What's the Difference Between a Used Car Warranty and Service Contract?

If you’ve ever asked, “what is the difference between a used car warranty and a service contract?” this post is for you.

Before you buy a used vehicle, look for the Buyer’s Guide - it’s required by federal law. Your vehicle’s guide should show if the dealer offers a used car warranty, an implied warranty or if the car or truck is being sold “as is” without a warranty.

Shabana Motors offers a warranty on any vehicle when you purchase with our in-house financing program. That’s great news for you.

What’s a Used Car Warranty?

Not all used car dealers offer a used car warranty. Doing so increases the dealer’s investment in your purchase.

When you buy a used car, you might not receive a used car warranty from the dealer. In that case, the dealer might offer you a service agreement at an additional cost.

If you’re offered both a used car warranty and a service contract, do you need to carry both?

A used car warranty is a promise made by your dealer to cover any defects and repairs on your vehicle over a certain period of time and/or mileage.

In contrast, an extended used car warranty may be purchased beyond the coverage offered. Note that more than 50 percent of people who buy extended used car coverage don’t use it.

To better understand what’s covered, ask the dealer about the specifics. You may learn that normal wear and tear or certain parts aren’t covered.

What’s a Used Car Service Contract?

The difference between a used car warranty and used car service contract is often subtle. A service contract may include products and items that aren’t covered under your used car warranty agreement. Before buying a service contract for your used car, answer the following questions:

• Am I covered for this item under my used car warranty? Read your used car warranty agreement and look for duplicate coverage. Compare each item with care.
• How much does the used car service contract cost? Am I responsible for a deductible? Your used car service contract is often configured on your vehicle make, model and condition. Does the contract require you to pay a deductible if the vehicle is repaired or serviced? What fees are you responsible for if you sell the vehicle or transfer the service contract to a new owner? Will you pay a fee if you decide to cancel the service contract in the future?
• What does the service contract cover? The service contract may contain exclusions. It’s important to note what the service contract doesn’t cover to determine its potential value to you. Common service contract exclusions include: 1) “normal wear and tear,” 2) repairs on parts like clutches and brakes, 3) rental car expenses and/or towing charges, and 4) tune-ups, alignments, and adjustments. If the service contract doesn’t list a part or service, you should assume it is not covered. If damage is caused by one or several parts that aren’t covered, your claim may be denied.

Before Purchasing Any Additional Warranty or Service Coverage

The purchase of any vehicle is usually a major commitment. Before adding to the cost of ownership, ask yourself:

• How long do I plan to own this vehicle? If you plan to keep the vehicle for years, your added coverage may come in handy.
• How much does the plan cover? Ask your dealer for specifics. Read the agreement. You may discover that some often-repaired or replaced parts aren’t covered under the plan. You might be responsible for a portion of the cost.
• Can you afford an unplanned or major repair? Many people don’t have enough money in their savings account to pay for an unexpected repair. A service contract or used car warranty can provide peace of mind.

What’s an Implied Warranty?

If you’re purchasing a used car without a dealer used car warranty, or if there’s an implied warranty, ask what this means.

Generally speaking, the implied warranty is an unwritten agreement. The dealer’s implied warranty is its unspoken promise that your vehicle will do what the dealer says it’s supposed to do.

Ask any questions about the dealer’s implied warranty concerning restrictions on use. You want to understand when and in what circumstances the implied warranty is valid.

What Does “As Is” Mean?

A dealer may sell a car “as is,” without a warranty.

In this case, you’re responsible for making any/all repairs. A used car warranty or vehicle service contract may provide protection or relief from unexpected repair bills in the future.

What’s the Bottom Line about Used Car Warranties?

When you buy any vehicle, used or new, it’s your responsibility to know what you’re receiving in return for the money you’re paying to the dealer.

Understand that buying a service contract isn’t the equivalent of receiving the dealer’s used car warranty.

A used car service contract may provide protection from some covered replacements or repairs. Problems may arise if the buyer merely assumes coverage and later learns this isn’t the case.

If you buy a used car, understand your used car warranty or service contract. By taking the time to read your agreement and asking questions of the dealer, you’re able to make informed decisions concerning whether buying a used car service contract is a good idea for you.

Shabana Motors Used Vehicle Warranty

Shabana Motors offers a warranty of your vehicle when you use our in-house financing program.

You’re covered for two years (or 24,000 miles)—at no additional cost to you!

Ask our sales team about our in-house financing program. We’re here to put you behind the wheel of a sweet new ride. Our used car warranty provides additional peace of mind that, if something’s just not right, we make it right.