Should you buy a used car warranty?
By Martin Pratt
Is a used car warranty essential or is it cheaper to pay for repairs upfront? Our guide explains how used car warranties work and whether they are worth the expense.
Whether you’ve reached the end of the warranty supplied by your manufacturer or you’ve just invested in a used car there is a wealth of third- party warranties that profess to give you financial peace -of- mind by taking care of the garage bill if you encounter any issues with your car.
We took a closer look at several third- party warranties to see if the cost of cover they provide is any less than the repair charges you could face at your local garage. What we discovered were terms, conditions and caveats aplenty all designed to limit when the provider has to pay out.
The reams of small print can be baffling and contradictory: if a warning light prompts a trip to the garage and a fault is discovered your warranty may not cover it. But if you ignore the warning and let the part break this can invalidate your claim – a catch 22 and one of several confusing examples.
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The cost of car cover
Using data from our car survey we compared the cost of car cover, and extended manufacturers’ warranties with the average yearly repair bill for a family car between four and seven years old. We discovered that the even the cheapest warranty was over £100 pounds more expensive than the average repair cost.
At the other end of the scale some used car warranties cost more than 10 times the average repair bill. A look at the small print shows why some warranties cost up to £643 while others can charge as little as £180 – cheaper warranties are cheaper for a reason.
At the top end, Warrantywise is one of the only companies that covers consequential damage to other parts of your car and the £200 per hour labour limit means your car could be repaired at a franchise dealer. The cheaper cover on the other hand puts strict limits on labour costs unless you use an approved garage.
Most warranties can be tinkered with, but improving the package will increase the price and once you’ve fine-tuned the cover to what you want you may find yourself with a plan that can’t compete with the low average repair costs.
Conversely, don’t be lured into a cheap deal that weasels out of coughing up your repair fees by including a list of terms and conditions as long as your arm.
Should you buy a used car warranty?
It’s difficult to justify the cost of even the cheapest used car warranty when you consider the endless exclusions, pricey premiums and low average expense of yearly repairs.
A car in the garage is already a stressful time and arguing over what constitutes wear and tear with your warranty provider to try and get your garage costs reimbursed is an extra headache you could do without.
We’d recommend setting money aside each year to cover any repairs, but if you’re intent on getting a warranty consider a paying for it when you buy your car. These manufacturer extended warranties tend to have fewer exclusions than their third-party rivals.
A-Z of terms and conditions
Wading through the seemingly endless terms and conditions is an exercise in patience even before you try to get your head around the vague terms that are open for interpretation.
Unfortunately, reading your policy is a necessary evil if you want to know exactly what cover you’re paying for. This A-Z guide will help you decipher the jargon.
- Age limit - warranties have a pre-set age limit for the car. If your car is approaching it then a warranty may not be worth it.
- Betterment – if a repair or new part makes your car more valuable you may be expected to foot some of the bill.
- Claim limit – the maximum amount of money you can get per claim – ideally up to the value of the car, but not always.
- Consequential loss – where one car part failing damages another; an added expense not all policies cover.
- Excess – the percentage of each warranty claim you will have to pay. Some policies increase the excess as your mileage goes up.
- Garage choice – some providers have ‘approved’ garages and using an alternative could leave you paying some of the labour rate.
- Labour rate – how much of a garage’s hourly rate the providers are willing to pay. Most don’t stretch to the amount franchise dealers charge, leaving you to pay the difference.
- Mileage – check to see if there’s an annual or mileage limit. If your car’s above it the warranty won’t pay for repairs.
- Pre-existing faults – any issues your car had before the warranty started may not be covered.
- Regulated provider – make sure your provider is regulated by the Financial Conduct Authority and you get a 14-day cooling-off period if you change your mind.
- Servicing schedule – you must keep your car serviced to the manufacturer’s schedule and keep any paperwork. Failure to do so can invalidate the warranty, as can fitting non-standard parts.
- Time limits – some warranties only allow you to claim after a certain period (e.g. 90 days). Any issues arising during that time would not be covered.
- Warning lights – If you ignore warning lights on your car’s dashboard the provider may refuse to pay out.
- Wear and tear – car parts that fail due to wear and tear are usually not covered. Even when they are covered, 'consumables’ like tyres and brake pads won’t be included.