Understanding Car Warranties in India: Guide for Used Cars

Buying a car, whether new or used, comes with its set of things to take into account. Vehicle warranties are one of the most essential. While new cars always come with a manufacturer’s warranty, the case is not the same with used cars. When buying from a local dealer, or directly from a seller, you may not be entitled to a used car warranty. However, for your own peace of mind, choosing a car that is accompanied by a warranty is a good idea, as it can help you avoid hefty maintenance costs, or huge repair bills, in the future. Additionally, you can opt for third-party warranty providers in the case your used car is not covered under an existing warranty.

What is a Car Warranty

A car warranty is a guarantee from the seller, dealer, manufacturer, or a third-party provider, which covers the cost of certain repairs or replacements for a specific timeframe or distance travelled. New cars in India often come with a 3 to 5 year, or 1,00,000 kilometre warranty, whichever comes first. Used cars, however, are not always covered by a warranty plan. While new car warranty plans are covered in the purchase price of the vehicle, used car warranties are more complex, as they are affected by the age of the car, and the kilometres it has covered in its lifetime, among other factors.

Why are Car Warranties Essential?

In the case of new cars, a warranty will protect the buyer from manufacturing defects, which are uncommon, but nonetheless essential, to safeguard the buyer. In case any critical part of the car fails, the warranty entitles the buyer to free of cost repairs or replacement, not adding to the cost of ownership. 

However, the necessity of a warranty in the case of used cars is much more severe. When buying a used car from a dealer or direct seller, the condition of the car, or the life of the parts, cannot be determined easily. Used cars can often come from fraudulent sellers or scammers, who may sometimes swap out original parts for cheaper counterfeits, or be deceptive about the actual mileage of the car by rolling back the odometer. 

Some sellers are also known to produce fake history and servicing reports in order to get a higher resale value for the car. To avoid falling victim to such scams, and paying higher upfront costs, or hefty repairs bills, it is a good idea to buy a used car that comes with a warranty. Additionally, you can also opt for a pre-delivery inspection service to get insights into the car’s actual condition and value.

Difference Between New Car and Used Car Warranties

New car warranties are typically more comprehensive, covering almost all components of a vehicle. Any component found faulty, whether it is a small component, like the windshield wiper motor, to something more crucial, such as the transmission, are covered in a new car warranty.

However, used car warranties are not as comprehensive, and will usually only cover critical components of the car, such as the engine, transmission, or other mechanical parts. Used car warranties are usually based on the car’s age, mileage, type of sale, such as from a private seller or dealership, etc, and in most cases will not cover parts that experience regular wear-and-tear.

Types of Car Warranties

There are varying kinds of warranties available today, based on whether the car in question is new or used. While new car warranties are mostly comprehensive, as mentioned above, there may be variations in used car warranties.

Manufacturer’s Warranty

A manufacturer warranty is usually provided when buying new cars. In some cases, where manufacturers have their own second hand car dealerships, or refurbished used cars for sale, this kind of warranty may be found for a used car, however this is uncommon. Manufacturer warranties cover almost all components of a car, whether it be mechanical, electronic, or other small components, for replacement or repairs in case they are faulty. Depending on the manufacturer, such warranties usually cover the vehicle for up to 5 years, or 1,00,000 kms, whichever comes first.

Extended Warranty

Extended warranty options may come with both new and used cars, and essentially increase the time period, or kilometre range, of warranty coverage. However, these policies are not as direct as manufacturer policies, and may not offer the same coverage. It is essential to read the offerings of extended warranties, both in the case of new and used cars, to be aware of the fine print. Although extended warranties may come with limited coverage, they are still a great choice, as they offer peace of mind, and can still mitigate high costs associated with repairs in the long run. Whether opting for a new or used car, getting an extended warranty, if on offer, might seem like an added expense in the short run, but will prevent your car from burning holes in your pockets in the long run.

Certified Pre-Owned (CPO) Warranty

Dealerships or manufacturers that provide certified used cars are mostly accompanied by CPO warranties. While not as comprehensive as a manufacturer warranty, CPOs are a great way to ensure the used car you buy does not cause you financial distress in the future. While most specialised dealership CPO warranty will cover a limited period of time or kilometres, some dealers, such as CARS24 provide the option of an extended warranty on top of the CPO, at an added price. This extended CPO goes a long way in ensuring your car stays in great running shape for longer, and your pockets aren’t drained by unforeseen repair expenses. CPO warranties often cover repairs related to the engine, transmission, and other critical components.

Third-Party Warranty

A third party warranty is not provided by a manufacturer or dealership. Third party warranties are a great option for people looking to acquire a used car that is not accompanied by a manufacturer or dealer warranty. However, there have been many reported frauds conducted by such providers, and it is important to conduct thorough research about the vendor’s reputation and claim settlement, and proceed with caution when opting for a third party warranty provider. 

Key Terms to Understand in a Used Car Warranty

There are plenty of things regarding various warranties that you should be aware of to make an informed choice. Being in the know of what each of these mean, and how they affect you in the long run, can help you pick the right used car. Let’s go over the terms and what they mean:

Coverage Duration

Coverage duration defines the period of time, or the number of kilometres, for which the warranty will be valid. Any repairs or replacements will be borne by the warranty provider for this time frame or kilometre range. Once the coverage duration of the warranty has lapsed, you will have to bear the burden of repairs. However, some warranty providers often provide the option of extending the warranty at a cost before the warranty is void. If the cost is reasonable for the new coverage, it would be a good idea to choose the extended warranty package.

Inclusions

While new car warranties will often bear the repair costs for any manufacturing flaw, used car warranties often are not that comprehensive. That’s why it’s good to understand what kind of repairs your warranty covers, and this is usually mentioned in the inclusions. A typical used car warranty will cover crucial parts and components, such as the engine and transmission. However, some warranties may cover additional services, such as roadside assistance, towing services, etc.

Exclusions

Just as it is important to understand what your warranty will include, it’s good to know what it will not include, known as the exclusions. Parts that are prone to wear and tear, such as tyres, batteries, brakes, clutches, etc. are often in the exclusions list. Knowing about exclusions beforehand can help in ensuring you’re prepared for some repair costs later on.

Deductibles

Some warranties include a deductible, which is an amount you must bear from your own pocket. This amount is deducted when you make a claim, and can be charged per visit, or per repair, depending on your policy terms. Understanding your warranty deductibles can help you make better decisions on how you process your claims in the future.

Claim Limits

Warranties often have a hard limit on how much claim can be made across their lifetime. This amount is usually set per repair, or as a total claimable amount, and it is essential to understand these limits to avoid exceeding them. 

Factors to Consider When Reviewing a Used Car Warranty

When procuring a vehicle which is accompanied by a warranty, you should be mindful of the following pointers. Some warranties may or may not cover all these points, so choosing the best used car with a warranty may come down to where you are willing to make a compromise. 

Vehicle Age and Mileage

Older cars with higher mileage may not be eligible for certain types of warranties. Cars that are newer, or have clocked fewer kilometres, tend to have better warranties associated with them. Cars that have high odometer readings may have lower coverage, or lesser components covered, so be sure to keep that in mind.

Transferability

If you plan on re-selling the used car you’re acquiring in the future, it would be a good idea to see if its warranty is transferrable. A transferrable warranty can help you retain the car’s value, and get a better deal if you decide to sell it in the future.

Repair Location Requirements

Warranties are often limited to where they can be claimed, such as authorized service centers, or tie-ups with local shops. It’s a good idea to explore where you can claim the warranty, so that you don’t  incur extra costs involved with a vehicle tow. Even if towing and transportation is covered under your warranty, having a garage to do the repairs close by can have the vehicle back in running condition sooner, saving you time.

Service and maintenance Requirements

Some warranties require you to take proper care of the vehicle, through scheduled repairs and maintenance. If the warranty provider has specified these in the cover policy, it is essential to carry out and log these maintenance jobs to ensure you are eligible for a warranty claim. These maintenance activities may include things like regular oil changes, brake pad replacement, or tyre rotations. 

Tips for Choosing the Right Warranty Provider

While most warranties will come from the dealership, and the only option you can get is an extended warranty, you can explore options when choosing a third-party provider. The following points are essential in ensuring you select a good warranty provider:

Research the Warranty Provider’s Reputation

Check for reviews and ratings of the warranty provider to ensure reliability and quality of customer service. You can also explore online forums where people write about their personal experiences. You can connect with existing customers to understand how easy or difficult the claim process was, and did they actually cover everything that was included in the policy.

Examine the Policy Thoroughly for Hidden Fees

Some warranty providers try to hide away costs in the fine prints. This can include additional deductibles, or additional terms for claims. Make sure to evaluate the policy thoroughly before making a decision. 

Tips for Buyers: Getting the Most out of your Warranty

While a good warranty coverage can bring you peace of mind, following a few good practices can help you get the best out of your policy.

Know Your Coverage Details

Explore your coverage policy thoroughly, and learn exactly what it covers, and what it doesn’t. If your policy has a limited claim, you might want to avoid getting small items repaired in the policy and paying for them yourselves. This can help you use the policy for larger repairs, and also help you avoid surprises when filing a claim.

Keep Your Vehicle in Great Shape

While having a warranty is good, regular maintenance should not be neglected. A car that has a well documented service record will also help with the claim process, as the warranty provider will know you are doing your bit to keep the car healthy.

Document all Repair Work Performed on the Car

Keep a detailed log of all the service and maintenance activities performed on the car, whether through a warranty claim, or on your personal expense. This will help ensure you don’t face any issues while seeking a warranty claim.

Pros and Cons of Extended Warranties on Used Cars

Extended warranties have their set of advantages, and disadvantages, when considered in the short and long term.

Pros:
 

• Peace of Mind: Extended warranties provide coverage for unexpected repairs, giving you peace of mind.
• Lower Repair Costs: With a warranty, major repair costs are covered, potentially saving you a lot of money.
• Better Resale Value: A transferable extended warranty can make your used car more attractive to buyers.

Cons:
 

• Additional Costs: Extended warranties come with an upfront cost, and depending on the car, they may not always be cost-effective.
• Limited Coverage: Some extended warranties have exclusions, so make sure you understand what’s covered.
• Fine Print Restrictions: Always read the fine print to avoid surprises when making claims.

Red Flags to Watch Out For in Used Car Warranties

While choosing a warranty provider, you should be wary of bad practices in order to avoid getting scammed.

Overly Broad Exclusions:  Warranties that exclude too many parts or repairs could leave you with limited protection.

Unreasonable Maintenance Requirements: If the warranty requires excessively frequent maintenance or repairs that are costly, it may not be worth it.

Complex Claims Processes: A complicated or convoluted claims process can be frustrating. Look for warranties with a clear and simple process for making claims.

Conclusion

Whether you’re buying a new or used car, understanding the ins and outs of warranties is crucial to making an informed decision. By choosing the right type of warranty, understanding key terms, and evaluating the best warranty providers, you can ensure that your car remains protected, giving you peace of mind on the road.