Gonna Be A While? Grab A Auto Warranty.
If you’ve ever bought a new car or one with reasonably low mileage from a dealer, chances are good that it came with some kind of warranty protection. While not a guarantee of perfection, the warranty at least gives you some peace of mind. If you’re shopping for a new or used car, the salesperson may encourage you to buy an auto service contract to help protect against unexpected or costly repairs. While a service contract may sound like a good idea, it may overlap with the vehicle’s existing manufacturer’s warranty. So before you spend the extra money, do some research to see if an auto service contract makes sense. Coverage varies widely.
Auto service contracts are sold by vehicle manufacturers, auto dealers, and independent providers. If you’re considering a service contract, shop around so you understand exactly what you’re buying.


You are generally not required to buy an auto service contract when you buy a car. You also are generally not required to buy a service contract to get financing. If the dealer tells you that you have to buy a service contract to qualify for financing, contact the lender to find out if this is true. Some people have had trouble canceling their service contract after learning that the lender didn’t require one.

Compare service contracts with the manufacturer’s warranty. New cars come with a manufacturer’s warranty, which usually offers coverage for at least three years or 36,000 miles, whichever comes first. A service contract likely will not provide benefits until the manufacturer’s warranty expires. Check over the documents to make sure this is true before you agree to buy a service contract.

If the service contract lasts longer than you expect to own the car, ask if it can be transferred when you sell the car and whether there is a fee, or if a shorter contract is available. If you’re buying a demonstrator a new car that hasn’t been owned, leased, or used as a rental, but has been driven by dealer staff ask when the warranty coverage begins and ends. It may have begun when the dealer put the car into service.

Usually, the price of the service contract is based on the car make, model, condition, coverage, and length of contract. The upfront cost can range from one to several thousand dollars. In addition, you may need to pay a deductible. Find out if the deductible is charged on a per visit or per repair basis. For example, assume you have a $100 deductible and your car needs three parts repaired.
What Is A Factory Warranty?
The factory warranty is a warranty covered through the car manufacturer to pays for repairs within a specific time frame and/or mileage after the purchase of the car. Factory warranties most commonly apply to new cars and may include a powertrain warranty, maintenance, corrosion, and emissions coverage. Factory warranties are different from other kinds of warranties because they are backed by the actual manufacturer. A big difference between a factory warranty and a manufacturer warranty is that you don’t have to pay for a standard factory warranty. It is automatically included with your new car, though some forms may require a deductible for certain repairs.
Today, practically all brands offer manufacturer’s warranties on new cars. What these warranties cover differs between makes and models, but the basics are similar. Since major car brands are competing in the same marketplace, shoppers expect that most factory warranties will offer similar core coverage, though the details can differ between brands.

Common Question
Other Parts Of The Factory Warranty
There are a few more coverage types that can come with a manufacturer warranty. These include:
Before you decide if the cost is worth it, there are some disadvantages to consider, as well.
- This warranty covers the cost of replacing sheet metal that has rusted through. It usually requires a hole to have formed in the metal, and it may not cover surface rust. Corrosion coverage can vary between different parts of the car.
- Many brands today offer roadside assistance. These programs can be tied to the powertrain warranty period, or they can have a separate duration. Some may also require deductibles or only offer allowances toward roadside assistance.
- Federal law requires emissions parts to be covered for defects. Most emissions parts are required to be covered for 2 years or 24,000 miles, though some parts like the catalytic converter or emissions control unit are covered for 8 years or 100,000 miles. Manufacturers can follow the minimum guidelines or offer more coverage for these parts.
- Some auto brands cover regular maintenance for a period of time. This coverage is usually short in duration. For example, Toyota covers regular maintenance on new cars for 2 years or 25,000 miles.