Car Warranties: Common Issues and Misunderstandings

There is a lot of fine print when it comes to car warranties. Here are some common issues and misunderstandings when it comes to the ever important car warranty.

Statutory Warranties

Most states have some form of a Lemon Law, where buyers will be protected from cars that have significant manufacturing defects. Some state’s laws will apply to new cars only, used cars and new cars equally or separately to new cars and used cars. The defect often has to be significant or a series of defects that together are significant. For the statutory warranties, you will need to keep detailed and accurate records of everything related to the car.

Extended Warranties

Extended warranties are most often seen on used cars or on new cars that are almost out of factory warranty. One of the major issues with the extended warranties is that some companies that provide these will require you to pay out of pocket for the repair and submit the bill for potential reimbursement.

Another big issue that is often the warranty is tied to the use of a particular repair shop. If that shop is inconvenient or goes out of business, you may be out of luck for any reimbursement or coverage.

New Car Warranties

The type of coverage is set out in the agreement of sale. The bumper-to-bumper warranty may be 10 years/10,000 miles, whichever is first, but there are other items in the fine print. The fine print is what limits the items in the warranty. For instance, tires will obviously not be covered. Most manufacturers place different time limits on the overall car, the power train and the corrosion protection.

New car warranties also tend to come with one larger caveat. Most of the longer car warranties only apply to the original owner. That means that when you sell it, or even possibly if you just transfer the car to a family member, the warranty no longer applies. This may cause an issue with resale value.

Implied Warranties