Limited Warranty vs. Extended Warranty

Minority man who just bought a new car

Understand the warranty that comes with that new car!

Buying a car gets more complicated every day. One of the more complicating factors is the different warranties offered. There seems to be no end to the number of warranties offered by manufacturers. Really, though, they all boil down to limited warranties (the factory warranty that comes when you buy the car) and extended warranties (a warranty you pay extra for to give you additional coverage).

The Limited Warranty

A limited warranty, or factory warranty, comes with the car no matter what. There are no negotiations involved and it doesn’t cost extra. This is the manufacturer’s guarantee that the vehicle won’t have substantial problems for a certain number of years, covering the cost of certain repairs.

Let’s look at an example: the 2013 Chevy Malibu. Chevy has a 3-year basic warranty, which covers pretty much everything. They also offer a 5-year powertrain limited warranty, which includes free roadside assistance. Chevrolet also offers a 6-year rust warranty; this last one is less common among limited warranties.

While you can’t negotiate warranties, they may be a deciding factor in choosing a car. If you’re stuck between two vehicles, then go with the one offering you more protection. Many dealerships might also tack on their own warranty, so it may actually be better to buy the same car, but from a different dealership.

The Extended Warranty

As a car gets older and the limited warranty has run out, repairs can get expensive. Sometimes, you can negotiate for an extended warranty that covers you after the original warranty expires. You can even get one through a third party. A manufacturer warranty will be more expensive, but you get the benefit of having certified technicians use certified parts with less red tape. There have also been some third-party warranty scams in the past.

There are a lot of factors to consider and negotiating can be tricky. Just remember that dealerships are always trying to make the most money. They tend quote their best and most expensive plans, so make sure you know all your options. The key is deciding how much you can cover financially. Extended warranties can be purchased when you first get the car—adding only a small bump to your financing costs—or can be added before the limited warranty is up without penalty.