If you are visiting this site, chances are you have asked yourself: what is an extended auto warranty? Don’t worry, it isn’t a silly question. Despite the name, an extended auto warranty is not a warranty in the traditional sense. The true name for an extended auto warranty is a Vehicle Service Contract (VSC) but the two terms are often used interchangeably. Though they are administered by third-party providers, extended warranties serve a similar purpose to traditional factory warranties: to save the buyer money in case they experience a vehicle breakdown.
Extended Auto Warranty vs Factory Auto Warranty
Though they are very similar in name, an extended warranty and a factory warranty have a few key differences that set them apart. The first and most basic difference is the type of company that covers the vehicle. Factory warranties are guarantees by automotive manufacturers, like Ford and Toyota, that state their cars will be repaired or replaced in case of a breakdown. VSC’s or “extended auto warranties”, on the other hand, are contracts that are administered by third-party companies that work solely to cover automotive vehicles. There are cases in which you can also buy extended coverage from manufacturers and car dealers, but in most of these cases, the policies are still administered by another party. In such cases, it is best to buy from the third-party directly, cutting out the middleman and saving money.
What vehicles are covered?
The two warranties are fundamentally different in the types of cars they cover. Where factory warranties cover new vehicles, extended warranties protect them after the factory warranty expires. This usually happens after the car has been driven for a certain number of miles or years. More information on this can be found in the section below. It is also important to state that extended warranties can be bought on new cars as an additional cost. One benefit of buying an extended warranty on a new car as opposed to buying it a few years later, is the increased chance of eligibility for plans at a lower cost.
What are the differences in coverage?
Generally, car companies set year and mileage cutoffs for different stages in their factory warranty. These are broken down into bumper-to-bumper coverage and powertrain coverage. As of 2017, the following car manufacturers have bumper-to-bumper coverage up to 3 years or 36,000 miles, as well as powertrain coverage up to 5 years or 60,000 miles.
Keep in mind that a driver only needs to reach the year OR mileage cutoff for the respective coverage and not both. There are some manufacturers that have slightly different cutoffs so it is best to do your own research, especially if the car you own is a luxury brand. Comparatively, Vehicle Service Contracts sold by third-party companies have a wider variety of coverage options. These range from basic powertrain plans to more comprehensive exclusionary coverage plans that are comparable to factory warranties.
Eligibility is based on make, model, age, mileage, and other factors. A 2014 Ford Focus with 45,000 miles will be eligible for a wider selection of plans than a 2012 BMW x5 with 80,000 miles. It will also cost less to cover the Ford over the BMW. Where most of the top selling manufacturers have standardized mileage and year restrictions for their warranty, there is much more variety in choice when it comes to service providers, pricing, and levels of coverage for extended warranties.
Smart buyers save more money
Having such a wide variety of choices is a good thing, but it can also be overwhelming for buyers. Our goal is to make the process simpler and quicker by providing you with the information you need. Now that you know what an extended auto warranty is, you are able to make a more informed decision when protecting your car, saving money in the process.