by Christian Odadzin

Created on: November 08, 2008   Last Updated: November 13, 2008

It seems like there are a zillion different warranties available for your new or used vehicle. Manufacturer's warranty? Certified Used Vehicle Warranty? Extended Service Contract? What are your options? What makes sense for you? A helpful guide to warranties and extended service contracts for the every day buyer!

The best, most comprehensive coverage that you can have is the original manufacturer's (factory) warranty that comes with every new vehicle sold. They tend to vary in length and term, but offer complete coverage of your vehicle during that period. (Commonly referred to as a "bumper to bumper" warranty since everything on your vehicle is covered.) For the duration of the factory warranty you won't spend a penny out of pocket for any needed repairs, a long as you have maintained your vehicle properly. I highly recommend Edmunds.com as a resource to educate yourself on the details of the manufacturer's warranty of any vehicle that you are considering.

The next best thing would be the manufacturer's Certified Used Vehicle Warranty, which is backed by the factory and offers nearly the same coverage for your vehicle, but for a longer term. Used cars that are factory certified have to pass a mandatory inspection and generally cost several thousand more than a comparable vehicle that is not certified, and which won't come with the same type of coverage.

Extended Service Contracts, or "extended warranties" are your last, and worst option. These contracts are available on almost all used cars bought from dealerships, and can range widely in both pricing and the amount of coverage available for your vehicle. These contracts can cover as little as the "power-train", which is generally ONLY the internally lubricated parts of the engine and transmission. They can also cover nearly as much as the original manufacturer's warranty, but the pricing on these plans can be prohibitive.

There are numerous things to keep in mind when considering an extended service contract:

-How much is the deductible per repair? A $200 deductible per repair visit can wash away any "savings" you may get from the warranty quickly.

-Does the contract pay 100% of needed parts and labor (after the deductible). Some contracts may be set up to pay only 80%, leaving you to pay the difference.

-Is there a maximum dollar amount that the contract will pay? Some contracts will only pay out to a set dollar amount and leave you to pay anything over their maximum out of pocket.

-Is the company reputable? Unfortunately, many service contract providers are not. Check the contract provider with the Better Business Bureau (where they warranty company is headquartered) to see what kind of rating they maintain.

Always read the fine print. Know what coverage you're paying for. Know what kind of service you can expect if you ever need to use the warranty. Take your time, do your research and you will be able to confidently make the decision that is best for you!

Learn more about this author, Christian Odadzin.
Click here to send this author comments or questions.