as the engine, transmission and drivetrain. This type of warranty is particularly valuable as these parts are often the most expensive to repair.
• Used-car bumper-to-bumper warranty: Bumper-to-bumper warranties provide more robust coverage for a greater number of vehicle components, excluding typical wear-and-tear items like brake pads and tires. This warranty is ideal if you want extensive protection for items like the powertrain, electrical systems and more.
• Used-car drivetrain warranty: A used-car drivetrain warranty focuses on a vehicle’s transmission, driveshaft and related components. Some plans may also cover the differentials and axles.

Each type of used car warranty has its own set of inclusions and exclusions, so it’s crucial to read and understand the contract thoroughly. Some warranties may also offer additional coverage add-ons, such as roadside assistance or rental car reimbursement.

Factory-certified pre-owned car warranties

Factory-certified pre-owned car warranties are specialized warranties offered by vehicle manufacturers for their certified pre-owned vehicles. These warranties are designed to give drivers more confidence when buying pre-owned cars, as they offer protections similar to those of new-car warranties.

A CPO program typically involves a thorough inspection and reconditioning process performed by the manufacturer or an authorized dealer to ensure that the vehicle meets specific quality standards. Once the vehicle qualifies, it is sold with a factory-backed warranty, offering buyers assurance that the car is in excellent condition. Coverage often mirrors that of new-car warranties, including comprehensive protection for major systems and components.

Is a Used Car Warranty Worth It?

Whether a used car warranty is worth it depends on several factors, including the vehicle’s age, mileage and condition. Also consider your personal risk tolerance and financial situation to determine whether the cost fits your budget. A used car warranty can mitigate the financial burden of unexpected repairs — especially if you own a vehicle with a history of reliability issues or expensive repairs.

On the other hand, the warranty cost might outweigh the potential benefits if you own a newer used car with low mileage and a strong reliability record. Additionally, most warranties come with exclusions and limitations, making it crucial to thoroughly read and understand the terms of the contract before making a purchase. Also evaluate how well your vehicle has been maintained and your level of insurance. Well-maintained vehicles are less likely to experience major failures, and some insurance policies offer mechanical breakdown coverage as an add-on.

For many, using the warranty just once will pay for itself, making the warranty worth it. But like insurance, you’re buying a warranty for the “what if” scenario and can’t predict the future value of the contract.

How Used Car Warranties Work

Buying the best used car warranty begins at the dealership or through a third-party provider. When purchasing from a dealership, the warranty may be included in the sale price or offered as an optional add-on. If you opt for a third-party warranty, you can buy it online or over the phone. It’s critical to thoroughly research different warranty providers, read customer reviews and compare coverage options, terms and costs. Choose a warranty that aligns with your vehicle’s needs and your budget.

Many used-car warranties include a waiting period before coverage takes effect. This waiting period often ranges from 30 to 90 days or a certain number of miles driven (often 1,000). It is designed to prevent fraudulent claims for preexisting conditions. The warranty won’t cover any repairs or breakdowns during this time. For that reason, it’s essential to understand and plan for this waiting period to avoid unexpected expenses.

When a covered component or system fails, you’ll take your vehicle to an authorized repair shop or dealership to diagnose the problem. The repair shop will identify the issue, contact your warranty provider to determine whether it’s covered under your warranty and initiate the claims process. If the claim is approved, the warranty provider will authorize the repair. The repair shop can then complete the necessary repairs, after which the warranty provider will pay the repair shop directly for the covered costs. 

In some cases, you might need to pay the repair bill upfront and be reimbursed by the warranty provider later. Depending on the terms of your warranty, you may also have to pay a deductible or any uncovered expenses. The warranty agreement will detail what’s covered by the plan, your deductible and other costs you may have to pay. It is important to understand what your financial responsibility is when buying a warranty.

How long are most used car warranties?

Most factory car warranties last for the first of three years or 36,000 miles. Extended warranties for used cars vary by warranty provider and policy but may be available for up to 15 years or 300,000 miles. Many third-party warranty companies have mileage limits on the car when entering into the warranty agreement. For example, you might not be able to get a warranty on a car with certain companies if the car has more than 250,000 miles on it. Compare your options and review the specific terms and conditions of any warranty agreement you consider.

What the Best Used Car Warranties Cover

Understanding what used car warranties cover can help you choose the best warranty for your vehicle and your needs. Coverage options vary significantly between warranty providers and plans, but most used car warranties cover essential vehicle components and systems. Here’s a breakdown of the common areas included in many of the best used car warranty policies:

• Engine and transmission: Coverage often includes the internal parts of the engine and transmission, such as the pistons, crankshaft and gears.
• Drivetrain: This generally covers the drive axles, driveshaft and any related components that transfer power from the engine to the wheels.
• Electrical system: Electrical coverage includes components such as the alternator, starter motor and electrical wiring.
• Heating and air conditioning (HVAC): This coverage usually extends to the air-conditioning compressor, condenser, evaporator and heating core.
• Suspension: Your warranty may cover various parts of the suspension system, including the shocks, struts and control arms.
• Steering: The steering system includes the steering gear, power steering pump and tie rods — all components that may be covered by a used car warranty.
• Brake system: Warranty coverage may include brake components such as the master cylinder, brake calipers and lines.
• Fuel system: Coverage for your vehicle’s fuel system may include the fuel pump, injectors and fuel tank.
• Cooling system: Coverage for a vehicle’s cooling system often extends to the radiator, water pump and related components.

What’s not covered under a used car warranty?

While used car warranties provide valuable coverage for many essential components, they often come with exclusions. Knowing what’s not covered can help you avoid surprises and understand the scope of your warranty. Common policy exclusions include routine maintenance, wear-and-tear items and preexisting conditions.

Here’s what’s typically not covered under a used car warranty:

• Regular maintenance: Oil changes, tire rotations and other routine maintenance tasks are not covered by used car warranties. But it is important to maintain the car to adhere to the requirements of warranty and keep it valid.
• Wear-and-tear items: Regular wear and tear isn’t usually covered by extended warranties, including the replacement of brake pads, tires, wiper blades and clutch linings. That said, some plans include limited replacement of certain parts. 
• Cosmetic issues: Issues related to paint, upholstery, trim and other inessential cosmetic features usually aren’t covered by an extended warranty.
• Preexisting conditions: Any issues or damages that existed before the warranty was purchased are not covered. Extended warranty providers usually impose waiting periods to reduce claims resulting from preexisting conditions. 
• Damage from accidents or neglect: A used car warranty likely won’t cover repairs required due to accidents, misuse, neglect or improper maintenance.
• Modifications and aftermarket parts: Damages or failures caused by aftermarket parts or modifications not approved by the vehicle manufacturer are usually not covered by extended warranties.
• Environmental damage: An extended warranty typically won’t cover damage caused by external environmental factors such as rust, corrosion and weather conditions. However, you may be able to get this type of coverage as an add-on. 

How Much Does a Used Car Warranty Cost?

How much a used car warranty costs depends on several factors, including the warranty provider, the level of coverage offered and the specific make and model of your vehicle. On average, you can expect to pay  $1,000 to $3,000 for a standard used-car warranty broken into payments of $50 to $150 per month. For example, we got a quote for an extended warranty through Endurance for a 2016 Toyota Camry with 100,000 miles. Coverage costs ranged from $133 to just under $140 per month, with a 30-month term.

Ultimately, though, factors such as the age and mileage of the vehicle can influence the price, with older and higher-mileage vehicles generally incurring higher warranty costs. Comprehensive plans offering more extensive coverage can also cost more. Carefully review and compare different warranty plans — considering costs and coverage — to get the best value for your investment.

Do You Need a Warranty on a Used Car?

Not everyone needs a warranty on a used car, as it largely depends on your circumstances, risk tolerance and vehicle condition. For some, the peace of mind a warranty can provide is invaluable; others might find the additional cost unnecessary given their situation.

You may need a used car warranty if: 

• You can’t handle unexpected repair costs. Vehicle repairs are often unpredictable. If you’re on a tight budget and don’t have room for unplanned repairs, a used car warranty may provide peace of mind.
• You have an unreliable make or model. Some vehicles have a bad reputation for reliability and often require more repairs than other makes and models. If you anticipate substantial reliability issues, consider a used car warranty.
• Your vehicle is old or has high mileage. Older, high-mileage vehicles often require more costly repairs than new vehicles that are still under manufacturer warranty.
• You plan to keep the car after the factory warranty expires. If you purchased a used car that’s still under the manufacturer’s warranty, you may not need additional coverage. However, if the factory warranty is about to expire and you plan to keep the vehicle for an extended period, a used car warranty could provide added protection.
• You drive frequently. If you drive often or rely on your vehicle to get to work, quick repairs are essential. A used car warranty can cover the cost of some auto repairs so you get back on the road quickly.

On the other hand, you may not need a used car warranty if:

• You have savings set aside for unexpected repairs. Some people prefer not to pay for warranties and instead put money into their savings account to cover any potential repairs. This option requires discipline and adequate funds in your account.
• You’re buying from a reliable source. If you’re purchasing your used vehicle from a reputable dealership or private seller with known maintenance records, it may be less likely to require major repairs. 
• The coverage is limited. If the used car warranty only covers specific parts or systems, it may not be worth the cost.

How to Choose the Best Used Car Warranty

Here are some essential tips to help you select the best used car warranty:

• Evaluate your needs. Assess the age, mileage and condition of your vehicle to determine what kind of coverage makes the most sense. Most extended warranty companies limit vehicle eligibility by imposing age and mileage limitations, so compare these requirements when shopping for a plan. 
• Research providers. Investigate some of the best used car warranty companies like Endurance. Read reviews and check their ratings with organizations like the Better Business Bureau. Online reviews can provide insight into the claims process, customer service and other plan features. 
• Compare coverage options. Look at the specific components and systems each warranty covers and ensure they align with your vehicle’s needs.
• Understand exclusions. Carefully read the fine print to know what is not covered by the warranty to avoid unexpected surprises. 
• Check the provider’s claim procedures. Learn how claims are filed and processed. A straightforward and efficient process can save you a lot of hassle, while some companies impose complex requirements. 
• Consider the plan deductible. Determine the deductible amount you are comfortable with, as this will affect both your premium and out-of-pocket costs.
• Look for flexibility. Some providers offer flexible payment plans and customizable coverage options, allowing you to tailor the warranty to your specific requirements.

Get multiple quotes. Obtain quotes from several warranty providers to compare costs and coverage, ensuring you get the best value for your money.

Used-Car Warranties FAQ

What is the typical warranty on a used car?

The typical warranty on a used car varies by provider but generally covers essential components like the engine and transmission. Warranties may last up to 15 years or 300,000 miles, though many policies are much shorter. Always read the terms carefully to understand the coverage and exclusions.

What’s the best warranty on a used car?

The best warranty on a used car is one that offers comprehensive coverage, fits your budget and comes from a reputable provider. It should cover critical components like the engine and transmission, have minimal exclusions and offer an easy claims process with excellent customer support. Always compare multiple options to find the best fit for your needs.

Is it worth getting an extended warranty on a used car?

Whether it is worth getting an extended warranty on a used car depends on your vehicle’s reliability, likely repair costs and your personal risk tolerance. For reliable vehicles with lower repair costs, it may not be necessary. However, for high-risk profiles, it can provide valuable financial protection.

How much should an extended warranty cost?

How much an extended warranty should cost varies based on factors like vehicle age, mileage and coverage level. Typically, prices range from $1,000 to $3,000 per contract. It’s crucial to weigh the potential repair costs against the warranty price to ensure its value. Shop around for multiple quotes and pay attention to other costs like deductibles.

What is a downside to purchasing an extended warranty?

A downside to purchasing an extended warranty is the potential for high upfront costs without ever needing to use the coverage. Additionally, some warranties come with strict terms and exclusions, potentially leading to denied claims for certain repairs, which can diminish their perceived value and benefit.

Can a warranty transfer?

A warranty can sometimes transfer to a new owner when the car is sold, but it depends on the terms set by the warranty company. Some warranties are transferable to a new owner if specific requirements are met, such as submitting documentation during a defined period. Always check the warranty terms to confirm transferability and any conditions that may apply.