Service Agreement Vs Warranty


An extended warranty may be offered by a car manufacturer for its certified used cars (CPO), which it has inspected and restored to an appropriate level of service. Certified used vehicles are generally less than five years old and less than 60,000 miles old. They can be previously leased vehicles or trade-ins and are usually in good condition at first. If they charge a premium for a “certified” used car, manufacturers will receive an extended warranty, but it will not cost the buyer anything. More than likely, these locations are independent companies that want to sell you extended warranties – specifically service contracts – that often sell for hundreds or thousands of dollars. If you answer a call from an advanced warranty business-pitching, you`ll probably hear high-pressure sales tactics as well as requests for personal financial information and a down payment before receiving details of the service contract. And if you buy a service contract, you may find that the company behind it will not be in business long enough to fulfill its obligations. Compare service contracts with the manufacturer`s warranty. New cars have a manufacturer`s warranty that typically offers coverage for at least three years or 36,000 miles, depending on what happens first. A service contract is likely to bring benefits only after the manufacturer`s warranty has expired. Check the documents to make sure this applies before you accept the purchase of a service contract. The warranty for new cars is actually a financial guarantee that the vehicle is ready for use for a certain period of time.

Depending on the manufacturer, the warranty conditions for new cars may be different. Be sure to read the fine print to see exactly what is covered and for how long. The new car warranty is included in the delivery of your new car, but once the new car warranty period passes, the owner is responsible for automatic diagnosis and repairs that can be costly. A service contract is in fact a legal clause, in the daily language, an extended guarantee is a clause for this type of agreement. This extended warranty does not come with the product and is usually not made by the manufacturer, but by the distributor who, in most cases, outsource actual repairs and replacements.