Used Car Warranty: How Does It Work? (June 2023)

This article will explain what a used car warranty is, what it covers, and how to get one. Our experts will also recommend several of the best extended car warranty companies worth considering.

All new cars come with a factory warranty that pays for unexpected auto repairs if your vehicle breaks down. When you purchase a used vehicle, it's essential to check if it still falls under the original warranty and what the warranty covers. And if the car doesn't, you’ll want to consider whether purchasing a used vehicle warranty plan from a dealership or third-party company is worth the extra cost.

A "used car warranty" is essentially a car warranty that covers a used vehicle. This can mean multiple things, including a factory warranty on a used car, a certified pre-owned warranty, or a used car extended warranty (more on the differences below). In most cases, the term "used car warranty" refers to an extended warranty that drivers can purchase to cover the repairs of major vehicle components on their used vehicle, such as the engine or transmission.

The only used cars that automatically come with a warranty are certified pre-owned (CPO) vehicles. In addition, there are instances in which a manufacturer's warranty is still on a used car that you buy. There are also some cases where a used car may be covered under an extended warranty purchased by a previous owner that can be transferred.

Buying a car "as is" means that the car you are buying does not have a warranty. Until you purchase a warranty for your used car, all costs associated with your vehicle will not be covered by the dealership or warranty company and will come out of your pocket. When buying a used car, be sure to find out whether the vehicle comes with or without a warranty. The best thing to do is to ask the dealer questions, check the buyer's guide, and find out as much information as possible about your used car warranty.

Along with asking questions and checking the buyer's guide, you can find out if your used car is still under factory warranty by checking your vehicle identification number (VIN) and calling your dealership. From there, your dealership can give you all the details on any warranty information you need.

There are only six states in the country (New Jersey, New York, New Mexico, Minnesota, Massachusetts, and Connecticut) that have used car lemon laws. These laws provide a required used car warranty that is based on the condition of the car. The dealer will have to repair any problems from the vehicle for a certain amount of time. If the dealer keeps trying to fix problems and nothing is improving, the dealer is required to give you a new vehicle or refund you.

If you live in a state where there aren't any used car lemon laws, there are still federal laws that will help you. The Uniform Commercial Code, The Federal Trade Commission's Used Car Rule, and the Magnuson-Moss Warranty Act are three nation-wide laws that can help protect you when buying a used car.

If you are covered by a used car warranty and your vehicle breaks down, you can take it to a licensed repair shop for diagnosis. Your plan provider or administrator will pay the repair shop directly minus your deductible, if repairs are covered under warranty.

A factory warranty is a guarantee that the dealership will help replace or repair any parts of your vehicle that are defective after purchase. However, a factory warranty does not cover things like oil changes and regular maintenance. A factory warranty can still apply to a used car if it hasn't expired or you purchase a certified pre-owned warranty from the manufacturer. Also, some manufacturers offer extended warranties you can purchase for vehicles that meet certain requirements.

A CPO car is a vehicle that is guaranteed to be in good working order and will have a manufacturer's warranty. CPO's are different from other used vehicles because the dealer will only sell CPO vehicles that are their brand. For instance, Ford will only sell a Ford CPO and Chevy will only sell a Chevy CPO.

An extended used car warranty prolongs your factory warranty to protect your vehicle against covered mechanical breakdowns for a period that lasts longer than the new car limited warranty. While true manufacturer-backed used car warranties can be purchased from the automaker that built your vehicle in many cases or come with the purchase of a CPO used car, most used car extended warranties are vehicle service contracts.

You can purchase a used car warranty from a third-party provider or the dealership where you bought your used car.

Purchasing coverage from a provider like Endurance, CARCHEX, or CarShield gives you more freedom and flexibility than buying from a dealership. Most third-party warranty providers allow you to purchase coverage for your vehicle at almost any time or mileage. You’re also not limited when it comes to repairs since most providers allow you to take your vehicle to any licensed repair facility.

You can also purchase extended warranty coverage from the manufacturer, usually through a brand dealership. Most dealerships will offer you a powertrain warranty at minimum, which covers your vehicle's engine, transmission, and drive axle. A manufacturer may also provide extended coverage through a separate administrator, which may give you more coverage choices and term lengths.

The first thing that needs to be done when transferring a warranty on a used car is to contact either the dealership or warranty company. You need to let them know about the sale of the car or the transfer of the warranty within the first 30 days of owning the vehicle.

The buyer of the car will need to give contact information and documentation, such as receipts, to the dealership or warranty company. Lastly, try to get all the information about the type of warranty that you are transferring. You will want to know the coverage, price, and length of the warranty that is being transferred.

Before you purchase an extended car warranty, it's important to decide what type of coverage you want. Almost all extended warranty providers and dealerships exclude routine maintenance like oil changes, tire rotations, and windshield wipers.

Several levels of warranty coverage are available to drivers, with each covering different vehicle components and repairs. Below are some of the most common types of used car warranties:

Used car warranty costs vary depending on the provider. While these prices provide an estimate of how much the best coverage could cost, your used car warranty quotes will still vary. Extended car warranty costs depend heavily on factors such as:

Our 2022 extended car warranty survey that polled 1,000 respondents found that about half paid between $1,615 and $3,208 for an extended car warranty. Some providers require you to pay the costs upfront, while others allow you to pay monthly.

Here's a closer look at respondents reported paying for an extended car warranty in our survey:

To give you a better idea of used car warranty cost, we collected cost information from the five best used car warranty companies. The following chart shows the quotes we received for powertrain plans on a Subaru Outback with 88,000 miles. All plans include a $100 deductible.

Used Car Warranty Company

Term Length

Financing

Total Cost

1. Endurance

5 years/51,000 miles

$121 for 30 months

$3,615

2. CARCHEX

6 years/60,000 miles

$193 for 18 months

$3,470

3. CarShield

Unlimited years/unlimited miles

$140 monthly

Varies

4. Protect My Car

4 years/unlimited miles

$116 for 36 months

with a $116 down payment

$4,176

5. autopom!

4 years/48,000 miles

$180 for 36 months

with one month down payment

$6,480

Some used cars may come with a limited warranty attached. However, you will more than likely need to purchase coverage from your dealership or a third-party company if you want continued coverage.

Here are a few things to note about used car warranties:

You shouldn't purchase an extended warranty if the original warranty is still active on your used car. Most factory warranties come with a 3 years/36,000 miles bumper-to-bumper warranty and a 5 years/60,000 miles powertrain warranty.

If you purchase your used car from a dealership, you can find out its warranty status by reading the Buyers Guide, which they are required to display. If the car is being sold "as is," it means the car is no longer covered under warranty.

Whether your vehicle comes with a used car warranty or you decide to purchase coverage, it's essential to read through the contract and any fine print. Each warranty should specifically outline who is legally responsible for repairs and what vehicle components are excluded if your car has a mechanical breakdown.

You’ll also want to spend time researching the contract administrator or third-party warranty company before you purchase coverage. Our team recommends that you check the company's Better Business Bureau (BBB) and Trustpilot profiles for a look at the overall customer experience. Trustpilot provides a rating based strictly on customer reviews, while the BBB will give its own score on top of a customer review score.

Used car warranties can be pricier than vehicle protection plans for new cars. This is because third-party warranty companies weigh age and mileage as factors when providing extended car warranty quotes, which tend to be higher in used cars than new ones.

Before you sign with a company, you should reach out to several used car warranty companies for quotes. Comparing estimates and coverage plans will ensure that you find the best deal for your budget.

As vehicles age, the likelihood of mechanical issues increases. Used car warranty plans are popular for older vehicles to protect drivers from the costs of unexpected and expensive car repairs.

Consider the following when determining whether to purchase a used car warranty:

Many third-party extended warranty providers offer coverage if your factory warranty has already ended. The best used car warranty companies are Endurance, ForeverCar, Olive, CarShield, and CARCHEX based on our analysis of over 50 providers.

Used Car Warranty

Company

Our Score

(Out of 5.0)

Coverage Levels

Highest

Contract Term

1. Endurance

4.6

6

200,000 miles

2. ForeverCar

4.5

4

Unlimited miles

3. Olive

4.5

3

185,000 miles

4. CarShield

4.5

6

300,000 miles

5. CARCHEX

4.4

5

250,000 miles

With each of the best used car warranty companies we reviewed, you can purchase a vehicle service contract any time during your vehicle's life at a reasonable rate. We’ve provided further information on the best used car warranties below:

#1 Endurance: Best Coverage

Endurance is a direct warranty provider, meaning it handles all claims itself without any middleman involved. The company offers a Select Premier plan specifically designed for drivers with up to 150,000 miles on their car. It provides protection for all vital vehicle components in addition to select air conditioning and electrical components. Plans are available in all states except California.

Keep reading: Endurance warranty reviews

#2 ForeverCar: Best Value

We name ForeverCar as the company with the Best Value. With four coverage levels that can give you protection for unlimited miles, you can choose the plan that works best for your car even if it has high mileage. Additionally, the Platinum Plus plan covers some wear and tear parts which isn't common with extended warranties.

#3 Olive: Best Online Process

Olive offers three levels of warranty coverage ranging from basic coverage to bumper-to-bumper coverage. These plans are available for vehicles up to 185,000. Compared to most other extended warranty companies, Olive is different because it doesn't have a waiting period before your coverage starts.

#4 CarShield: Best Monthly Payments

CarShield plans are some of the longest-lasting in the industry. We found that certain plans will provide coverage up to 300,000 miles. The Platinum plan is the best option for used cars with higher mileage, as 15 major systems are covered including the air conditioning, steering, fuel pump, suspension, brakes, and engine.

Keep reading: CarShield reviews

#5 CARCHEX: Best for Used Cars

CARCHEX is one of the most reputable extended car warranty providers in the industry. The company is one of the best options for older vehicles since it can cover cars up to 250,000 miles. The Gold Plan was designed for used vehicles with over 60,000 miles and covers the powertrain systems (engine and transmission) and items like the brakes, suspension, and steering.

Keep reading: CARCHEX reviews

When you buy a used car, make sure to compare all of your warranty options to find the best deal for your situation. Read through each vehicle service contract carefully to understand what type of warranty coverage is offered and what vehicle repairs are excluded.

A used car warranty can save you money by paying for unexpected auto repairs. Along with recommendations for who is the most and least likely to benefit from a used car warranty, it's important to take into account cost and coverage information before considering purchasing a plan from a dealer or aftermarket provider.

Below are some common frequently asked questions about used auto warranties:

Most used cars from a dealership come with a limited 30-day factory warranty that protects a vehicle's most important components, such as the engine, cooling system, and electrical systems. After that, drivers can choose to purchase used car warranty coverage through their dealer or a third-party warranty provider.

Purchasing a used car warranty from a dealership can be worth it, though it's still worth considering all of your options. A used car warranty from a third-party provider will provide you with more flexibility around terms and repair shop availability. However, if your vehicle ever needs repairs, there's no telling if the repair shop will use genuine parts like they do at dealerships.

According to our research, the best car warranty companies for used cars are Endurance, ForeverCar, Olive, CarShield, and CARCHEX. All of these companies offer multiple levels of coverage and have excellent customer service. However, the provider and plan that are best for you will depend on your vehicle, coverage needs, and budget.

Yes, you can purchase an extended warranty on a used car. You can purchase coverage directly from a dealership when you buy your used vehicle or from a third-party warranty provider at any time.

The typical new car factory limited warranty lasts 3 years/36,000 miles, meaning the warranty covers repairs related to factory defects for the first three years after purchase or the first 36,000 miles that you drive it, whichever comes first. You can purchase an extended warranty for a used car, which can last for up to 7 years/200,000 miles with some providers.

You should consider purchasing a warranty if you want comprehensive coverage after your used car's manufacturer warranty has expired or you’re looking for peace of mind. Having a used car warranty can save you hundreds of dollars in repair bills if your vehicle breaks down.

Expect to pay anywhere from $1,500 to $4,000 for an extended auto warranty depending on your vehicle, coverage level, and contract term. Older vehicles are generally more expensive to cover, since they may have more routine maintenance issues.

The top used car warranty companies offer multiple coverage options. In general, vehicle service contracts cover parts and labor costs should your vehicle experience a mechanical breakdown. Powertrain coverage is the most basic option, while a bumper-to-bumper warranty offers the most extensive auto protection.

Most used car warranty plans will allow you to take your automotive to any dealership as long as it's certified by the ASE. In addition to dealerships, you can also take your car to any ASE-Certified® repair shops or facilities of your choice.

While new cars come with a manufacturer warranty, this isn't the case with used car warranties, as state regulations vary for used vehicle coverage. If you’re considering purchasing a used vehicle, it's important to check if it comes with a warranty and what it may cover. If you are considering purchasing an extended warranty for a used car separately, examine the cost and coverage thoroughly to see if it's worth it.

Our review process aims to deliver consistent and unbiased assessments of extended auto warranty providers.

Our review process aims to deliver consistent and unbiased assessments of extended auto warranty providers. While there are multiple qualities that make a warranty company successful, our review team focuses on those we believe are the most important for consumers:

*Data accurate at time of publication.