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Buy a new car & you automatically get a generous warranty with it, usually for a minimum of three years. That is three years peace of mind where apart from a handful of items (wiper blades, bulbs, brake pads, adjustments etc) everything is generally covered should something go wrong. Buy a used car within that warranty period & you will get the balance of the warranty, the only thing you need to do (as with any car) is to make sure the vehicle is serviced as per the manufacturers recommendations & everything should be OK.
However, buy a used car over three years old or when the manufacturers warranty has finished & you'll need to purchase a used car warranty if you want some peace of mind. Unfortunately used car warranties are not as generous as new car warranties & this leads to confusion & complaints from car owners.
Apart from our homes, the car is likely to be the second most expensive thing most of us will purchase in out lifetime. Cars are complex machines made up of thousands of different parts & components, some more complex & thus more expensive than others.
When something does go wrong you can face hefty repair bills. The national average labour rate per hour at most franchised dealers is around £75.00 per hour + Alastair Darling's tax, it's even higher in the London area. When you consider many repairs can take 6 hours, 8 hours or even more & then add on the cost of parts, many final bills run into four figures. Eye watering stuff!!
When it comes to buying a used car warranty you really need to be diligent. Look very carefully at the terms & conditions. Most are sold at the time when the car is purchased. Remember sales staff are paid a low basic wage & rely on the 'extras' to make their commission. Those extras include finance, GAP, accessories & used car warranties. At the point of sale you get little time to study the terms of the warranty & it is best to ignore what the sales staff are telling you & study the terms at your own leisure at home. You don't need to buy a used car warranty at the time you buy the car; you can if you want purchase it direct from the company at any time within reason.
Of all the used cars I have purchased in the past I've never had a used car warranty, but as an ex-mechanic it really didn't matter. If you're not technically minded a used car warranty becomes more important. However, I used to see on a daily basis how things went wrong from the 'other side of the fence' when I worked at a busy dealership. It soon became apparent to me what goes wrong with these warranties & it's all down to clever wording of the polices & companies who are only to keen to avoid payment, let me explain.
Critics claim that these warranties are not worth the paper they are written on, I don't agree but customers often get them confused with the original vehicle warranty where just about everything is covered.
Most used car warranty policies are limited to items such as engine, gearbox, starter motors, alternators, electrical motors, control units, switches and so on. They do not cover the hundreds of other components fitted to a car. Good polices are expensive, they cover the most but also cost the most, peace of mind includes breakdown cover, over night accommodation, (only if necessary) and a low excess payment. Cheaper polices cover less and have a higher excess payment.
One thing they all have which becomes a contentious issue, is the clever wording of their policies. They cover the cost of an item (usually listed in the policy book) should it fail & the labour to fit it, however should the part just wear out, then cover is usually withdrawn.
You need to define the difference between 'failure' & 'wear & tear' & I honestly doubt if even a court of law could do this without it being contentious.
Let me try and explain that in simple terms, your car fails to start one morning & the starter motor is diagnosed, as the part is sealed & has failed the warranty company will cover the cost of the repair less the excess payment. Another example is the wipers stop working & it's traced to a faulty wiper switch, another sealed part that has failed, so the company honours the claim less the excess.
However, if you complain that your engine is burning oil and the garage confirms something is not right but they need to strip it down to examine it. They need your permission to dismantle it and they diagnose that the piston rings have worn out; your warranty company will walk away from your claim. This reason being, that on the basis that nothing has failed, only the part has worn out. Wear and tear items are not covered on used car warranties, only failure of a part.
There you are left with an engine in bits and having to pay the garage to either put it back together again or repair it. They would be unable to diagnose the problem until it was stripped down. A situation like this would leave a sour taste in your mouth!
Another example of 'wear & tear' versus 'failure' is when you complain to the garage that your clutch is slipping. It could be a worn clutch but it could be an oil leak which has come in contact with the clutch & thus covered under warranty. Once again they cannot tell until the gearbox is removed with your permission. They then find wear & tear on the clutch & no oil leak & the warranty company doesn't want to know as nothing has actually failed, just worn out. Once again you are left with a stark choice, pay up or lose out.
Another nasty one often listed in the small print is oil leaks on major items such as engine & gearbox. An oil leak is covered provided nothing major has to be removed to access the repair. Most engine & gearbox oil leaks can be repaired in place leaving you to pick up the bill. You are often left wondering why you ever paid for a warranty in the first place!
More nasties they don't tell you about is diagnostic time, a garage may spend two hours trying to find a fault, lets say a fault sensor which is covered by the warranty has been diagnosed as faulty. The warranty company will only pay for the sensor & fitting the part, the two hours diagnostic time becomes your problem. As does any breakdown charges unless the policy included it. Any extras required such as oil, antifreeze, electrical connections, nuts & bolts are also charged to you.
More examples where these companies can avoid paying,
Your exhaust is leaking, 'sorry not covered by a used car warranty'. There is a crack in my windscreen, 'sorry that's not covered'. My brakes squeal in the morning, 'sorry that's not covered either'. There is a rattle form the dashboard, 'no sorry, no cover for that either'. There is a pool of water in the boot, 'sorry this is not covered'. My headlamp doesn't work because the wiring has burnt, 'you guessed it this is not covered either'. The back seat won't fold down, 'no'. There is corrosion on the front wings, 'no'. My paintwork is flaking off, 'no' My handbrake is not holding, 'no sorry'.
I could go on and on. Used car warranties do provide peace of mind should a major part fail, but they can be very expensive to buy in the first place. The best advice I can give you is to check out the wording on each policy before you sign up for one, find out what is covered and how they define 'failure' and 'wear and tear'. Also, check the excess charges as sometimes they can be rather excessive, sometimes you are actually cheaper fitting a second hand part than paying the excess from a claim!
If that is not bad enough many of the companies employ telephone claims staff that have very little technical knowledge, everything is either black or white & that causes many problems. Often the garage is the 'middle man' but gets the biggest amount of abuse when faced with the customer.
I remember on one occasion a lady left her car with us for a leaking shock absorber on one side of the vehicle which was covered. The other shock absorber on the opposite side was just starting to leak & I asked the warranty company for permission to fit two. They said no as it wasn't leaking as bad as the other, so only one was fitted. One month later the other one was leaking badly & when I phoned the company for permission they rejected my request because they said, I should have fitted two at the same time!!!! Fortunately for the lady her father was a lawyer, one carefully worded letter to the warranty company made them change their mind but it just lets you see how fickle they often are.
If you have inherited a warranty package on your car you may find it is transferable to you. Check if the previous owner had the vehicle serviced as without proof you will lose out on any claims.
Whilst under a used car policy the vehicle must be regularly serviced or the policy becomes invalid. You are not tied to a particular garage for service work but you must be able to produce a receipt as proof of work has been done. Receipts must be from a VAT registered garage, not dummy receipts made up by one of your friends.
Not all warranty packages are rubbish, Car Care is one of the better but more expensive ones often recommend by the manufacturers. Rarely do manufacturers under write these type of polices they are often through separte companies.
I am not saying ignore a used car warranty but just carefully examine what it has to offer as it can still save you a lot of money when things go horribly wrong.
There are many companies who offer MOT insurance on the components that are likely to fail your MOT test but most won't cover the labour costs. You can get basic cover for as little as £50.00 a year and for that the insurance company will usually pay the garage direct after authorisation has been confirmed. These policies can cover the most popular items that are likely to fail an MOT test such as wheel bearings, steering and suspension joints, driveshafts, shock absorbers, brake callipers, ABS units, handbrake cables and the horn. However most polices do not cover other likely failure items such as leaking exhausts, leaking fuel tanks, leaking steering racks, catalytic converters, broken lamps, broken mirrors and adjustment to wheel alignment due to renewal of steering and suspension components. When you consider the labour costs on all these items are excluded and the general range of cover that looks quite good but in reality is rather limited, you begin to wonder if it is worth paying for. Only you can make the decision but I would recommend that you read the small print carefully before committing yourself. Many of the components that are covered will cost substantially more than the basic annual cost of the policy and most companies have a mileage and age limit for the vehicle. Some companies will only insure the vehicle with a minimum six months valid MOT left. Many manufacturers are involved with MOT insurance but they are normally underwritten by a handful of insurance companies and are only approved by the manufacturer.