Buying a car Counting the costs
Used-car warranties promise peace of mind, but are they really worth buying? Our investigation reveals the uncomfortable truths hidden in the small print.
What price peace of mind? That’s the question you may be asking if your car warranty has just expired. Should you take your chances with unexpected repair bills or invest in a used-car warranty?
A used car warranty could protect against unexpected repair costs
Sadly, it isn’t quite that simple. All of the warranties we looked at came with pages (and pages) of terms and conditions, all designed to limit the provider’s liability in the event of a claim. Paradoxically, if your car doesn’t break down at the right time and in the right way, you could find that with some warranties you won’t be entitled to anything.
The same goes for you as the driver. Fail to maintain your car as specified, or act upon a fault immediately, and you’ll foot the bill. Still got that peace of mind?
Are used car warranties good value?
Before we delve into subjective small print, let’s look at used car warranties in the most objective way possible: value for money.
We picked five medium hatchbacks: the BMW 1 Series, Ford Focus, Honda Civic, Skoda Octavia and Volkswagen Golf. For each car, we obtained quotes from six warranty companies, plus an extended warranty from the car manufacturer. All cars were assumed to be four years old and have covered 30,000 miles. And we opted for the best level of cover available – minus any extra-cost options.
We compared warranty prices with average annual repair costs from the Which? Car Survey 2013. These relate to examples of each car between four and seven years old and, like used car warranties, they don’t include scheduled servicing costs.
|The cost of car cover|
|Car||Average annual repair cost (4-7 years)||Highest annual warranty cost|
|BMW 1 Series 118d SE||£72||£665|
|Ford Focus 2.0 TDCi (136) Zetec||£138||£494|
|Honda Civic 2.2 i-CDTi SE||£53||£643|
|Skoda Octavia 2.0 TDI SE||£101||£549|
|Volkswagen Golf 2.0 TDI (140) SE||£54||£585|
Used warranties: counting the costs
Our research shows that used-car warranties can cost more than 10 times the average annual repair bill for a typical family car.
Before buying, check your car's average annual repair costs in the Which? Car Survey
If you own a four-year-old Honda Civic 2.2 i-CDTi, you’re likely to face an average repair cost of just £53 during the next year. Yet Warrantywise charges a wallet-wilting £642.65 to cover your car for the same period. Equally, a BMW 118d should cost around £72 in repairs, but a BMW Insured
Comprehensive warranty costs £664.67.
Apart from BMW’s policy, we were surprised at how little difference there is between the cost of third-party warranties and manufacturer-backed cover. But it's worth noting that the extended cover offered by Ford and Skoda, for example, is only available at the time of purchase when you buy a new car.
Talking in pounds and pence doesn’t tell the whole story though. Put simply, cheaper warranties may be cheaper for a reason. Take the two biggest players in this market: Warranty Direct and Warrantywise. The former’s policy is the cheaper of the two for all the cars we checked. However, unlike its main
rival, it does not cover additional damage to insured parts, and you may incur charges for improving the condition of the vehicle (see ‘consequential loss’ and ‘betterment’ in our A-Z of warranty terms and conditions).
Equally, Warranty Direct only pays garage labour costs up to £60 per hour – unless you agree otherwise – effectively excluding franchised dealers, while Warrantywise sets a limit of £200 per hour – meaning you could potentially get your car repaired at a franchised dealer. Such comparisons are interesting, but ultimately rather misleading, as most firms allow you to tailor a warranty to your personal needs.
You might pay more to include breakdown cover or exclude betterment. Or you could pay less, but have a bigger excess and lower claim limit. To use a well-worn cliché, always read the small print.