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Everything You Need to Know About Warranties

 

Warranties are quite misunderstood, and that misunderstanding causes quite a few customers to be unhappy with their purchases. Let’s clear the air with a few important points.

 

How Much Should a Used Car Warranty Cost?

Warranties aren’t free or automatic when you’re dealing with a used car. After all, the car is used! In addition, the prices vary. The two factors that impact the price are the terms of the warranty, and the amount of items covered.

If you get a 12 month, 12,000 mile powertrain warranty that covers your engine, transmission, and drive axle you can expect to pay about $1300. This amount can be rolled into your car loan. Warranties are somewhat negotiable. Most of the time, a dealership has locked in rates with the provider of the warranty. You can always ask—it’s always good to try.

You can also ask if there are different warranty plans available. If you’re willing to pay a little bit more you could get a better warranty that the dealer would not necessarily offer to you by default.

What to Watch Out for when Purchasing a Warranty

 

Make sure you understand exactly what your warranty covers and when. You should also be aware that many warranties come with deductibles, just like insurance plans do. This can be quite a shock if you expect to walk into the dealer service center and receive every one of your repairs for free!

You should also be sure to ask about value options. Many warranties come with roadside assistance, rental car assistance, locksmith coverage, and more. Sometimes those extra services can be even more valuable to you than the warranty itself can be, making them well worth the price of the warranty itself.

 

How Long Does a King of Cars Warranty Last?

 

Our dealership provides a free 3 month, 3,000 mile limited warranty on every qualifying vehicle.

Now that you know warranties generally aren’t free at all you’ll definitely understand what a great deal that is! We can talk about extending your warranty or upgrading your warranty to include additional coverage. Depending on your specific concerns that upgrade could be money well spent.

What is Gap Insurance, and Why Do I Need It?

 

Many dealers will require you to purchase a gap insurance policy, especially if they are financing the car. Sometimes, they will in fact purchase one on your behalf, and then roll that coverage into your loan.

But that’s okay, because you actually want gap insurance. Gap insurance covers the gap between the difference owed to the lien holder (whoever is financing your vehicle) and the amount the car is actually worth in the event you get into a total loss accident.

For example, let’s say your payoff amount is $20,000. The insurance company writes us a $16,000 check, because that’s what the car is actually worth. You don’t want to be on the hook for the additional $4000, especially since you no longer have a car to drive. With gap insurance the $4000 gets paid, and you’re in a position to shop for another vehicle. And gap insurance is cheap, especially when you think about the fact that you aren’t likely to have $4000 handy if you get into this situation.

 

It is possible to get rid of gap insurance once you have positive equity. If that $16,000 car has an $8000 payoff then there’s no need for gap insurance. The dealership would take $8000, you’d take $8000, and you’d have all the resources you need to get on the road again. Of course, you don’t need gap insurance if you’ve purchased the car with cash.