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Car Warranties are not as important as you may think! Here’s why.

Car Warranties are not as important as you may think! Here’s why.

1 March 2021 Concept Car

For many drivers, warranties seem like a safe place. Whatever issue you may have with your car, it’s always covered.

In reality, warranties are not quite as great as some make them out to be.

Certainly, regular three to four year warranties serve their purpose. Especially when a manufacturer introduces a new model, they protect drivers from the unknown: In lieu of reliability data, you can trust that you won’t have to pay up for the producer’s negligence.

Warranties also protect you – at least slightly – against lemons, of which there still are a few, despite significantly improved quality controls.

Warranties are also great when buying used. Imagine this: All repairs on a cheap car are covered for an entire year after buying it! Clearly, such a policy contributes to your peace of mind.

If you can’t ask an independent mechanic to check the car’s condition for you, these benefits add security to the transaction.

It’s a good thing, then, that manufacturers seem to be constantly making their warranties longer.

For quite a long time, a tree year warranty was the norm. That, in itself, was a significant improvement over times when warranties were so short as to offer hardly any additional protection.

Today, four years are gradually turning into the new standard and quite a few makes have even racked that up to five.

  • Renault offers a four year bumper to bumper warranty.
  • Most major Japanese brands have upped the ante and will cover repair costs for five years.
  • KIA offers a seven year warranty, plus a ten year warranty on powertrain repairs. Right now, that puts it in a pretty privileged position.
  • However, you can expect other manufacturers to eventually follow suite.

Warranties have turned into a sales argument and brands are competing with other brands with it. For consumers, the development seems like a great deal – but is it really?

Why warranties usually make cars more expensive

Think about it for a minute. Why would a car maker increase her warranty to seven years?

On the plus side, a seven year warranty is obviously a badge of pride: If you can cover repairs for this long, it means your product must be good.

The thing is: No one should need further proof of that. Reviews and reliability data clearly show that cars are really that good. Despite claims to the contrary, they’ve all become insanely reliable with very few exceptions. Essentially, you have very little to be afraid of these days when buying a mainstream car in the UK. Whether or not you have a warranty is unlikely to make a huge difference: Major repairs usually occur still later on in the process.

Don’t for a second, however, think that manufacturers are not making you pay for the luxury of a long-term warranty. In the past, many drivers opted for a voluntary extended warranty. Today, these are simply already part of the package. In a way, you’re paying for these warranties whether you want it or not. This has made cars more expensive rather than cheaper to drive.

This is especially troublesome since extended warranties are not a very great deal.

As Dave Ramsey puts it:

“Extended warranties are a really horrible set of mathematics, and the reason people sell them is because they make a bundle on them in commissions. On average, you’ll pay about $1,500 on an extended warranty, and the average repair is $180. I don’t recommend buying extended warranties, ever. If you can’t afford a $200 repair on a car, then you can’t afford the car.”

Ramsey admittedly omitted one important aspect of warranties. They’re not meant to just be economical. They’re meant to protect you against the unlikely event of a serious malfunction.

However: Even a bumper to bumper car warranty won’t cover everything. Inspect the fine print with a looking glass to see the extent of your policy. Many warranties simply exclude seemingly obvious parts of the car.

All in all, a warranty is a nice bonus. But what matters is the overall reliability of a model, not how many years you can have it serviced for free. Creating a fund for emergency repairs, as Ramsey suggests, makes a lot more sense in this regard.

1 March 2021 Concept Car