by Andrew Rohrlich
Buying a used car can have many advantages. For one, it’s going to be much cheaper than buying a new car. And if you purchase your car from a private seller, you often don’t have to go through the normal hassle of getting a car from a dealership.
However, with that low cost and convenience are some risks as well. Used cars might experience more mechanical issues down the line, and may require repairs or bodywork sooner rather than later. Used cars, especially those from private sellers, also usually do not include the service guarantees one would get from a dealership.
One solution that many used car buyers turn to is an extended warranty. An extended car warranty can be an excellent way to cover costs and provide peace of mind when purchasing a used car, especially one from a private seller. Read on to learn more about extended car warranties and whether you should consider getting one if you are looking to purchase a used vehicle.
When Do You Need an Extended Car Warranty After a Private Purchase?
You may be asking yourself: “Should I buy an extended warranty on a used car?” To get the answer, you should first understand what an extended warranty is. Generally, an extended warranty is an extra layer of protection that you can purchase when you buy a used vehicle from a private seller.
Also known as a “vehicle service contract,” it covers potential future repairs or maintenance costs for a specified period after purchase. But when is it a good idea to make this investment when purchasing a used car from a private seller?
It's at a Decent Price Point
The main thing to look at when considering an extended warranty is the price point. Extended warranties can range in price, depending upon factors like the condition of the car, the mileage, the warranty terms, your credit rating, and so on. In many cases, you can get a good price point for your used car that does not substantially add to the value that you are getting by purchasing a used vehicle from a private dealer.
If you can find a price point that works for you, buying an extended warranty makes a good deal of financial sense. But make sure that you understand the full terms of the warranty before purchase, including what it covers, the specific timespan of coverage, and other factors.
It's Under a Manufacturer Warranty Plan Ending Soon
In some cases, a used car sold by a private seller may still be under its original manufacturer’s warranty. This warranty would transfer over to you following the purchase. However, depending on the car’s age, any manufacturer or factory warranties may expire soon after your purchase.
Once these warranties expire, you as the new owner will no longer have coverage for future repairs or maintenance costs. If the original manufacturer’s warranty is ending soon after purchase, it’s a good idea to invest in an extended warranty for additional coverage.
When Do You Not Need an Extended Auto Warranty After a Private Purchase?
Of course, as with all types of coverage like this, an extended warranty is not always necessarily the best option for you when purchasing a used vehicle from a private seller.
In many cases, the payment for the warranty is too excessive for what you’re paying for the car itself. In others, the terms of a particular warranty may not cover all of the components of the car, or provide you with sufficient insurance for likely repairs or maintenance.
It's Under a Manufacturer Warranty Plan That Isn't Ending Soon
You may sometimes find a used car for sale that is still under its original manufacturer’s warranty for a longer period. In these cases, an extended warranty may not be necessary on top of what’s left of the original warranty. If the original warranty still has enough time before expiration, an additional extended warranty may not add enough additional coverage or time to the span of coverage to justify the additional cost.
In other cases, a used car may still be under specific types of coverage, such as a powertrain warranty or a bumper warranty. In these cases, you may feel confident enough in the coverage you have for the vehicle’s power system or body to go without the additional coverage of the extended warranty.
When deciding whether you should invest in an extended warranty for your used vehicle, it’s a good idea to look at the pros and cons. In many cases, an extended warranty is a great investment in your used vehicle, especially if you are buying it from a private seller. However, you should also consider the potential downsides of an extended warranty as well, to get a fuller picture up front.
The Pros
Extended Warranties Can Be Canceled at Any Time
One of the biggest upsides of an extended warranty is that you will not necessarily be on the hook for the entire warranty the minute you sign up. Most extended warranty plans can be canceled at any time during the coverage period. This means that you have the freedom to change your mind and cancel the ongoing payments before the expiration date. This may be because you decide that the price is not worth it, or that you are unlikely to need added coverage for future repairs.
For these reasons, an extended warranty for a used vehicle is usually a lower-risk investment.
Saves Money on Unexpected or Major Repairs
Used vehicles, of course, bring with them a greater risk of needing repairs or maintenance much sooner than new vehicles. This is especially true if you are buying a used car for a low price from a private seller. Generally, the less you spend on a used car, the greater your risk of needing to pay for unexpected repairs at some point in the near future.
With an extended warranty, you will save money on any unexpected repairs that your used car may need during the warranty period. Thus, an extended warranty is often a good means of saving even more money on a used vehicle if you decide to purchase one from a private seller.
Most Coverage Is Transferable
Another benefit of extended warranties is that they are often transferable. If you decide to sell your used car after purchase, you will not be on the hook for the car’s extended warranty for the rest of the coverage period. You can instead transfer the extended warranty to the car’s new owner, which will provide you with another layer of freedom when considering whether to purchase the car in the first place.
Flexible Coverage Options
Finally, extended warranties often have flexible coverage options that allow you to customize your coverage based on your budget, your preferences, and the repairs that you think are most likely for your used vehicle.
The Cons
May Not Be Worth the Cost, But Provides Peace of Mind
One of the biggest downsides to purchasing an extended warranty is that you can never be entirely certain that you will need it. While used cars, especially those from private sellers, are more likely to need repairs, it is impossible to tell whether you will need specific repairs during the timeframe of the warranty.
If your car ends up not needing repairs, you may retroactively feel as if your extended warranty was not worth the cost. Still, while you cannot be certain that you will need the coverage, an extended warranty will provide you with peace of mind when purchasing a used vehicle.
Be Aware of What Items Are Covered
Extended warranties may also vary in terms of what is covered. Some warranty providers may not offer an entire warranty, but rather provide coverage for certain types of repairs or car components. This, of course, does not necessarily mean that the extended warranty is a bad investment.
However, you should make sure that you thoroughly review the terms of the coverage before purchasing a warranty, especially in terms of what items are covered.
This article was written by Andrew Rohrlich. As a brand and product marketing expert, Andrew Rohrlich has crafted products, experiences and communications for household names like Gap and for multiple automotive technology businesses. For nearly a decade Andrew has studied automotive retail in depth from a customer point of view and aggregated the industry’s best research, thought leadership and know how to provide credible and important information to auto shoppers and sellers.
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