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Extended Warranty: Aftermarket Car Warranty

Aparna Iyer
Extended warranty, that can be a manufacturer-backed warranty or an aftermarket car warranty, may be necessary due to the following reasons.
A car warranty, that is provided at the time of purchase of a new car, is akin to a guarantee by the manufacturer to provide remedial measures like repairs and replacement free of cost, for a certain period of time, provided the repairs are not on account of negligence on the part of the owner.
Vehicles come with a bumper-to-bumper factory warranty, emissions warranty, tire warranty, and body rust and corrosion warranty. Sometimes, emergency roadside assistance may also be a part of manufacturer's warranty.
Once the warranty expires, the buyer is no longer entitled to these benefits. Since car maintenance can be expensive, the need for used car warranty arises.

Types of Extended Warranty for Used Cars

Extended used car warranty, that can be purchased from a dealer, covers the cost of certain repairs that may be required after a car's factory warranty expires. Extended warranties can be broadly classified into two categories: manufacturer's warranty and aftermarket car warranty.

Manufacturer-backed Extended Warranty

This warranty is an extension of the factory warranty. A car covered under a manufacturer-backed warranty entitles the owner to get his car repaired for free, provided certain conditions are satisfied. The biggest advantage of this type of warranty is the facility to get the car repaired by any dealer.
One can choose a bumper-to-bumper warranty or a specialized warranty that covers transmission, engine, and other parts which may cost a great deal of money to repair or replace.

Aftermarket Car Warranty

Aftermarket car warranty is provided by an independent company. Aftermarket car warranties are typically more expensive as compared to manufacturer-backed extended warranties. In fact, the extended warranty may be restrictive and may not allow the buyer to get the car repaired by any dealer.
Many times, the owner of the car is expected to pay upfront for the repairs with the assurance of reimbursement at a later date. However, the repairs may not be approved. Consequently, the owner may have to bear the cost of repairs, despite purchasing an aftermarket car warranty.
Generally, dealers offer aftermarket car warranties that have a very high mark up cost. Hence, a manufacturer warranty is a better option.

Factors to be Considered while Purchasing Extend Warranty on Cars


High mileage on the car would make it difficult to obtain an extended warranty. In fact, most companies refuse to provide warranty on cars that have more than 100,000 miles.


The age of the car is an important factor that determines the cost of the extended warranty. Since automotive repairs increase with age, the cost of purchasing warranty also escalates with the passage of time. Hence, it may not be sensible to obtain a warranty on a very old car.

Selling the Car

In case a person has decided to sell the car in a few years time, it may not be prudent to opt for an extended car warranty. This is because most extended car warranties expire on selling the car. Sometimes, extended car warranties may be transferable to the new owner for a fee.
These are some of the factors that may influence the owner's decision to purchase an extended service contract. Although extended car warranties may provide peace of mind to the owner, it may be unnecessary in case of reliable cars. Again, in case of old cars that have been driven around quite a bit, extended warranty may not be cost-effective.