Shopping around for an extended car warranty can be an overwhelming experience. There’s an enormous amount of choice to deal with. And every extended car warranty is slightly different (hello fine print!).
To help you choose an extended car warranty or “aftermarket warranty” that’s best for you, here are some buying tips and questions to guide you through the process.
Get clear on the type of extended car warranty you need
Extended warranties will typically provide three different levels of coverage—powertrain coverage, bumper-to-bumper coverage, or a level of coverage that lands somewhere in between these two.
Getting clear on the type of coverage your car needs before you start comparing extended car warranties can save you a lot of time in the long run.
Learn what each of these aftermarket warranties cover and choose the one that’s right for you.
A powertrain warranty covers parts on a car’s powertrain—things like the engine, transmission, and driveshaft. Powertrain warranties typically are more affordable than bumper-to-bumper warranties, so they can be a good idea if you have a limited budget.
The downside here is the limited level of coverage that’s provided. These warranties exclude everything else besides the powertrain, including essentials like suspension, air conditioning, and even heat and electrical accessories.
If your car is covered by a powertrain warranty and it experiences a major breakdown that involves several components, you’ll be paying out of pocket for anything that isn’t included in the policy.
Bumper-to-bumper warranties cover almost all components other than a select list of exclusions. Components that are typically covered beyond the powertrain are air conditioner, radiator, window motor, airbag assembly, and even multimedia software updates.
Bumper-to-bumper extended car warranties tend to be more expensive because of the higher level of coverage they provide.
If you’re considering this type of warranty, just be aware that no warranty will actually offer full “bumper to bumper” coverage. Contracts will always include certain exclusions and limitations like general wear and tear, cosmetics, and routine maintenance. So make sure you read the fine print.
Extended car warranty with coverage that lands somewhere in between
More and more, extended car warranties are providing coverage that lands somewhere between these two tiers. Similar to a bumper-to-bumper warranty, these contracts go beyond powertrain warranties by providing coverage for critical components like a car’s electronics, air-conditioning, and other components.
This type of extended car warranty tends to suit a wider range of drivers because it offers solid coverage at an affordable price.
Dealership vs third-party warranties: what’s better for you?
Now that you’re clear on the type of extended car warranty you need, it’s time to decide where you’ll buy your warranty: at a dealership or from a third-party provider.
Here’s what you’ll need to consider before deciding what’s right for you.
When you buy a used car from a dealer, the dealership will typically offer you an extended car warranty at the time of sale. The advantage here is convenience. You can buy an extended warranty on the spot, roll the cost in the financing of your vehicle, and forget about it. The downside? This is just one offer among many. There might be better deals out there.
Ask these questions when you’re considering a dealership warranty:
- Is it a good deal? The product and price on offer may not be the best deal for you. Do your research and make sure the offer stacks up against other warranty providers.
- When does the extended car warranty kick in? If the car’s manufacturer’s warranty is still valid and your extended car warranty won’t kick in for another few years, it may not be worth investing a lump-sum in a warranty right away.
- Will they include the warranty cost in your financing? Generally this isn’t a great idea, because you’ll end up paying interest on the cost of your extended car warranty.
- What are the repair shop limitations (if any)? A dealership warranty may require you to have car repairs done at a branded dealership or approved service location. If you don’t have easy access to one of these locations when your car breaks down, you could find yourself in a bind.
- Are there restrictions on replacement parts? Some dealership warranties will stipulate that you need to use branded parts—genuine parts from the manufacturer—to repair your vehicle. More often than not, branded parts are more expensive than generic replacement parts and they’re not always readily available.
If a dealer tries to pressure you into making a decision, remember that you’re under no obligation to buy a warranty on the spot. Make sure they give you enough time to assess the contract and compare your options.
You’ve probably noticed that a long list of third-party providers also offer extended car warranties to drivers.
Because there’s no dealership markup on a third-party warranty, they tend to be cheaper and more flexible in what they cover. The catch is that some third-party extended warranties are better than others, because of the quality of the seller and the quality of coverage they provide. So it’s important to do your research.
Here’s what you’ll want to consider before purchasing a third-party extended car warranty:
- Is your used vehicle eligible for the extended car warranty? Your vehicle’s age, make, mileage, and even how you use your vehicle, can render it ineligible for certain policies.
- Can you tailor your coverage and choose your deductible? Some third-party sellers allow you to choose the level of coverage and your deductible, which ultimately affects the cost of your extended auto warranty.
- Does the provider have a good reputation? Check online reviews and forums to make sure the company has a solid reputation amongst existing customers.
- Are there any repair shop limitations? Make sure you aren’t overly restricted in where you can get your vehicle repaired.
- Is the provider a broker or reseller? Some third-party warranty providers simply repackage and resell policies from other major providers. If you’re eyeing up a policy from a broker, make sure they have good customer service and a simple claims process.
Considerations when purchasing an extended car warranty
You’ve chosen the type of coverage you need, and you know where you’ll be buying your warranty. Well done! Now it’s time to review the fine print of each contract with a fine-tooth comb.
Remember: not all extended car warranties are created equal, and some will provide far better coverage for your needs than others.
Ask yourself these questions when you’re sizing up an aftermarket warranty for your car.
Is your car eligible for coverage under the warranty terms?
First things first: make sure your car is actually eligible to be covered under the warranty you’re considering. Factor’s like your vehicle’s mileage, your driving habits, what you use your vehicle for (e.g. commercial usage) can all render your vehicle ineligible for coverage.
For example, an extended warranty with GuardTree covers light commercial use for vehicles, such as ridesharing or food delivery. Other providers may or may not offer the same level of flexibility.
What does the policy exclude?
Make sure you know exactly what is and isn’t covered. In general, extended car warranties don’t cover wear and tear, vehicle appearance, and routine maintenance. But a provider might also exclude specific components or types of repairs that could affect you in the long run.
For example, let’s say you drive an electric vehicle and you come across a policy that excludes coverage for electric vehicle components. Evidently, that policy wouldn’t be right for you.
Are the limitations fair and do they work for you?
Keep an eye out for limitations on things like overall benefit limits and the total number of claims you can make. Certain limitations might even apply to a specific car part or type of benefit.
Every policy will have limitations. The trick is to make sure that they aren’t a deal-breaker for your particular situation. For example, if you have an older car that is likely to require several repairs but the policy limits how many claims you can make, then it’s probably not the right policy for you.
Where can you get your car repaired?
Some warranties stipulate where you can take your car in for repairs. This may or may not be a problem depending on where you live, but it’s worth double checking before you commit.
Does the aftermarket warranty come with any added benefits?
A good extended car warranty will cover some or all of the other costs associated with a breakdown. Check if the contract provides added benefits like roadside assistance or coverage for car rental and trip interruption.
What is the cancellation policy?
If you think you may cancel your warranty before it expires, make sure it’s easy to get out of the contract. The majority of extended car warranties are cancellable within the first 30 days. Beyond that initial window, you won’t be able to request a cancellation except for certain cases (e.g. you move to a province where your provider doesn’t offer coverage, your car is repossessed or written off, etc.).
With our cancel anytime policy, GuardTree is a bit of an anomaly in the world of extended car warranty providers. You can cancel your GuardTree subscription at any time and you will continue to be covered through to the end of the period for which you have paid.
Check out the fine print of our cancellation policy here.
GuardTree is the first and only extended used car warranty subscription in Canada.
Can the contract be renewed or continued?
Some extended warranties can be renewed easily, while others (e.g. fixed-term contracts) cannot. Once a fixed-term contract ends, you’ll need to go through the signup and qualification process (including another car inspection) again to acquire extended coverage for your used vehicle.
GuardTree is one of the few used car warranty providers that offers subscription renewal. With GuardTree, you can start and stop your subscription whenever you like, as long as your vehicle remains within the eligibility criteria.
When will the extended car warranty expire?
Most extended warranties automatically expire when your car reaches a certain threshold— total kilometers on the odometer, if your car reaches a certain age.
If your used vehicle is already hovering close to any of the policy’s expiration limits, you may want to keep shopping around for a warranty that provides coverage with longer terms.
Is the extended warranty transferable?
Having the option to transfer your extended car warranty can add value to a future sale. if you plan to sell your vehicle after some time, make sure the warranty can be transferred to a new owner.
Keep in mind, not all warranty contracts can be transferred. Most providers will charge administrative fees for a transfer. And there might be specific conditions in the contract that dictate when transfers are allowed (e.g. the vehicle must be sold directly to the next owner and not through a dealership).
Is there a waiting period?
You cannot file a claim for breakdown or repair costs during the waiting period. So if you’re buying an extended warranty for peace of mind, make sure you choose one with a shorter waiting period or no waiting period.
Some contracts might have a waiting period of 30 days to a few months, while others like GuardTree do not have a waiting period at all.
Does the warranty provider have a good reputation?
It’s a good sign that you’ve found a reputable provider when other consumers are happy with the company. Read online reviews and forums (Google reviews and Reddit are both great places to start) to see what other drivers have to say about filing claims. If the feedback is resoundingly negative, you should probably steer clear.
Extended auto warranty providers are often backed by larger insurance companies. So it’s also a good idea to look at the reputation of who’s backing the warranty while you’re doing your research to make sure your car is protected by the best.
For example, GuardTree is backed by Trisura Guarantee Insurance Company, which is rated A- by A.M. Best, the industry standard.
How does the warranty provider process claims?
A quick and simple claims process is what you’re looking for here. Policy documents should outline the claims process. And online reviews will give you a good idea of the experience that others have had when filing claims.
What’s the deductible and how is it applied?
Generally you can choose your deductible on an extended car warranty. A $0 deductible might sound appealing, especially if you own an older car that’s likely to need more frequent repairs. But paying a higher deductible will often reduce the total cost of your warranty. Consider how long you plan to hold onto your car and its current age/mileage to figure out what’s best for you in the long run.
One other thing to look for here is how the warranty provider applies the deductible. Is it “per repair” or “per item”? There’s a huge difference in cost with these two options. With a per repair deductible, you’ll pay the deductible once per repair—no matter if the mechanic is fixing one or many parts of your car. With a per item deductible, you’ll pay that deductible for every item that’s fixed or replaced.
Read more: Is an extended car warranty worth it?
Costs add up when your car breaks down
Looking for a reputable third-party warranty with comprehensive coverage and awesome benefits? GuardTree gives you peace of mind with a monthly extended car warranty subscription that you can cancel at any time.
GuardTree provides protection from most major electrical and mechanical repairs and offers additional benefits like roadside assistance and car rental and trip interruption costs.