It’s the big question you not only get asked by car sales staff, but you probably also ask yourself: should I take out a warranty policy on my used car?
Unlike car insurance, there is no legal requirement to buy a warranty, or mechanical breakdown insurance, for your motor. It’s entirely up to you whether you want to cover yourself financially if your used car suffers a mechanical breakdown or failure.
Like most insurance, it’s all about risk and, in that respect, buying a car warranty is a bit of a gamble. You have to consider several things:
- Are you willing to cross your fingers and hope that nothing goes wrong with your car?
- If something does go ‘bang’, do you have the available cash to pay for the repairs, no matter how catastrophic?
- Would you rather save a little money each month to put aside in case if anything goes wrong with your car – rather like having your own ‘warranty plan’.
- Or do you not like unpleasant and potentially expensive surprises, and would rather play it safe, with some sort of warranty cover?
Ever-increasing odds of breakdown
You wouldn’t buy a new car without having some sort of warranty to protect you, but are you prepared to accept that just because it’s a used car?
It’s somewhat ironic that a brand-new car has a warranty to cover it for the first few years when it’s much less likely to break down, but an older car has no legally required warranty cover when it’s far more likely to have problems.
The older your car gets and the more miles it covers, the greater the chance of something needing replacing. Cars are complicated machines that gradually wear out and, no matter how reliable the manufacturer is, you can’t expect a vehicle to go on forever without some attention. However, as cars get older they devalue quite rapidly.
Looking after your car, getting regular servicing carried out and doing your own checks on oil, water and tyre pressures, will certainly help to keep your pride and joy running smoothly, but you can’t guarantee it for ever.
New cars will usually come with at least three years of manufacturer and dealer warranty, and sometimes more. Buy a used car from an official dealer and you’re likely to get a warranty throw in, maybe for up to a year. If you purchase from an independent car showroom, that cover is more likely to be three months.
After all of these different terms are expired, you’re on your own. So if you have spent good money on a used car, it’s well worth considering some warranty cover for your car.
Car finance complications
Car finance is becoming a big consideration, with about half of all used cars sold by dealers now being financed with a PCP or similar finance product. This can have important repercussions for you if your car develops a fault.
We have had many car owners seeking help and advice from The Car Expert because their car has broken down and they can’t afford to fix it, yet they’re still having to pay the finance company every month for a car they can’t drive.
If you’re taking out car finance because you don’t have the cash to buy a car outright, it’s also likely that you won’t have the cash available to pay for an expensive repair. You also can’t voluntarily terminate your agreement, return the car to the finance company or part-exchange it to a dealer if it’s broken.
A broken car is also inevitably worth a lot less money than a working car, so you also can’t usually afford to sell the car to pay off the finance company, as the broken car’s sale price will almost certainly be a lot less than your finance debt.
Understand your policy
Don’t automatically assume that every working part in your car is going to be covered by a warranty. Plan providers have specific clauses saying what is, and what isn’t, covered. It’s important to read them, understand them, and make sure your policy is right for you. There are many things to look out for:
Age limit: Many warranties have an age limit for cars, so if your motor is getting on, it might not be worth insuring against breakdown.
Claim limit: There will be set thresholds on how much you can expect back for each repair.
Consequential damage: if something breaks and damages another part, the warranty might not cover both components.
Excess: Many policies will allow you to opt to pay for some of the damage yourself with the insurer topping up. This will reduce the premium so it’s a good option if you’re not sure about spending big money on a warranty.
Workshop choice: You can’t always go to whatever repair shop you choose. Many warranty providers have their own ‘approved’ garages.
Mileage allowance: You might have to stay within a set mileage range to keep your warranty operating.
Betterment: If a repair makes your car worth more than it was, you might have to find some of the repair money.
Previous faults: The warranty might not cover damaged parts that were already there when you took out the warranty.
Service book: Insurers expect you to keep your car serviced according to the manufacturer’s recommendations.
Warning lights: Don’t ignore warnings on your dashboard. If you do, the warranty might become invalid.
Wear and tear: Don’t expect brake pads, tyres and clutch plates to be covered. These, and other ‘consumables’, won’t count in the cover.
As always, it’s not our place to say that you should or shouldn’t buy a used car warranty. We want to help you understand what you’re buying if you do decide to buy a warranty, and what you’re risking if you don’t.
Like most insurance policies, you have to weigh up the cost of the policy against the likelihood that you will need to make a claim on it. Cars are expensive to buy and expensive to run, and adding another expense on top of your other costs may not seem very attractive.
The flipside is that a relatively small cost now could save you a lot of money down the line or prevent you being left with a broken car that you can’t afford to fix.
Weigh up your position, get some quotes and look at the detail of each policy. We have five warranty partners below who can give you a quote for your car, so you can make sure you’re getting the best possible price if you do decide that it’s the right call for you.
Here at The Car Expert, we have some fantastic warranty offers for our readers provided by our commercial partners. If you’re interested in a used car warranty, you should check these out:
More car warranty information
Additional reporting by Stuart Masson.