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Buying a car can make you life that little bit easier, providing you with an easy way to get from A to B. While there might be no guarantees the car won’t have faults, there are ways to safeguard your purchase. A manufacturer’s warranty acts as a guarantee of the vehicle’s quality for a certain period of time, usually between two or three years, but what about after that time? If you’re looking at financing your vehicle purchase, and want an extension on the manufacturer's warranty, then you might want to consider a car loan with an extended warranty.
When you purchase a new car, the manufacturer will often issue a warranty to guarantee that the car will not break down within an agreed-upon period of time. This is to ensure the quality of the car, and the warranty will make provisions for normal wear and tear.
Once the warranty expires, however, the manufacturer has no responsibility to ensure the quality of the car, despite the fact that you may have been under the impression of the vehicle lasting several years. A car loan with an extended warranty will extend this warranty for a certain amount of time, giving you an additional guarantee for the quality of the car.
Car loans with extended warranties can be offered on new and used vehicles, and work by extended the manufacturer’s guarantee by a certain amount of time, or for a certain number of miles. The typical time of extension is between 12 months and three years.
Extended warranties are referred to as ‘exclusion warranties’, meaning they cover everything on the vehicle excluding some items, such as brakes or tyres. Inclusion warranties are typically offered by dealerships and only cover the parts listed in the policy. Extended warranties differ between providers, so be sure to check the terms offered by your provider to see what is and isn’t covered.
When you buy a new or used vehicle, you may be entitled to free warranty from the seller. A statutory warranty is a type of ‘inclusion’ warranty, as such only covers the parts listed in the policy.
New cars have a minimum 12-month statutory warranty from the date of sale or 20,000km, whichever comes first. Used cars under 10 years old with less than 160,000km have a 3-month or 5,000km statutory warranty. Both of these warranties must be provided free of charge.
Extended warranties are usually unique offers, so it’s important to read the fine print. These policies may be offered as additional cover to your original warranty, meaning that not everything from your original warranty will be covered. Some typical exclusions for extended warranties include:
There are also various requirements which must be met for the warranty to be applicable. Some of these include regular services for the car and proper care and maintenance. There’s also likely to be conditions relating to excess payments and payout limits.
Before you sign up to a car loan that offers an extended warranty, it’s important to check the fine print. You should avoid taking on one of these loans just for the extended warranty, as this should be seen as an incentive to the loan, rather than a reason to take the loan on. You need to consider the value of the loan in relation to the value of the extended warranty, so avoid applying for the loan before you think about this.
Extended warranties are offered as ‘add-ons’ for a reason, and so you shouldn’t feel pressured into signing up to one if you don’t want it. There are laws against salespeople pressuring car buyers into taking out extended warranties, because they can be costly. Also, many extended warranties are restrictive in what they cover.
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