Car Warranty Guide: Everything You Need to Know

By Chris Hardesty 11/07/2022 11:25am

Car mechanic holding clipboard while examining an engine.

Car Warranty Quick Facts

  • Car warranties can reduce out-of-pocket expenses for some repairs.
  • A car warranty covers defects or damages from regular use.
  • Your vehicle warranty does not cover parts made to wear out, like brake pads in normal use.
  • Buying a car extended warranty is a strategic financial choice that may give peace of mind but might not pay for itself.
  • A warranty is not insurance and does not cover accidents or abuse.

For most of us, our car is the most or second-most valuable thing we own. Sadly, they break down — even more so as they age. Enter: the car warranty.

A car warranty is a repair contract limiting a car owner’s financial risk for a set period.

It can help you find peace of mind even on a day when it’s not needed. And on the day the seal on your car’s radiator cap breaks, leaking hot vapor onto the thermostat and melting the housing, which not only triggers an overheating warning but also sends coolant into the overflow tank, causing a…OK, you’re right. Sorry. Still a little shaken from last month’s post-warranty repair bill.

Having a car warranty can protect you from paying out-of-pocket fees if your car needs repairs. But not all warranties look or act the same. In fact, not all warranties are worthwhile.

Here’s our guide on automobile warranties, how they work, if extended warranties are worth it, and if you need them.

What Is a Car Warranty?

A car warranty is a contract that says that your car’s manufacturer, or the aftermarket warranty company you bought an extended warranty from, will pay for some repairs to your vehicle.

Some repairs? Warranties cover problems the manufacturer considers defects and kick in when a component doesn’t live up to reasonable expectations. So, they don’t cover damage from accidents or when using your car in a way the manufacturer didn’t intend you to use it. They also don’t cover normal wear and tear.

How Long Does a Car Warranty Last?

Car warranties operate for a set period of time or a set distance in miles. The typical auto warranty coverage is 3 years/36,000 miles. That means the warranty would cover needed repairs in the first 3 years you own your car or for the first 36,000 miles you drive it, whichever comes first.

And for most of us, the mileage limit comes first.

The industry standard of equating one year of warranty coverage to 12,000 miles of driving is a bit outdated. The United States Department of Transportation estimates that the average American logged about 12,700 miles in 2020 — during pandemic lockdowns. The year before, the DOT estimate was approximately 14,300 and 13,500 annual miles in 2018. So, most of us are exhausting those 36,000 miles before three years have passed.

A recent study found that the average new car on American roads is now over 12 years old, so many of us are driving well past the end of our original warranties.

How Much Does a New Car Warranty Cost?

The cost of a new car warranty is built into the price of a new car. No dealer should ever try to charge you a warranty fee on a new car.

Types of New Car Warranties

2022 Toyota CH R

Most new cars are covered by not one but several different warranties.

Comprehensive Warranty

A comprehensive, or bumper-to-bumper warranty, covers every part your new car had when you bought it. For instance, a brand new 2022 Toyota C-HR comes with a 3-year/36,000-mile comprehensive warranty.

Powertrain Warranty

A separate powertrain warranty covers the mechanical parts that move the car and usually lasts several years, or several years’ worth of driving, longer than the bumper-to-bumper warranty.

The C-HR from our example comes with a 5-year/60,000-mile powertrain warranty. So, should the buttons that lower the windows stop working at mile 36,001, the cost of repairing it would fall on you. But should the transmission fail, that repair becomes free.

Restraint Systems Warranty

A restraint systems warranty covers damage to your car’s seat belts and airbags. Restraint systems warranties can vary considerably from one manufacturer to the other. The C-HR, in our example, carries a 5-year/60,000-mile warranty on its restraints.

However, new Subaru models come with a seat belt warranty that covers the entire life of the car. Should you keep your new Subaru running for 35 years, you’ll have free seat belt repairs for that length of time.

Corrosion Warranty

Many cars also carry a corrosion warranty. It will pay to replace body panels that have rusted through. But crucially, these warranties generally only cover body panels that have completely rusted through, with lesser corrosion not covered. Our Toyota C-HR carries a corrosion warranty for 5 years or unlimited miles.

Emissions Warranty

An emissions warranty covers the components that limit your car’s emissions. These warranties are often complex, warranting some parts for shorter periods and others for longer periods. They can also vary from state to state.

California, in particular, has more stringent requirements. Manufacturers often issue separate emissions warranties that give California residents longer protections. Our hypothetical C-HR ships with a warranty guaranteeing the emissions system will meet certain performance standards for 2 years or 24,000 miles in most states, and 3 years or 50,000 miles in California. It guarantees against defects in the system for 3 years or 36,000 miles (3 years or 50,000 miles in California). It protects some critical components like the catalytic converter for 8 years or 80,000 miles in every state.

Hybrid Component Warranty and EV Component Warranty

Hybrid component warranties and electric vehicle (EV) component warranties cover repairs to the battery, electric motor, and other unique components found in an electric or hybrid car. Electric motors require much less maintenance and are subject to less wear and tear than gasoline engines. But the battery of an electric or hybrid car can carry much of the car’s value, and replacing it is among the costliest repairs in the automotive world. So, these parts get covered separately.

Our hypothetical C-HR has no components specific to a hybrid or electric car. But, for comparison, a 2022 Toyota Prius Prime plug-in hybrid vehicle on the same lot carries an 8-year/100,000-mile warranty on its hybrid components and a separate 10-year/150,000-mile warranty on its battery.

Extended Warranty

Extended warranties ­take over for the manufacturer’s warranty after it expires. They cost additional money and deserve their own section, so they’ll be covered in a moment.

What Does a Car Warranty Cover?

A car warranty covers defects or damage that occurs during regular use and can’t be considered normal wear and tear. It pays to replace defective parts with new or reconditioned parts at the company’s discretion behind the warranty. It also covers labor.

Should your air conditioning stop working while your bumper-to-bumper coverage is active, that warranty will cover the full cost of replacement. If your powertrain warranty is active, it will cover the cost of replacing a transmission that failed during everyday driving.

But there are many reasons you could end up in a repair shop that are not covered by the standard warranty.

Car Warranties Don’t Cover Normal Wear and Tear

Mechanic using calipers to check brake pads.

Some parts of your car are expected to wear out regularly, so car warranties only pay to replace them if they wear out ahead of schedule. For example, depending on the model of the car, it’s normal to replace brake pads every 25,000 to 70,000 miles. A car warranty will generally not cover that cost.

Since wear and tear are not covered by your warranty, the cost will be completely on you to pay. Try our auto repair estimate tool to help you determine the price range for your repairs to avoid paying more than necessary.

If, however, your car was to need brake pads after just 10,000 miles, the warranty would likely cover the cost of the new pads and the cost of figuring out what part of the brake system is malfunctioning to wear them out so fast and fixing that as well.

Changing Your Car Parts Can Void Warranties

Manufacturers design all car parts to work together properly, so changing those parts usually voids at least part of the warranty. This can work in both obvious and subtle ways. You might expect that adding a lift kit to your truck would void the warranty. But something as simple as adding run-flat tires to a car that didn’t come with them can also render parts of the warranty null.

Parts? Under federal law, a dealership can deny a warranty claim if they can prove that an aftermarket part caused a defect. But this doesn’t mean that one aftermarket part voids your entire warranty. If a dealership claims your upgraded shocks nullify your suspension warranty, they may have a point since shocks are part of the suspension.

If they claim your coolant system failed because of those shocks, you can probably appeal and get them to cover the coolant repair since changing the shocks usually does not affect the engine.

Car Warranties Don’t Cover Abnormal Use

2022 Subaru Outback Wilderness Off-Road

Car warranties generally don’t cover racing your car on (or off) a track, taking it off-road, or other non-standard uses.

Hauling or towing more than your vehicle is designed for can also void the warranty.

Even with some trucks and SUVs marketed for their off-road prowess, driving them off-road can void the warranty. If you buy a Jeep Wrangler, Ford Bronco, or another off-road-oriented vehicle that you plan to take to the trail, we recommend that you discuss the warranty terms with the dealer.

Dealers that sell many off-road vehicles rarely find it profitable to reject warranty claims because they believe the car has left the road. But even they won’t cover actual damage caused on the trail.

Car Warranties Are Not Insurance

Car warranties do not cover damage caused by accidents, theftweather, or similar factors that have nothing to do with the quality of the car. For those, you’ll need car insurance.

Car Warranties Do Not Cover Regularly Scheduled Maintenance

Every manufacturer requires owners to perform certain maintenance tasks regularly, as found in the car’s owner’s manual. You can also find it by using our car maintenance schedule tool.

Car warranties do not cover routine maintenance. In fact, failing to keep up with the manufacturer’s recommended maintenance schedule can void your car warranty.

Some manufacturers now include a maintenance plan in the purchase price of a car. Many 2023 Hyundai vehicles, for instance, come with 3 years or 36,000 miles of complimentary maintenance. Other automakers offer optional maintenance packages with the purchase of a new car.

For instance, Audi offers several care packages allowing buyers to prepay some standard maintenance with the purchase of a new vehicle. But such programs are separate from warranty coverage.

Recall Repairs Are Always Free, With and Without a Warranty

Some defects can make a car unsafe to drive. When a manufacturer learns of a serious safety defect, federal law requires them to issue a recall order, attempt to contact every owner to notify them of the problem, and repair it for free.

Recall repairs are always free and never expire. If you learn that the manufacturer recalled your car to fix a safety defect 22 years ago, you can still bring it to the dealership to get that problem fixed at no cost.

Does the Warranty Transfer to the New Owner if I Sell My Car?

Most car warranties transfer with the car when it’s sold. Occasionally, transferring a warranty will change its terms. Both Hyundai and Kia, for instance, offer one of the industry’s longest warranties on new cars — a 10-year/100,000-mile powertrain warranty. However, if the vehicle is sold, only a 5-year/60,000-mile powertrain warranty goes to the new owner of the car.

If you’re buying a used car, try to find out when it first sold. Automakers routinely start selling the model’s next year before the calendar year is out, so your 2018 car may have a warranty period beginning in 2017 if it sold early.

How Do You Check Whether a Car Is Still Under Warranty?

To determine whether your car is still under warranty, you’ll need to know its mileage and date of purchase.

Your car’s owner’s manual will have details on the warranty coverage from when the car was initially sold.

To find the mileage, check the odometer. If the car’s mileage exceeds the warranty limit, the car is no longer covered. If it does not go over the limit, you’ll still need to check the date of purchase.

If you don’t know the original purchase date, write down the VIN (vehicle identification number) and call any dealership selling that car brand. They will be able to look up the purchase date for you.

If you are not your car’s first owner, you’ll also need to ask whether the warranty was transferred to you when you bought the car. The answer is almost always yes. But, for some manufacturers and some model years, warranty terms can change when a car gets sold as a used vehicle.

All About Extended Warranties

When buying a new car, you don’t face a decision as to whether to buy a warranty. The initial car warranty is built into the cost of a new car. But after your initial car warranty has expired, it’s possible to buy additional coverage in the form of an extended warranty. These are also sometimes called service contracts.

Extended car warranties are a much more complex subject. There are reputable companies that offer reliable warranties that can protect you from the cost of unexpected repairs. But there are at least as many, if not more, scammers looking to sell you a virtually useless extended warranty.

Some extended warranties cover just the vehicle’s powertrain. Others offer bumper-to-bumper coverage. But they differ from initial car warranties in that most include a deductible, much like an insurance plan.

You usually pay either a hefty up-front fee or a smaller monthly fee for the cost of your car’s extended warranty. You must also still pay the deductible before that warranty covers any repairs.

How Much Does an Extended Warranty Cost?

Unfortunately, it’s nearly impossible to determine the average cost of an extended car warranty. They can cost anywhere from a few hundred to a few thousand dollars per year.

Some of this variance is reasonable. Replacing common parts on a pricey European luxury car costs significantly more than replacing the same parts on a mainstream domestic car, for instance.

Some of this variance comes from unscrupulous providers overcharging for warranties of dubious value.

Are Those Extended Car Warranty Phone Calls a Scam?

You may receive a phone call offering to sell you an extended car warranty or even asking for payment to renew an extended car warranty you don’t remember buying. It’s a scam.

According to the Federal Communications Commission, auto warranty robocalls are America’s most common telephone scam. The agency receives more complaints about extended car warranty scams than any other subject.

Simply put, never respond to a phone call about a car warranty unless you placed the call. Scammers may even know what type of vehicle you drive. In some states, that information is public and easy to obtain. But no reputable car warranty company will ever call you to offer you a plan.

Do You Need an Extended Car Warranty?

Whether or not to buy an extended car warranty is a strategic financial decision.

For some cars, it will rarely make sense. The quality of today’s cars goes far beyond that of cars just a generation ago. After all, the average car on American roads today is more than 12 years old and still going, according to a recent report by S&P Global Mobility Reports, formerly the automotive data team from IHS Markit. Mainstream cars built by domestic or Japanese automakers are comparatively inexpensive to repair.

Owners of those cars may find the peace of mind of an extended warranty valuable. But the warranty may never pay for itself.

For owners of mainstream vehicles, keeping an emergency repair fund set aside for car repairs may make more financial sense than paying for an extended warranty.

Some luxury and sports cars may be rare and dramatically more expensive to repair. Owners of those cars are far more likely to find that an extended car warranty saves them money someday.

How Do You Tell a Reputable Extended Car Warranty from a Scam?

If you think the peace of mind of an extended car warranty could be worthwhile for you, we highly recommend buying one from a company you already do business with and have reason to trust.

Many car dealerships offer extended warranties. The dealership where you initially bought your vehicle has every reason to treat you fairly to keep your business. Many banks and financial service companies have relationships with warranty providers. Again, your bank benefits less from selling you a sketchy warranty and losing your trust than from selling you a solid one.

CARCHEX is one such company with an A+ Better Business Bureau rating if you’re looking for a warranty from a reputable company.

Whether you choose a warranty from a bank, dealership, or reputable company, we recommend selecting from a business you know and trust. A company with a reputation to defend, a Better Business Bureau rating, and perhaps even faces in your local community is far more likely to approve warranty repairs than a company you know only from a website.