Auto 101

Manufacturer’s warranty vs extended warranty: Understanding the difference

By February 12, 2020 No Comments

When you face a mechanical breakdown with your car, one of the first things that likely comes to your mind is whether or not it’s covered under warranty or if you will have to pay for it out-of-pocket.

For warranties, typically there are two main types that cover your car for certain periods of time: the manufacturer’s warranty and the extended warranty. So what’s the difference?

Manufacturer warranties

When purchasing a new vehicle, most vehicle manufacturers include a number of warranties that provide coverage for select periods of time. These warranties cover major vehicle parts that may break due to a manufacturing defect or failure. Depending on the manufacturer, there are different category levels of warranty coverages, the most common being Powertrain Warranty and Comprehensive Warranty.

  • Powertrain Warranty: covers the parts that power your vehicle – such as the engine, transmission, and drive axles. The duration of the powertrain warranty is usually the longest amongst the different warranties provided by the manufacturer. Some manufacturers offer a lifetime warranty on certain components of the Powertrain Warranty.
  • Comprehensive Warranty: also known as “bumper to bumper”, covers most things that aren’t covered by the powertrain warranty. This warranty typically covers almost everything between your vehicle’s front and back bumpers, but is for a much shorter duration (typically from two to five years). Be aware that there are some parts not covered because they naturally wear out through use such as tires, light bulbs, window glass, brake pads and windshield wipers.
  • Other manufacturer warranties such as Corrosion Warranty, Roadside Assistance, and Hybrid and Electric Car Battery Warranty may also be offered as added benefits by the manufacturer.

Note that warranties do not provide coverage for parts that become damaged – such as from a car accident.

Pro Tip: Since the purpose of a manufacturer warranty is to cover defects in materials and workmanshipit’s important to follow the manufacturer’s maintenance schedule to ensure your manufacturer warranty remains valid, as well as check ahead of time on what warranties you’re covered for and for how long. 

Extended warranties

So, what do you do if you are worried about the parts that aren’t covered by the manufacturer’s warranty and what can you do after the manufacturer’s warranty period expires?

This is where car owners can choose to purchase an extended warranty that provides powertrain and comprehensive coverage when the manufacturer’s warranties have expired. This is ideal for car owners who want protection and reduced risk so they can drive with peace-of-mind.

An extended warranty can be purchased from a dealership who can usually offer the best selection from OEM branded to third party, or there are a limited number of providers that sell directly to consumers. The cost can vary based on your vehicle year, make, and model as well as the type of coverage plan and term length you decide to purchase. It costs a bit less if you decide to purchase an extended warranty when you buy your vehicle brand new compared to when you decide to buy it later when your vehicle is older.

Pro Tip: look for extended warranties that are transferrable, so that if you sell your vehicle to someone else during the contract period it can increase your resale value. Also, if you are worried about costs, some extended warranties offer a claims-free reward benefit (in the form of a credit or even cash) if no claims are made. 

General Considerations

If you’re able to set aside money for unexpected repairs, then you may not want the protection of an extended warranty, but keep in mind that these items can be anywhere from several hundred dollars to thousands of dollars for just one part. With inflation and rising vehicle repair costs, an extended warranty can really save you when you need it the most – protecting yourself and your budget.

Regardless of what you choose, we recommend that you start your research early even before you buy a vehicle, as part of deciding what vehicle you want to buy. If you’d like more information on extended warranties, check out our guide to extended warranty that goes into detail about where, when, what, and how. You can also read our blog that covers the 5 questions to ask yourself before buying so that you feel confident in your decision.

Many dealerships will gladly provide information on extended warranty options to you ahead of time, too.