Vehicle Warranty Information

Vehicle Service Contracts


What is an Extended Warranty?


An Extended Warranty is also called a vehicle service contract. It is a contract between you and a service provider that privdes coverages that will cover certain repairs and mechanical components when they fail. Many people purchase auto warranties to shield themselves against the costs resulting from mechanical breakdown and/or failure to their vehicle. It is important to know that when you purchase a car warranty you are not purchasing a form of insurance, but you are entering into a service contract between a company and yourself. The extent of coverage, benefits, and terms of payment are particular to each individual contract.

An auto extended warranty does not necessarily replace the original manufacturer's warranty, but is intended to make available a level of coverage right for you. Although the main advantage of attaining a car warranty is to avoid the high cost of automobile repairs, many plans also come with additional benefits. It is important that you not only understand the coverage being offered, but that you are also aware and comfortable with the company providing the plan.


Do I really need an extended vehicle warranty?

When determining if an extended vehicle warranty makes sense for you, it is important to conduct a cost analysis. The amount of money needed to repair your vehicle will only increase as time passes, especially as labor rates continues to go up. There is no guarantee that if you purchase an extended car warranty you will definitely use it. However, cars do have mechanical problems, and that is a big reason all manufactures will only offer new car warranties for 3 or 4 years.

As you look down the road over the next several years of your cars life, it is hard to imagine what condition you will be in financially when something does happen to your vehicle. An extended warranty can give you a definite cost of what you will be spending on auto repairs over a given period of time, and it can also give you an easy payment option. Can you afford to pay a hefty auto repair bill in a month when you will also have a car payment? Can you afford to fix your vehicle should something happen to your engine or transmission? These are the types of questions that are difficult to answer, but they should put you on the idea of thinking that an extended auto warranty might be the best option for you.

Another major reason so many people have decided to purchase extended warranties is that they are frustrated and tired of dealing with auto shops, hard to understand mechanical terms and concepts, and billing disputes. When you join an auto warranty program you are also hiring a professional claims department that will deal directly with your repair shop. They are familiar with regional labor rates, retail prices for parts, and they know how not to get double charged for manufacturer callbacks. If you are unsure about many of these requisites, or if you are just tired of dealing with them, maybe an extended vehicle warranty is right for you.


What about the manufacturer's warranty on my car?


Every new car purchased comes with a unique warranty program. The limits, terms, and benefits of the warranties provided are different for each automobile manufacturer. If you are unsure as to what type of protection your particular vehicle may or may not have, you should check your owner's manual, or contact the manufacturer for details. If the make of your vehicle is listed to the left you may find the information you are searching for by clicking on the link. It is important to be familiar with the term of your manufacturer's warranty so that you will be aware of when this protection is no longer active.


Money back guarantee


If you are going to purchase an extended auto warranty, make sure that you are given some sort of review period with the contract. This will ensure that you will be satisfied with the plan, or else you can cancel for a full refund within a certain number of days. Most warranty plans will give you at least a 30-day money back guarantee period


Backed by a reputable insurance company


Find out which insurance company is backing your extended warranty plan. Ask them what the insurance company is rated.


Low deductible option


If you are going with a long-term plan you want to get the lowest deductible possible. It is not unlikely that you may use this plan at least once per year. If that's the case, a large deductible can add up quickly. Go with a reasonable deductible, if any. However, if you are going with a shorter-term plan, and less coverage (i.e.: just a powertrain warranty), a higher deductible can bring down the cost for your extended car warranty. Since you are only shielding yourself against major repair costs anyway, a larger deductible will not hurt you here.

Rental benefit


A rental benefit will pay for, or contribute toward, the amount of money spent on a rental vehicle while your car was being repaired. Once again, the amount of money offered is limited on a daily basis, therefore limiting the type of vehicle you are able to obtain. When learning about a particular plan and their policies on their rental program, it is important to discover whether the rental benefit will be available from minute one, or whether they demand a certain amount of time to be worked on your vehicle before granting this right. Some car warranties will make you wait up to 8 hours before allowing you to drive off in a paid rental car, while other plans will let you take the car as soon as you drop off your vehicle.


Trip interruption benefit


The trip interruption benefit is built-in with auto warranties to provide you with the peace of mind knowing that should your car breakdown far from home you will receive some compensation for the money you had to spend on food and lodging. This reimbursement process is generally in the form of you supplying your extended auto warranty provider with receipts, and then them sending you a check.


Towing benefit


If you are unable to drive your vehicle to a repair facility, or if it has broken down along the side of the road, a towing benefit will make sure that you are not responsible for the cost of towing your vehicle. The amount of money allotted to this benefit is different for each car warranty plan, and can sometimes differ depending on the size of your vehicle.


Lost key lock out benefit


Should you ever need the services of a locksmith to help gain access to your vehicle, this benefit can compensate you for a portion of those costs. Again, the limit of the benefit may differ for each particular extended car warranty provider.





Vehicle Service Contracts - Extended Warranty














Can I finance my Extended Warranty by dumping it into my car loan?


Many warranty companies do offer financing of their plans, but the financing terms are typically only 1 year long. Generally, the only way to include an auto warranty inside your car loan is to either, finance them together at the time you're going to purchase your vehicle, or, to include the warranty at a time when you are refinancing the car loan.

Most banks or financial institutions will not allow you to include an extended warranty unless you are purchasing the warranty through them or one of their affiliates. This obviously limits your choice in selecting a car warranty. The major advantage to financing your warranty within your car loan is that you can spread out the payments, thereby paying a much smaller amount per month for the warranty.

Also, if your vehicle is totaled or stolen and your insurance company is going to reimburse your bank for the vehicle loan, then you would not be responsible for paying off the whole warranty.

However, the major disadvantage to financing the extended car warranty with the auto loan is that you will be paying finance charges on the service contract. This is an added expense.

If you are going to finance your warranty alongside your loan be careful that there is not a gap between what you owe on your car loan and what your car is actually worth. If you believe there will be a large gap, you may want to explore GAP insurance. For more information, please click below.


Other than an extended car warranty, what other protections are available?


Vehicle service contracts need to be viewed as an investment. Cars do break down, and they will always break down. An extended warranty can protect consumers against the unexpected high costs involved with diagnosing and repairing a vehicle.

However, sometimes purchasing a warranty plan doesn't make since for every consumer. This could be because of limited funds available, or perhaps their vehicle doesn't qualify for the right types of coverage. In these instances a roadside assistance program may be the perfect answer.

There are many providers of these plans, and many consumers are glad they joined their programs. A roadside assistance plan will be there to help you out should you ever get stranded along the side of the road due to car failure, lack of fluid or gas, dead battery, etc.

Having this security can be very comforting and extremely useful should such a situation ever arise. We recommend the following roadside assistance program.


Bumper to bumper?


"Bumper-to-bumper" - Bumper-to-bumper, otherwise know as full protection, represents the highest level of coverage available. A quick definition will assume that this coverage protects everything with the exception of regular maintenance and wear.

True bumper-to-bumper protection will not list out all the parts that it protects. Instead, it will simply state the exclusion list, or the parts that fit into the category of regular maintenance and wear. If you are unsure if a particular plans falls into the category of bumper-to-bumper, ask them if it is an "exclusionary plan".




If your extended auto warranty is transferable, you have the option of transferring the warranty should you ever sell the car, or give it to someone. This would clearly add to your car's resale value becasue the car is still protected by an extended auto warranty, and, therefore, considered less risk present.




You never know what is going to happen to your vehicle in the years to come. Some extended warranties can last up to 7 years, and the chance of you having your vehicles at the end of those seven years can be slim.

Whether you may sell the vehicle, trade it in, experience a crash resulting in the vehicle being totaled, or theft, pro-ration gives you the opportunity to get out of your contract with a refund.

A pro-rated refund determines what amount of warranty you have left at the time you cancel the contract, using either the time elapsed or mileage accumulated, whichever is greatest. The refund can be sent to you in the form of a check, or put toward a new vehicle service contract.


Let's wrap it up - what is wrap coverage?


Wrap Coverage" - Wrap coverage is a form of extended warranties specialized for particular vehicles. If your vehicle comes with a powertrain warranty for 10 years, up to 100,000 miles, than this coverage pertains to you.

A wrap warranty plan takes your existing powertrain protection, wraps all other components of your vehicle around it, thus giving you bumper-to-bumper protection for the full 10 years, up to 100,000 miles. This plan is sometimes only available while a vehicle is within the first 12,000 miles.