Extended Warranty For Cars: A Car Owner’s Guide

May 20, 2023

As a car owner, you want to ensure your vehicle is reliable, but what if something happens out of your control? You can still manage repair bills if you’re lucky enough to have adequate insurance or auto loan coverage.

Unexpected repairs can burden car owners, making extended warranties a great option on top of a manufacturer’s warranty. This guide will tackle everything about extended car warranties—how they work and why they matter. Discover the ins and outs of its service contract to safeguard your automotive investment.

What Is An Extended Warranty

What Is An Extended Warranty?

An extended car warranty is an insurance policy that protects your vehicle against costly and unexpected repairs. While true warranty costs are included in the product’s price, extended warranties are an additional expense purchased separately.

Why Is Extended Warranty Important?

Here are a few reasons that make extended warranties worth it.

1. It Provides Extended Coverage

A manufacturer’s warranty typically comes with a car purchase but is largely limited in coverage. An extended warranty is acquired to receive security for an extended period after the original warranty’s expiration.

2. Its Offers Coverage Options

Extended warranty has options to fit the car owner’s specific requirements. Today’s vehicle technology has become advanced and intricate, leading to frequent breakdowns and malfunctions. This necessitates the maintenance and repair of these systems.

Buying an extended warranty for technological systems is ideal for automobile owners who can’t live without their Bluetooth or navigation system. On the other hand, drivers who don’t need these systems can exclude this and save money.

3. It Increases Car Value

Customers often need to realise the increased worth that an extended warranty entails as their vehicle ages. The hidden advantage of such a policy becomes more valuable over time.

Vehicles in good condition, especially those covered by an extended warranty, are more likely to have been consistently and properly maintained.

When the owner decides to trade the vehicle at a dealership later, it would be perceived as more reliable and valuable. Therefore, it will likely receive a better trade-in value. Thus, it is advantageous for the owner to ensure their car’s condition over time.

4. It Gives Customer Satisfaction

It can be hard to understand the situation when sudden car breakdowns happen. This is because most car owners lack technical expertise in automobile parts. If you have extended warranty coverage, you can access complete assistance from the service provider. Instead of going to a local mechanic, you can get advice and take the right steps from an expert.

How Does An Extended Car Warranty Work

How Does An Extended Car Warranty Work?

Using an extended car warranty is usually a straightforward process. It generally involves following a series of simple steps. If roadside assistance or towing options are available, take advantage of them when taking the car to a repair shop. Ensure you thoroughly read the contract to confirm that repairs covered within it will only be conducted at accepted repair shops.

Once your vehicle arrives at the repair facility, contact your extended warranty provider and get the necessary repairs approved. This is important because the warranty provider may not cover some or all of your claims. The claim could be denied for various causes, including modifications to your vehicle or other issues due to neglect.

Types Of Extended Warranties

Extended warranties may either be provided by OEMs or third-party dealerships.

Original Equipment Manufacturer (OEM) Warranty

OEM warranties protect car owners from any expenses brought by premature component failure. This guarantee is an ideal way to increase the worth of equipment investments and ensure that necessary components are replaced immediately.

Examples of Original Equipment Manufacturer (OEM) providers are Chevrolet, Ford, and Toyota.

Third-Party Extended Warranty 

Third-party extended warranties, often more affordable than manufacturer-backed contracts, are provided by companies not associated with the car brand.

For example, Ford has four levels of coverage. Meanwhile, third-party extended warranties can offer up to eight or more levels of care.

These warranties often come with more bonuses and benefits than the manufacturer offers. For example, they may include identity theft protection, key fob repair or replacement, and tire replacements. These are not commonly included in the manufacturer’s warranty but are often available in many extended auto warranty plans.

What Does Extended Warranty Cover

What Does Extended Warranty Cover?

Powertrain Warranty

Extended powertrain warranties are designed to protect only the mechanical components within a vehicle that allow it to function. All other car parts, including the interior and electrical systems, are excluded from such coverage. These include:

  • Turbocharger/Supercharger
  • Engine
  • Transmission
  • Front and rear drive axle
  • Transfer case
  • Electric/hybrid components

If you have powertrain coverage, it covers all the important drivetrain components. For example, the Nissan powertrain warranty covers the engine, transmission, transaxle, drivetrain, and airbags. These measures do not protect auxiliary systems, such as air conditioners and navigation systems, against potential threats.

Drivetrain Warranty 

A drivetrain warranty is a vehicle service contract covering certain crucial parts that help the car operate. In other words, this type of warranty covers some of the most important components required to move a car.

Expensive to fix or exchange, the transmission is particularly included in the costly components of your car’s drivetrain. A drivetrain warranty covers the driveshaft, axles, transmission, differentials, and wheels. In other words, the warranty would provide coverage if they were to break down.

Bumper-To-Bumper Warranty

A bumper-to-bumper warranty comes with the greatest coverage level—from the paint job to the electrical system. This type of warranty ensures that almost anything on the vehicle is covered. However, oil changes, tyre rotations, and other maintenance items are not included.

The bumper-to-bumper warranty covers three years or 36,000 miles—whichever comes first.

Corrosion Warranty

A corrosion warranty is also known as an anti-rust or anti-perforation warranty. This coverage protects rusted-through body sheet metal panels. However, it does not cover environmental damages, like acid rain.

Comprehensive Car Warranty

A comprehensive warranty protects all parts of the car, including its heating and air conditioning systems, electrical components, and audio system. All manufacturing issues are covered except for damages caused by the car owner’s negligence.

OEM Parts

An extended warranty will provide peace of mind as it guarantees the usage of only OEM parts. This means that customers are ensured access to high-quality components for the repair or maintenance of their products.

Regarding repairs, Chevrolet opted for only using original parts for their cars, not aftermarket parts. In other words, when purchasing a Chevrolet, it is ensured that the parts used during repairs are originally from that company.

Roadside Assistance

Roadside assistance coverage can be found in many different extended warranty policies. Both vehicle manufacturers and third-party companies offer these policies. The roadside assistance program provides several services, including lockout assistance, towing, battery jump starts, emergency fuel delivery, and flat tire changes.

Pros and Cons of Extended Warranty

Pros Of Extended Warranty

Here are some pros of extended warranty.

Keep Your Car For Longer

An extended car warranty ensures your vehicle if you intend to keep it for a long period. Without this protection, expensive repairs to keep your car safe and functioning could discourage you from driving your car.

Great For Expensive Repairs

Extended warranties protect you from potentially expensive repair bills after the expiration of the factory warranty. For example, engine replacement costs between $4000 and $8000. Therefore, purchasing an extended warranty can help cover such financial expenses.

Easy Paperwork and Payment

Due to their added cost, extended warranties from dealership manufacturers tend to be more expensive. The dealer will handle all paperwork, and the manufacturer will pay them directly for their services.

Cons of Extended Warranty

Reaping the Benefits May Take Long

Extended warranties don’t cover current issues. So, waiting periods are established to ensure your vehicle works correctly before your coverage begins. Extended warranties don’t cover your vehicle for 30 days and/or 1,000 miles after purchase. Think again if you expect to be covered immediately after purchasing an extended auto warranty.

Might Be More Expensive than a Regular Repair

Buying an extended warranty can cost at least $800 annually while it is in effect. So, it’s best to determine how much you spend on auto repairs on average. Note that the latest cars are more reliable than their older counterparts. So, you may not need an extended warranty unless you intend to keep your car for a long time.

You Can’t Always Choose Your Mechanic

Repairs for non-warranty work allow car owners to choose their preferred mechanic. This does not apply to extended warranties. When you purchase an extended warranty, the warranty provider may have certain requirements on which mechanics can perform repairs.

Some warranties may require repairs exclusively by authorized dealerships or certified mechanics. This information is often included in your extended warrant’s terms and conditions.


How Much Does An Extended Warranty Cost In Australia?

The extended car warranty’s price depends on a few factors, such as the vehicle type and warranty duration. It can range in cost from hundreds to thousands of dollars.

It is recommended to contact your chosen insurer to get an estimate of how much an extended warranty would cost. Their website usually provides contact information so you can request a price quote from one of their associates.

What Are Not Included In Extended Warranty? 

While an extended warranty is great for saving on unexpected repairs, it does not cover the following types of repairs:

  • Maintenance items like tune-ups, oil changes, and tire rotations
  • Significant damage from neglect or abuse
  • Damage from natural disasters or accidents
  • Alterations or modifications include tampering with the odometer and installing faulty parts.
  • Damage from environmental factors: tree sap, salt, wind, sand, hail, etc.

Who Needs Extended Car Warranty?

An extended warranty is best for car owners with extremely unstable vehicles who can’t pay for major repairs anytime soon.

Purchasing used cars from a dealer may come with hidden or undetected issues. So, this makes purchasing an extended warranty a wise move if you are uncertain about the automobile’s history. This includes accidents, repair records, and salvage titles.

Additionally, this warranty can be worth it if your car is nearing specific problems, like transmission issues.

It’s best not to buy an extended warranty immediately after buying a car you aren’t certain you’ll use for several years. Wait until the manufacturer’s warranty deadline before availing of this warranty.

How Long Is Extended Warranty’s Validity?

Extended warranty plans can cover automobiles for up to seven years. If you plan on keeping your car for a substantial amount of time, opting for a longer plan could be beneficial. Your extended protection plan may be transferable even if you sell your car before its warranty ends.

Can Extended Warranty Be Cancelled?

Extended car warranty can be cancelled anytime. However, the terms and conditions may vary per provider.

Some may charge a cancellation fee. Also, you may only be eligible for a partial refund. This depends on how much time has passed since you purchased it.

Ensure Your Car with Extended Warranty 

Considering an extended warranty for your car is a wise decision that brings peace of mind and protects your investment. Extending the coverage beyond the manufacturer’s warranty ensures that unforeseen repairs and breakdowns are handled without straining your finances.

Mad Man Motors is a reputable dealership that goes the extra mile to ensure customer satisfaction. They value the importance of protecting your vehicle and offer extended warranty plans on all the vehicles they sell.

Mad Man Motors ensures its customers receive the best coverage through its partnership with Integrity. Integrity has been one of the most trusted Australian warranty providers since 1992. With a proven record of handling and customer service, you can have confidence in your vehicle in no time!

Visit our website or contact our team to learn more about the options, terms, and conditions available for your vehicle.

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