Why You Should Buy An Auto Warranty for Used Cars

car-repairA certified pre-owned car with a warranty provided by the manufacturer is the safest bet in the used-car world. But if you’re not buying a CPO car from a franchise dealer, can you still get a warranty? Yes, but buying one can be tricky.

The fact is, we all hope to find a company that will warranty a used car with 150,000 miles on it, sight unseen. But such companies don’t exist because there’s no way they can, as an example, buy everyone a new engine and transmission and still stay in business. So let’s look at the realistic options:

Some dealer groups and used-car chains offer their own CPO warranty programs, but coverage is usually minimal. CarMax, which has more than 100 locations across the country, certifies its own cars, and everything it sells has a “limited 30-day warranty,” which is actually 60 days in Connecticut and 90 in Massachusetts due to local laws. CarMax also offers “MaxCare,” an extended service plan that expands the coverage to most of the mechanicals except for wear-and-tear items, fluids, wheels, glass, and trim. Check the website, which details what is and isn’t covered. Prices vary according to the coverage and car.

There are also aftermarket warranties: In December 2009, we checked these out, and we didn’t like what we saw. A cluster of companies, most based in the St. Louis area, used high-pressure tactics to get signatures on warranty deals. One of the biggest, US Fidelis, previously known as National Auto Warranty Services, went bankrupt, and at least two of its executives went to prison.

To avoid a scam, look for a company that has been in business for a long time. EasyCare, for instance, has been around since 1984. It was formerly purchased and owned by Ford, but the company’s employees and equity partners bought it back in 2007. The company sells its contracts outright, or through more than 2000 dealers, and while it recommends that you use the selling dealer for service, any licensed repair facility is acceptable. There are four different levels of coverage, and price varies by the level, the vehicle, and its mileage. The costs, however, are often negotiable.


1. Never buy a warranty based strictly on a phone sales pitch.
2. Always have a contract in hand for review before you make a decision.
3. Don’t be taken in by “today only” price pitches.
4. Every contract has an “insurer” or “underwriter.” Find out who that is and check the company at ambest.com, the website for A.M. Best, a century-old insurance-rating service.
5. Make sure you know your deductible, and that it is only charged once per repair visit.
6. Never buy a warranty based on the performance of a product—a bottle of magic liquid, for example. That tactic is a way around certain consumer-protection laws.
7. Buy from a company that pays directly for repairs, not one that says it will reimburse you.
8. Extended warranties are often transferable. When you purchase a car with an extended warranty, paying a transfer fee (which usually varies by state) will transfer the remaining coverage.
9. Get the refund policy in writing. If you sell the car and don’t transfer the warranty to somebody else, you should be entitled to a refund for the unused portion of the warranty.