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A car warranty is a legally binding contractual agreement in which an automotive company agrees to pay for your car's repairs for a given period of time. By law, manufacturers are required to compensate owners for defective factory parts, but warranties typically have many more benefits than free exchanges on faulty parts.

Warranties often include beneficial components such as roadside assistance in case of a breakdown or emergency and car rentals in specific situations. In addition, if you choose to sell your car in the future, having a vehicle still under warranty can also increase the resale value.

Basic warranties cover automotive components which are not subject to typical driving wear and tear. In other words, your brakes, tires, or wiper blades are not included in most warranty agreements because of the frequency of use and the regularity with which changes are necessarily made to these parts in order to maintain the vehicle in operating condition.

More advanced, power-train warranties cover the non-variable, larger parts which include engines, transmissions, and axles.

Some third-party warranty companies provide extended agreements which are supervised by Federal and State government offices and backed by insurance companies. Regardless, most warranties have paragraphs of fine print included which outline the responsibilities of the car owner or leaser and obligate the individual to keep up with the vehicle's routine maintenance as far as oil changes, filter replacements, and other essential fluid checks.

In order to adequately prepare yourself for the financial burdens of owning or leasing a car, read the following tips to ensure that you have a general understanding of your car's individual warranty.

1. Read the fine print! Understanding the extent of your coverage is crucial in determining which services you will be required to pay for out of pocket, and which services will be covered by the manufacturer.

2. Consider your options. It may seem like the more insurance the better, but there is really no need to pay interest on extended warranty plans until your factory warranty has expired.

3. Keep records! Typically, defects that occur due to a lack of routine maintenance will be denied by warranty providers. Always save the receipts you are given for any routine procedures such as oil changes. When engine problems arise in older vehicles, or simply due to an internal malfunction as a result of assembly line manufacturing, dealers will often ask to see proof that you've undertaken the responsibilities outlined in the fine print.

Keep in mind that modifying the vehicle often voids most warranties, regardless of whether damage to the car ensues immediately after modifications. With the growing trend of customizing cars, more and more individuals are opting out of warranties as they search for unique vehicles which have been tailored to their needs.

Learn more about this author, Krystle Hernandez.
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