Making Sense Of An Auto Warranty

An auto warranty is a type of contract between the purchaser and manufacturer or seller of a vehicle.  Like any other contract, auto warranties can often be over-complicated and full of legalese, making it difficult to understand the various aspects of your warranty coverage

Case in point: standard new-car warranties these days are often 30, 40 or even 50 pages in length, with dozens of different subsections and clauses.  Unless you're a contract lawyer, you could rightly begin to feel intimidated about a warranty, and even assume that it is beyond your comprehension.

But the fact is that the majority of new-car and used car warranties are very similar, and they routinely contain many of the same common points.  Here is a brief overview of the most common warranty types, and the basic points you need to understand about each.

New cars are actually sold with several warranties.  The first of these is called the basic warranty, and it covers most major systems and parts of your car.  The basic warranty for most cars sold in the United States is limited to three years or 36,000 miles.  However, there are a few notable exceptions, including Hyundai, which offers a five-year basic warranty, as does their affiliated company, Kia.

Basic warranties will cover the car's electronics, most interior parts and details, rims, and ignition components.  It is important to note that tires are never covered in a basic warranty, and certain interior parts, such as carpeting and mats will usually not be covered either.

The other warranty that all new cars are sold with is called the powertrain warranty.  This is also sometimes known as the drive train warranty, and it covers the larger mechanical aspects of the car.  These would include the engine, transmission and differential, and usually the axles and drive shaft.

Powertrain warranties tend to be in force quite a bit longer than the car's basic warranty.  It is not uncommon to see 10-year powertrain warranties on new cars, and although this sounds like an awesome deal, it is important to remember that the larger mechanical parts of new cars are normally not the parts that break down.

Unfortunately, smaller and electronic-based parts tend to be the ones that are the least reliable, and these are not included under the powertrain warranty.  That means that they will only be replaced or repaired during the time limits of the basic warranty -- normally three years or 36,000 miles.

In other words, don't be too overwhelmed if a new car offers a 10 year powertrain warranty.  It would actually be far more impressive if they offered a 10 year basic warranty, which covers nearly every part and system of the car.  But unfortunately, you're unlikely to see a basic warranty in effect for that long.

Finally, new cars also have what is known as an "adjustment warranty."  This is simply a very basic warranty between the purchaser and the car dealership that sold you the vehicle.  These cover most parts and systems within the car, but are normally in effect for only 30 days. 

The adjustment warranty is actually of little consequence when buying a new car, because every part that it covers will also be covered by the manufacturer's basic warranty.  It is really only there to increase the purchaser's peace of mind, and help make a sale.  In other words, never base your purchasing decision on an adjustment auto warranty, even in the rare cases where it is valid for 60 or 90 days.