I would NEVER buy a used car warranty. Why? Because of the “escape” clauses in almost all of them. If your used car warranty contains one of the following clauses, beware!

  • EFFECTIVE DATE – Some used car warranties actually have a retroactive start date that goes back to when the car was originally put in service! Yes, as ridiculous as it sounds, you may buy a 5-year warranty on a used car that’s 3-years old … meaning that you theoretically only have 2-years of coverage left! Crazy but true!
  • EXCLUSIONS – Many used car warranties exclude normal wear and tear, owner abuse and pre-existing conditions! Think about that! ALMOST EVERY PROBLEM WITH A USED CARE WILL BE FROM ONE OF THOSE CAUSES!
  • DEDUCTIBLES – Many used car warranties have a “deductible” that you pay on each repair. That may not sound too bad until you run up against one problem that may have caused other problems. You could end up having to pay a deductible on each item to be repaired!
  • “VANISHING” COVERAGE – Many used car warranties state, that when the cumulative cost of repairs equals the market value of the car, warranty coverage terminates. In other words, as your car gets older, the value goes down significantly but repair costs accumulate. If you chart this out, you’ll see that you have diminishing protection in a sharp downward curve. So even though you may think you bought 5-year warranty, coverage could run out after a few repairs.