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Car warranty options: How to choose the best plan for you

·3 min read

What we'll cover

  • The differences between warranties and vehicle service contracts

  • The benefits and drawbacks of both coverage types

  • How to decide which option is right for you

If you're driving around with your check engine light on just to avoid the repair costs — it's time to talk. Unknown expenses can be stressful, but protections from a manufacturer's warranty or vehicle service contract (VSC) can help give you peace of mind. Not sure what the difference is or which option is best for you? We've got you covered.

Infographic titled What's covered. Vehicle service contracts (VSC) and manufacture warranties can meet different auto needs. See key coverage differences to find the right fit for you and your car. Basic repairs (usually includes electrical, mechanical and safety) are included in a manufacturer's warranty and a VSC. Routine maintenance (like oil changes and brake pad replacement) is sometimes covered by a manufacturer's warranty and not covered by a VSC. Components that fail due to wear and tear are not covered by manufacturer's warranty but are covered by a VSC. Cosmetic fixes (including dents, paint scrapes) are not covered by manufacturer's warranty and are sometimes covered by a VSC. 24/7 roadside assistance is sometimes covered by a manufacturer's warranty and also sometimes covered by a VSC. Towing is sometimes covered by a manufacturer's warranty and sometimes covered by a VSC. Trip interruption (reimbursement for hotel, food, etc.) is sometimes covered by a manufacturer's warranty and sometimes covered by a VSC.

What is a manufacturer's warranty?

A manufacturer's warranty is provided by auto manufacturers on new vehicles. The coverage typically lasts three years or 36,000 miles and covers routine maintenance and repairs due to manufacturing defects, but not problems related to an accident or wear and tear.

Because manufacturer's warranties are limited, they can't be reinstated and are only provided on new cars. Even though it's new to you, a used car that's purchased outside of three years or 36,000 miles will typically not be eligible for a manufacturer's warranty.

Read more: Keep your auto expenses on track with spending buckets

Advantages of a manufacturer's warranty

Some of the perks of this type of warranty include:

  • Guaranteed original parts for repairs and technicians trained on your vehicle

  • Included at no cost with the purchase of a new car (or sometimes used car within the mileage limits, if applicable)

  • Includes basic repairs for mechanical, electrical and safety issues

Disadvantages of a manufacturer's warranty

Some downsides of a manufacturer’s warranty include:

  • Does not include repairs due to wear and tear

  • Cosmetic fixes like dents and paint scrapes are not covered

  • Repairs must be done at a dealership

What is a vehicle service contract?

VSCs, sometimes referred to as extended warranties, are more flexible than a manufacturer’s warranty and may allow you to choose how long you'd like to protect your vehicle. You can purchase one when you first buy your car or for a car you already own. It can often be purchased directly from the vehicle manufacturer or from a third-party provider.

Unknown expenses can be stressful, but protections from a manufacturer's warranty or VSC can help give you peace of mind.

A vehicle service contract is an additional expense — but the cost of coverage could be significantly less than the out-of-pocket charges you'd be responsible for later, should your car require a repair.

A vehicle service contract helps to protect a plethora of vehicle components and covers various types of repairs, including many high-tech electronic features, engine components and transmission components. It can often be purchased either directly from the vehicle manufacturer or from a third-party provider. A VSC typically covers both the cost of the parts and the labor. Some repairs are excluded from coverage depending on the VSC you purchase. The Ally Premier Protection suite of products covers a range of needs.With a more comprehensive VSC, coverage may also include perks like 24/7 roadside assistance, towing, trip interruption protection (reimbursement for a hotel room and food if car troubles require an overnight stay) or rental car reimbursement. These additional perks may be capped at a certain dollar amount— but they can help to alleviate the all-around hassle of a major vehicle issue.

Most often, neither a VSC nor manufacturer's warranty will cover cosmetic fixes (paint scrapes or dents) or routine maintenance, like oil changes, tire rotation or replacing windshield wipers.

Advantages of a vehicle service contract

Some of the benefits of a VSC usually include:

  • The ability to customize coverage and payment options

  • Repairs can be done at the dealership or by any certified technician

  • You can extend coverage after the manufacturer's warranty expires

  • Covers repairs due to wear and tear

  • It can be transferred to a new owner

Disadvantages of a vehicle service contract

Some downsides of VSCs include:

  • Not all repairs are covered

  • Charged in addition to cost of vehicle

  • Coverage may go unused

  • It doesn't include routine maintenance like oil changes and brake pad replacements

  • Not all plans include guaranteed original manufacturer parts or repairs

What is a manufacturer's warranty?

When it comes to coverage for repairs to your vehicle, you don't want to be left out in the cold. Take the time to understand your options and know exactly what's protected by your manufacturer's warranty or VSC to drive on with peace of mind.

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