Making sense of warranties and vehicle service contracts

Nothing beats that new car feeling. And your car warranty helps ensure that your vehicle remains in top shape for many miles to come. Whether you have a manufacturer’s warranty on a brand-new car or a vehicle service contract (VSC) on a car that’s new to you, they both cover a variety of problems that vehicles may encounter. However, having a clear understanding of what your warranty or VSC entails will help you take full advantage.

Unsure about what your warranty or VSC covers? Our guide will help put you on the road to understanding your car’s warranty or VSC and making the most of it.

If you’ve purchased a new vehicle, your car is automatically covered by the manufacturer’s warranty. Though, what is actually covered can depend on the type of warranty.

A factory warranty is exclusively offered by auto manufacturers and usually expires after a set time period, commonly defined as three years or 36,000 miles — whichever comes first. Although, some auto manufacturers extend their coverage of a new vehicle up to five or six years. A manufacturer’s warranty only applies to new or some certified used cars, so if you buy a used car that is not certified or falls outside the mileage or time constraints set by the warranty, it usually will not be covered.

As the name implies, a bumper-to-bumper warranty covers almost every part of your car between the front and back bumper — from the transmission to the air conditioning system. If any of these parts break down, they are replaced or repaired at no charge under a bumper-to-bumper warranty.

This type of warranty is included in the price of the car and offers exclusionary coverage, meaning the contract will list only the parts that are not covered by the warranty. For example, “wear and tear” items (tired, break pads, and wiper blades) are usually not covered, and even with a bumper-to-bumper warranty you can expect to still pay out-of-pocket for cosmetic fixes for dings and dents or other normal wear and tear of the body of the vehicle.  However, some do cover routine maintenance, such as oil changes.

A powertrain warranty only covers the vehicle’s propulsion system, including the engine, transmission, and differentials as well as parts that bring power to the wheels, such as the driveshaft and constant velocity wheels. It does not cover interior components, such as the car’s audio system, air-conditioning and suspension system. And while a bumper-to-bumper warranty is exclusionary, a powertrain contract has stated-component coverage, meaning it will list every part that is covered as part of the warranty.

A vehicle service contract (VSC) is similar to an extended warranty and can be purchased when you buy a used or new vehicle or for a car you already own, as long as it’s an eligible make and model. This type of coverage is more flexible in terms of how long it lasts. In addition to auto manufacturers, a vehicle service contract can also be issued by an authorized third party, including, but not limited to dealerships, finance companies and repair shops

While you can purchase a VSC after you purchase your vehicle, the price may increase the older your vehicle gets, so it’s advantageous to purchase it when you purchase the vehicle. Additionally, VSCs will vary depending on your own personal needs and selections, but there are some common features and considerations to keep in mind:

Similar to a manufacturer’s warranty, a VSC does not usually cover routine maintenance. Also similar to a manufacturer’s warranty, a VSC will usually provide coverage for repairs due to mechanical and electrical breakdown. Additionally, unlike manufacturer’s warranties, VSCs usually cover components that fail due to wear and tear.

Some additional benefits that often come with a vehicle service contract include roadside assistance, towing, and reimbursement for expenses associated with trip interruption if your car breaks down (such as hotel and food). These conveniences come in handy when you find yourself in a tough spot. Sometimes, some of these situations will be covered by a manufacturer’s warranty, too, but not always.

If you’re purchasing a brand-new vehicle, a vehicle service contract can provide coverage beyond the term covered by the manufacturer’s warranty as well as offer additional benefits not covered by it. If you’re purchasing a used vehicle, a vehicle service contract is a smart way to help safeguard against unexpected expenses.

Your car’s warranty and VSCs are both resources for you as a vehicle owner, so don’t let them go to waste. You should take some time to read the documents provided for whatever type of coverage you have so that you know what it fully entails. By understanding your coverage, you can fully utilize all that it offers, which can save you money and stress throughout the lifespan of your vehicle.