Money Advice Service

On this page you’ll find key facts about the manufacturer’s warranty you get with a new car. We also explain used car warranties, with a checklist to help you avoid the expense and disappointment of a used car warranty not meeting your needs.

Car warranties explained

Buyer beware!

Warranties sold for used cars often have so many conditions it’s difficult to work out exactly what they include. This could lead to a nasty surprise if you needed to make a claim.

A report by Which? magazine in March 2014 said: “Pricey premiums and endless exclusions mean we can’t recommend any used-car warranties.

All cost more than average annual repair bills for the cars we checked and, far from offering peace of mind, the odds are stacked against owners who try to claim.”

Warranties for new cars

All new cars come with a manufacturers’ warranty.

These can last between three to seven years and should cover most faults except wear and tear of parts such as tyres and brake pads.

For the warranty to be valid, you usually have to follow some rules. For example, ensuring the car is serviced on time and at a reputable dealer.

When the manufacturer’s warranty expires, you might wish to take out a warranty yourself.

It’s worth bearing in mind four out of ten cars between four and nine years old break down each year, with an average repair cost of £376.19 (source – survey by Warranty Direct July 2013).

Companies providing car warranties include the AA, the RAC, and Warrantywise.

Warranties for used cars

When buying a used car you’ll need to decide whether you want to take the chance of unexpected repair bills or pay to take out a used car warranty.

There are two main levels of cover to choose from – simple ‘mechanical breakdown’ and ‘comprehensive’.

The general rule of thumb is the cheaper the warranty, the less cover it provides.

However, warranties sold by car dealers tend to be more expensive than those you can buy online, but don’t necessarily give more cover.

Although most new cars come with a three-year warranty, some have a five-year warranty and Kia even offers a seven-year, 100,000-mile warranty.

So you could consider looking for a used car with some years to go on its manufacturer’s warranty.

Car warranty checklist

Before taking out a car warranty make sure you read the small print.

Here are the basic points you need to check:

  • Is there a limit per claim?
  • Does the warranty have an excess?
  • Is the servicing schedule acceptable?
  • Is there a standard 14-day cooling off period?
  • Does it state a limit for either your annual or total mileage?
  • Can you only make a claim after a set period, such as a month?
  • Does the policy cover the full cost of repair – not just parts or labour?
  • Is the warranty company registered with the ABI (Association of British Insurers)?
  • Is there a maximum amount paid for labour costs, leaving you to foot the bill for the extra?
  • What garages are on the list used for servicing and repair, and what are their locations and costs?
  • Remember if your car is approaching the maximum age allowed, it might not be worth buying a warranty.

Your next step

You must by law be insured to drive your new or used car on the road.

Make sure you know the facts about Car insurance and the different levels of cover available.

This article is provided by the Money Advice Service.