- 24/7 roadside assistance
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You’ll often hear the term “extended car warranty” or “car warranty” used interchangeably with “vehicle service contract.” Despite the fact they both protect you from expensive mechanical breakdowns, warranties and vehicle service contracts are actually two different things.
Find out what makes warranties and vehicle service contracts different, as well as the benefits you can get from a third-party service contract provider like CARCHEX, which offers five levels of coverage for any vehicle.
To get a free, customized quote in just a few minutes, call 866-261-3457 or fill out the online form.
First, let’s define both warranties and vehicle service contracts. According to the Department of Justice, a warranty is a statement from the seller or manufacturer that:
In other words, you can consider a factory warranty to be a true warranty. It promises a car that is free from defects in materials, and it is included in the price of the new vehicle.
Then what is a vehicle service contract?
A vehicle service contract, also called an “extended warranty,” is an optional protection plan you can purchase at an extra cost to cover the repairs on specified vehicle parts. This contract is usually only valid when the factory warranty expires. The repairs are not entirely free, since you must pay for the contract itself and a small deductible at the time of repairs. Parts and labor costs are normally covered.
|Warranty||Vehicle Service Contract (VSC)|
|Cost||Factory warranties (or implied warranties) are included in the new vehicle’s financing.||The price of a VSC depends on the car’s age and model. You pay for the contract and a deductible that’s charged per visit or repair.|
|Repair Facilities||A factory warranty usually requires vehicle owners to have their car repaired at a dealership or approved service center for that manufacturer.||Third-party VSC providers allow you to choose between a number of approved repair facilities nationwide.|
|Coverage||Receive comprehensive bumper-to-bumper coverage and powertrain (engine, transmission, drive axle) coverage for a set number of years or miles. Coverage includes the use of original equipment manufacturer (OEM) parts.||VSCs also provide powertrain and bumper-to-bumper coverage, as well as many coverage plans in between.|
|Eligibility||A factory warranty can only be used for new vehicles or used vehicles still within the terms (years/mileage) of the warranty.||VSCs can usually be purchased for any vehicle at any time for both new cars and pre-owned vehicles.|
But wait. Don’t dealerships also offer extended warranties, or vehicle service contracts, once the factory warranty expires? What’s the difference between a dealership extended warranty and a third-party extended warranty?
1. Dealership extended warranties, like factory warranties, normally require you to visit the dealership for repairs, rather than a repair facility of your choice. Third-party providers give you the flexibility to choose within a larger network of available mechanics. CARCHEX partners with a network of over 30,000 repair facilities, from major chains to local mechanics.
2. Dealership extended warranties also come at an extra price, but this price is set by the dealership, and it can’t be negotiated against competing contracts. At CARCHEX, we use our buying power to shop around and get the most competitive and affordable price for its customers.
3. Third-party providers use independent administrators that are responsible for the payment of each repair (and are usually backed by an insurance company to ensure cash reserves for payments). The provider itself is the marketer for those administrators, whereas the dealership itself is the obliger or party responsible for repair payment. CARCHEX uses trusted administrators and markets reliable, insurance-backed its plans.
Third-party extended warranties, much like a factory or dealership warranty, cover cars at different levels, including the powertrain and all other major vehicle systems. Contract terms require that repairs are not the result of:
Some manufacturers offer separate warranties for tires or car batteries, but generally, items that are normally replaced through routine maintenance are not covered. Instead, coverage is based on mechanical breakdown.
While some dealerships may require a vehicle inspection prior to providing coverage, CARCHEX does not require a vehicle inspection in order to purchase a vehicle service contract.
CARCHEX offers five coverage plans with various levels of protection, ranging from five to 10-year terms:
When shopping for a vehicle service contract, you don’t have to choose the first offer you come across. Are there too many exclusions? Are some parts excluded unless they were damaged by another covered part? Read the fine print and ask questions.
Here’s what we recommend looking for an extended warranty:
The average vehicle service contract can cost $1,000 to $1,500 if purchased from the dealer or manufacturer. However, with third-party extended warranty, you’ll find more affordable market prices based on a wide variety of coverage packages.
In addition, CARCHEX offers easy, monthly payment plans that spread out the cost of the contract, so you don’t have to pay hundreds of dollars upfront. With low deductibles and a No-Haggle, Low-Price, Everyday Guarantee™, you’re getting a fair price for coverage.
When it comes down to it, you want an extended warranty that costs less than the potential repairs. Imagine you drive a 2015 Chevy Impala. A catalytic converter replacement (with labor) can cost upwards of $1,300, a full transmission replacement can cost $1,800 to $3,400.
If your service contract costs several thousand dollars, and your deductible is $250, then it may be smart to simply save your money. If your powertrain warranty is only $700 with a $50 deductible, then you already saved hundreds of dollars on an unexpected, mechanical breakdown. CARCHEX gives you the opportunity to save money overall.
CARCHEX was founded in 1999 and has been accredited with the Better Business Bureau since 2009. The BBB has since given CARCHEX an A+ rating.
As you can see in the chart below, CARCHEX has fewer complaints than competitors, such as Endurance or AutoAssure, as well as higher satisfaction ratings.
Customers want prompt and straightforward service. That’s why CARCHEX has a 99.9% Customer Satisfaction Rate, as well as awards and industry accolades, including:
Getting repairs on your car is easy. Simply take your car to the repair facility and contact the Claims Department to receive approval. If approved, your payment will be taken care of (with the exception of the deductible), and you can pick up your vehicle once it is fixed.
If you’re looking for extended vehicle protection, get a free quote from CARCHEX by calling 866-261-3457 or filling out the online form. Our representations can answer all your questions and customize your cost to your vehicle and needs. It’s fast, easy and available for any car, whether new, used or high-mileage.
Vehicle Protection Association: http://www.vpainfo.org/The-Difference-Between-a-Manufacturer-92s-Warranty-and-a-Vehicle-Service-Contract
Los Angeles County: https://dcba.lacounty.gov/portfolio/service-contracts-and-extended-warranties/
Minnesota Attorney General: https://www.ag.state.mn.us/Consumer/Publications/MotorVehicleServiceContracts.asp
Transmission Repair Cost Guide: https://www.transmissionrepaircostguide.com/
CARCHEX is trusted by these industry leaders.
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