Protection. That’s what warranties are all about, whether you’re buying a computer, a refrigerator or a car.
Of course, the best warranty is the one you never have to use. The product simply behaves properly throughout its life.
Because we can’t be sure that will happen, we like to know there’s a place to turn if something goes wrong. Warranties and service contracts give the vehicle buyer such peace of mind for at least a limited time.
Take vehicles. Every new one comes with warranty coverage, divided into basic, powertrain, corrosion and emissions. Automakers issue warranties and are responsible–through their dealership service departments–for making needed repairs.
“A warranty is part of the purchase price,” said Pete Biscardi, executive vice president of National Auto Care Corp., an issuer of service contracts. You “can’t negotiate that out” of the total vehicle price.
No one can say how much a warranty adds to the vehicle’s price, because it’s an integral part of the total. The warranty that comes with every new car gives you a way to get repairs made without charge when something goes wrong during the early life of the vehicle.
A service contract costs extra and can pick up the slack left by the basic warranty. It provides coverage for an extended time period or number of miles beyond the original warranty.
Most vehicles include a basic, bumper-to-bumper warranty for three years or 36,000 miles, whichever comes first. Volkswagen offers two-year/24,000-mile basic coverage, and several luxury models include a four-year/50,000-mile basic warranty. Hyundai takes the prize, with a five-year/60,000-mile basic warranty.
Don’t forget that word “or.” A three-year/36,000-mile warranty expires the moment the odometer reaches 36,000 miles, even if you’ve owned the vehicle for a few months.
Conversely, it expires after three years even if the car never left the garage.
And bumper-to-bumper warranties don’t include every item mounted between the bumpers. All warranties are limited in scope as well as duration. Many exclude tires and batteries, which are warranted by their manufacturers. And traditionally, they exclude wear-and-tear items, such as brake pads and windshield-wiper blades.
Many warranties, especially for more costly vehicles, cover some items that need replacement or adjustment, but for a shorter period. Several automakers include basic maintenance for a year or so, so you don’t have to pay for such essentials as oil changes.
Nearly a dozen manufacturers also provide a supplementary powertrain warranty, which extends coverage for specific components. Hyundai led the pack here, too, with 10-year/100,000-mile powertrain coverage. This year, Isuzu topped that with a 10-year/120,000-mile powertrain warranty, but its basic coverage is only three years/50,000 miles. Powertrain warranties typically cover the engine, transmission, driveshafts and related components.
If you get a three-year/36,000- mile basic warranty plus five-year/60,000-mile powertrain coverage, nearly all problems are covered for three years or 36,000 miles. After that, only powertrain components will be repaired free. After five years or 60,000 miles, you’re on your own–unless you buy a service contract.
Are these long periods and mileage limits really beneficial? After all, most people don’t keep their cars 10 years, though the average has reached 7 1/2 years.
Most vehicles are likely to develop a problem or two as their odometers approach 100,000 miles. Engines, for examples, are a lot more durable than they used to be. Still, those valves and pistons in the engine are constantly wearing and that eventually will lead to mechanical trouble.
Hyundai began its long warranty last year, when shoppers appeared skeptical about the reliability of the South Korean’s products. Expanding the warranty helped send a message that Hyundai was getting better. “We believe our product’s so good, we can offer this warranty. Consumers view that not as a warranty story, but as a product quality story,” said Finbarr O’Neill, head of American operations.
Corrosion warranties cover rust-throughs in the vehicle’s body metal. They last three to 12 years. Most are for unlimited mileage, though some end at 100,000 miles. Requirements vary, but as a rule they cover only “perforation” rust, which eats through the metal and creates a hole.
If rusting was caused by pollution or hail, you might be out of luck. That’s often are excluded. Corrosion is covered for long periods because today’s cars are not nearly as vulnerable to rustouts as they were a decade ago.
Federally mandated emission warranties cover components that are charged with reducing pollutants. To make sure that cars emit as little nastiness as possible, manufacturers must make needed repairs in this area, overriding any other warranty coverage.
Extensive emissions-component coverage might be provided for a relatively short period: typically two years or 24,000 miles. Certain specific components, however, including the catalytic converter and onboard diagnostic devices, must be warrantied for eight years or 80,000 miles. Several states, notably California, have more stringent emissions-warranty requirements.
Finally, most automakers, except Honda, Nissan and Toyota, offer roadside assistance. Car buyers are enrolled in an auto club for a period or given access to services from an independent roadside service. Either way, free help with a flat or mechanical breakdown is a phone call away.
LONG AND SHORT OF EXTENDED WARRANTIES
A “warranty can only be given by two people,” said Pete Biscardi of National Auto Care Corp–the manufacturer or seller of the product. An outside company can offer extra-cost service contracts.
Cars are no exception.
Some new-vehicle service contracts are purchased at the time of initial sale, but others can be obtained later. But after a stated time, usually within one month or 1,000 miles of the expiration of the regular warranty, you can’t buy a service contract.
Most service contracts are purchased through the dealership, but they also are available from independent agents. You might be offered a choice of service-contract programs. Service contracts that are backed by the vehicle manufacturer are likely to cost more, but can be more reliable.
Service contracts ordinarily cost less at the time of vehicle purchase. Buy one later and you can pay “30 to 50 percent more,” Biscardi said. The contract can cost $300 to $600 less when the vehicle is purchased, he said.
As for duration, “a lot depends on your intent,” Biscardi said. A service contract can be valid for one to five years or more.
How long do you plan to keep the car and how long is the loan? You might finance for five years but have a warranty for three.
According to J.D. Power and Associates, 25 percent of new-vehicle buyers get a service contract. And the number generally is higher on used cars.
“Anyone who buys a used car should consider purchasing a service contract,” said Biscardi.
Used-car contracts, issued by the same independent providers that issue the new-car agreements, must be obtained at the time of the vehicle purchase.
Certified used cars, which have been specially inspected, include a warranty. Whether other secondhand vehicles have one is up to the dealer. A Buyer’s Guide affixed to the car window indicates whether or not that vehicle is under warranty and should spell out the details.
As a rule, used-car warranties supplied by the dealership are for a short period and minimal mileage. In Biscardi’s view, a used-car service contract should be effective for at least half the duration of the finance agreement. If you have a 48-month loan, consider a 24-month contract. Biscardi said the average term of a service contract is 38 months.
Prices vary dramatically, depending on the duration of the contract, its coverage, vehicle type and age, and the issuing company. When purchased along with the vehicle, the cheapest contracts start at several hundred dollars, but they can top $1,000.
Contract issuers don’t necessarily set the price, either. Some provide dealerships with a “dealer cost,” but the dealer can sell that contract for whatever the market will bear, unless state law fixes a price. Illinois does not.
Before buying a contract, ask a few basic questions:
– How long has the administrator been in business? In most states, the service-contract business is unregulated. “You can operate out of a shoe box in some areas,” Biscardi said.
– Who insures the company? You want a company that’s substantial, backed by a reputable insurer. Illinois, for one, requires insurance by a licensed carrier.
– Where must service work be done? Who must you contact before having repairs made and is someone there at all times?
As a rule, the best place to have service work done is at the selling dealership. “We encourage them to go back to the dealer,” Biscardi said. Even so, “we will deal with any certified shop in the world.”
Read the service contract and brochures. They should spell out the steps that must be taken, and explain whether–and how–to obtain permission from the contract issuer. If you have the work done first, you could have a tough time getting reimbursed.
— James M. Flammang.
2000 NEW-VEHICLE WARRANTIES
Here are the warranties on 2000 vehicles expressed in years/mileage. New vehicles include a separate warranty for emissions-related components.
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Carmaker Basic Supplementary Corrosion
Warranty powertrain
Acura 4/50,000 — 5/unlimited
Audi 3/50,000 — 12/unlimited
BMW 4/50,000 — 6/unlimited
Buick 3/36,000 — 6/100,000
Cadillac 4/50,000 — 6/100,000
Chevrolet 3/36,000 — 6/100,000
Chrysler 3/36,000 — 5/100,000
Daewoo 3/36,000 5/60,000 5/unlimited
Dodge 3/36,000 — 5/100,000
Ford 3/36,000 — 5/unlimited
GMC 3/36,000 — 6/100,000
Honda 3/36,000 — 5/unlimited
Hummer 3/36,000 — 6/100,000
Hyundai 5/60,000 10/100,000 5/100,000
Infiniti 4/60,000 6/70,000 7/unlimited
Isuzu 3/50,000 10/120,000 6/100,000
Jaguar 4/50,000 — 6/unlimited
Jeep 3/36,000 — 5/100,000
Kia 3/36,000 5/60,000 5/100,000
Land Rover 4/50,000 — 6/unlimited
Lexus 4/50,000 6/70,000 6/unlimited
Lincoln 4/50,000 — 5/unlimited
Mazda 3/50,000 — 5/unlimited
Mercedes-Benz 4/50,000 — 4/50,000
Mercury 3/36,000 — 5/unlimited
Mitsubishi 3/36,000 5/60,000 7/100,000
Nissan 3/36,000 5/60,000 5/unlimited
Oldsmobile 3/36,000 — 6/100,000
Pontiac 3/36,000 — 6/100,000
Porsche 4/50,000 — 10/unlimited
Saab 4/50,000 — 6/unlimited
Saturn 3/36,000 — 6/100,000
Subaru 3/36,000 5/60,000 5/unlimited
Suzuki 3/36,000 — 3/unlimited
Toyota 3/36,000 5/60,000 5/unlimited
Volkswagen 2/24,000 10/100,000 12/unlimited
VW Cabrio 2/24,000 10/100,000 6/unlimited
VW EuroVan 2/24,000 5/50,000 6/unlimited
Volvo 4/50,000 — 5/unlimited
Source: Automakers
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UNCOVERED
By studying the warranty manual that came with your new vehicle and following its requirements, you can remain covered. But here are some things that could cause a manufacturer to deny warranty coverage:
– Damage that results from an improperly made repair.
– Damage due to installation of aftermarket accessories (such as an alarm or roof rack), used parts or any part not approved by the manufacturer.
– Damage due to structural alterations of the vehicle or suspension modifications.
– Damage resulting from inferior-grade fuel.
– Engaging in any sort of competitive event with the vehicle.
– Continued operation of the vehicle after a warning light or gauge indicates a problem.
– Failure to do scheduled maintenance.
– Environmental harm (bird droppings, acid rain, etc.).
– Failure to wash the car properly or leaving damaged body panels unrepaired or unpainted.
— James M. Flammang.
