How to Get a Used-Car Warranty (and Not Get Screwed)
Getting a little peace of mind when you buy a preowned car isn’t always easy. We help you navigate certified preowned warranties, aftermarket alternatives, and not voiding your coverage.
Anderson’s math helps guide IntelliChoice’s Best Overall Value of the Year Awards. But the real reason data like his matter to you is that it shows the differences in warranties that various automakers offer on preowned cars both CPO vehicles and other used autos.
Figuring out whether to buy a warranty on a used car, or how to do it, can be a tangled mess. But we’re here to help. For some advice on buying used, what warranties are best on the CPO front, and what to watch out for in extended warranties if you don’t buy a CPO vehicle, read on. As you might imagine, it all starts with “read the fine print.”
Certified preowned-car warranties provide peace of mind because factory warranties are backing the product, but Anderson says there’s another crucial factor: manufacturer vetting. CPO cars have to be in good to great shape to be insurable. “The only way [car companies] can offer CPO is because they’re making money on the aggregate of the warranties. If they weren’t, the business model wouldn’t make any sense.”
Like any insurer, carmakers want to insure mostly healthy patients. But unlike health insurance providers, car companies can inspect every patient top to bottom to make sure it’s healthy. They’ll do small repairs to prep a CPO for sale, but any vehicle that needs major work, such as a new transmission, will never make it into the certified preowned pool.
The upshot: A CPO car is already a good machine or the carmaker would never sell it as such. That puts the dealer in a position where he doesn’t feel like he has to hide anything from you.
Shopping for CPOs
But just as new-car warranties differ, not all CPO warranties are created equal. When you’re shopping for one, Anderson says, look first at the deductibles. Audi charges $85, BMW $50, and Land Rover $100, none of which may surprise you (though neither Mercedes or Lexus charges a deductible). But it is a shocker that Chrysler charges $150 and Ford $100.
Also, check whether the CPO warranty is transferable if the car is sold prior to its expiration, which could apply to you if you’re the buyer or the seller. Audi, Infiniti/Nissan, and Lexus all say no, but Kia will let you transfer a warranty, though it charges $40.
There’s a ton of fine print that comes with CPO warranties. Read it the details should be on the manufacturers’ websites. The information within covers a lot of ground. Can you finance a CPO car? Can you lease a CPO car? Is roadside assistance included? Look for deal-breakers. There’s no such thing as perfection; it just depends on where you’re willing to bend and where you’re not.
The biggest question, however, is the obvious one: how much coverage you’re going to get and for how long. Lexus offers three-years/100,000 miles, which is one of the best CPO warranties around. It compares favorably witih other programs that offer anywhere from three months comprehensive/12 months powertrain to 24 months comprehensive coverage.
To Extend the CPO Warranty or Not?
Before you buy a certified preowned car, you should investigate not only the warranty details, but also whether you can buy an extended warranty.
This is especially true for a luxury car, and even more so if the CPO contract covers only a year or two. Luxury cars are typically expensive to maintain and the extra warranty protection is nearly always a wise play. However, Anderson says, extended warranties are becoming an increasingly smart move even for other vehicles. “Think of Ford’s Sync or any other sophisticated electronic system,” he says. When it goes south, it requires a great deal of troubleshooting. “Often the parts are cheap, but it takes them a long time to figure out why something isn’t working, and at $85 or $120 an hour, that labor adds up quickly.”
But (you knew there was a but, right?), not all extended warranties are necessarily worth it. Audi doesn’t even offer one, nor does Porsche or Mini, and even if you can get one you still need to look at the limitations. For instance, you might find an extended warranty that covers up to five years, but ends at 74,000 miles. If you’re buying a car with 60,000 miles on it already, that extended warranty isn’t much good.
Finally, a little secret of the extended warranty game is that they cost the dealer a set amount. How much isn’t public knowledge and carmakers won’t share that information, but dealers are free to use it as a bargaining chip. They can throw it in with the purchase price of a CPO car or non-CPO car; they can charge more than it costs them. The point is that it’s negotiable, so you should feel free to ask for the time to study what the warranty covers and what it doesn’t, and haggle over the price.
More From Popular Mechanics