How does a car warranty work?

When purchasing a car, you will most likely be covered by a warranty for a certain period.

Warranties cover costs of repair if there’s a manufacturer’s defect. You may purchase an extended car warranty to be extra safe and save repair costs in the future.

Depending on your warranty, coverage may include issues with the engine, transmission, air conditioning or other systems. However, warranties only last for a certain period or mileage. That’s when an extended warranty can come in handy. You can purchase extended warranties from car dealerships or third-party companies.

They are different from insurance in that they only cover repair costs and not collision. When we say repairs, that doesn’t include your regular services such as oil changes or brake pad replacements.

What does a car warranty cover?

As mentioned above, you’ll get a warranty on your car when you first purchase it. That warranty lasts for a certain period and therefore is transferrable from the owner to the owner because it sticks with the car.

Types of issues covered by a car warranty include:
– Engine parts
– Transmission parts
– Seat belt or airbag default
– Entertainment system defect
– Air conditioning or electronic systems default
– Some warranties may also include roadside assistance, but that depends on your dealership.

Types of warranties

When purchasing your car, you’d get an original manufacturer warranty, otherwise known as the factory warranty. It usually lasts for a certain period or kilometres, whichever comes first. When shopping for a car, you should consider the warranty length, as that varies with different dealerships.

There are two types of warranties:
Statutory warranties: Usually added onto used cars.
New car warranties: Added onto new cars.

Should I get an extended warranty?

An extended warranty is a separate product that can be added when purchasing your vehicle. That extends your warranty to a certain time or kilometres reached, whichever comes first. Extended warranty still covers similar costs as an original warranty. Those costs may be the engine, transmission, or electrical repairs. Make sure you read your warranty fine print to understand what’s covered so you don’t get any costly surprises.

An extended warranty may work best for people with old or used cars that have an expired original warranty. You can purchase additional warranty either through a dealership or third-party companies.

Extended car warranty companies

As mentioned before, you may purchase an extended warranty from a car dealership or third-party companies. Just like insurance, it’s best to compare different warranty rates before choosing the one for you. It’s best to read fine prints before finalising your options. Sometimes cheaper warranties cover less than warranties that cost more.

Some third-party companies that sell extended warranties are:

• Car sales
• Iwarranty
• National Warranty Company
• Stratton Finance

Car warranty vs. insurance

Warranties cover manufacturer’s defects and issues while insurance covers damage caused by an accident. Car insurance is important to cover damage to yourself or others in the event of an accident. However, car insurance coverage is broken into multiple components.

Read more on how much car insurance roughly costs in Australia.