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Car manufacturers often make a big deal about the factory warranty they include with a new car purchase. In addition to the various deals and price cuts, a dealership might float the idea of a manufacturer’s warranty as a way to seal the deal. But it's arguable whether a limited warranty an actual beneficial perk.
Factory limited warranties come standard from all major manufacturers. Regardless of how much you pay for a new vehicle, the purchase will include a new bumper-to-bumper warranty. You may find, however, that a limited new car warranty isn't everything you believed it to be.
What Is a Bumper-to-Bumper Warranty?
Also known as a limited warranty, bumper-to-bumper coverage is a comprehensive plan that often comes from the dealership. A true limited bumper-to-bumper car warranty will cover every part of a vehicle for a certain period of time.
On the surface, this makes a limited factory warranty fairly attractive. The fact that it automatically comes with a brand-new vehicle is appealing, but what a limited warranty entails is often disappointing. It won’t always save you money on repair work and routine maintenance. It will probably pay out less than you think, leaving you to pay out of pocket.
Limited Warranty Limitations
What does the limited part of a limited warranty mean? It means that the warranty doesn’t cover all the parts in all instances that you may need a repair or replacement. In most cases, limited means really limited. A true factory limited warranty only kicks in when a specific defect arises that is the manufacturer's fault.
Let's say you notice body panels flying off or your digital display flickering out of existence. If these issues are due to bad materials or workmanship, the factory warranty will apply. If they aren’t working because of an accident or normal wear and tear, you will be out of luck. This is what trips up many new vehicle owners.
It’s easy to assume that the fancy limited warranty will help reduce the cost of a normal oil change or brake inspection. Unfortunately, additional warranties are needed to get real cost-saving coverage. So, while it is possible to save money on repairs and routine maintenance, a limited warranty isn’t your best bet.
Beyond the specific limits of a factory warranty, it’s important to learn about the particulars of your warranty. In general, these details include:
- Inclusions: These are the components that the bumper-to-bumper warranty covers. Most limited warranties have more inclusions than exclusions. It should have coverage for things such as wiper blades, brake pads, and more.
- Exclusions: These are the things not covered by the limited warranty. Many limited warranties only have an exclusion list to save time since they are fairly comprehensive in the warranty coverage.
- Coverage term: No factory warranty lasts forever, and limited warranties tend to be the shortest. All warranties are limited by time (years or months) and distance (mileage). A five-year, 60,000-mile warranty, for example, will end when the car is five years old or travels for more than 60,000 miles. Three-year warranty limits are more common. These terms should be in the service contract.
Alternatives to Limited Warranties
Factory warranties of any kind, including limited and powertrain warranties, don’t present much of a dilemma as far as whether you should have one. If you have a new car, you have a warranty. The real dilemma is whether you should stick with the factory warranty alone.
There are a couple of options you can add to the factory warranty or even buy once the warranty expires:
- Third-party extended warranty: Normally, a factory extended warranty is nothing more than an extension of the regular factory warranty. The limits and coverage terms of the original apply to the new one as well. Third-party providers, however, generally offer their own set of coverages and extra perks, meaning you can get much more by going away from the manufacturer.
- Auto repair insurance: This is a type of auto insurance that actually can cover certain repairs and services. Regular auto insurance is limited in service coverage, so the extra policy is necessary to get the cost savings up to a useful level.
The choice of whether to just stay with the automaker warranty alone or add additional coverage should depend on your needs and vehicle. New cars can typically make do with the factory warranty if you are OK with paying for routine maintenance out of pocket and don’t need much extra peace of mind.
Older vehicles, however, may benefit from the extra coverage and perks such as roadside assistance.