Factory Warranty Overview: Coverage & Terms

If you’ve ever shopped for a car, you’ve heard the term factory warranty. While its exact definition can vary in different situations, it always refers to some type of coverage that is offered by the original brand or manufacturer. In this article, we’ll get into the nitty-gritty of what factory warranties really are. We’ll also talk about extended warranties offered by manufacturers and other providers.

The factory warranty is a new vehicle limited warranty that is covered through the car manufacturer and pays for car repairs within a specific time frame and/or mileage after the purchase of the car. Factory warranties most commonly apply to new cars and may include a powertrain warranty, maintenance, corrosion, and emissions coverage.

Factory warranties are different from other kinds of warranties because they are backed by the actual manufacturer. A big difference between a factory warranty and a manufacturer warranty is that you don’t have to pay for a standard factory warranty. It is automatically included with your new car, though some forms may require a deductible for certain repairs.

Today, practically all brands offer manufacturer’s warranties on new cars. What these warranties cover differs between makes and models, but the basics are similar. Since major car brands are competing in the same marketplace, shoppers expect that most factory warranties will offer similar core coverages, though the warranty details can differ between brands.

The term “manufacturer warranty” really includes more than one warranty. To understand what those are, we need to make a quick distinction between inclusionary and exclusionary warranties.

If a factory warranty is inclusionary, the contract will explicitly list every part that is included in the coverage. If a warranty is exclusionary, the contract lists the excluded parts instead. Exclusionary coverage typically covers more items, since there are thousands of parts that make up a car. However, the circumstances under which those parts are covered can vary.

Below are the main types of coverage that are typically included in a factory warranty.

Basic Limited Warranty

Also called bumper-to-bumper coverage, this warranty covers defects in materials or workmanship for many parts of the car. This is an exclusionary warranty that often excludes wear items like brakes and tires, as well as environmental damage like external rust or windshields. The bumper-to-bumper warranty does not cover routine maintenance like oil changes or damage from lack of such maintenance. Damage from misuse – like taking a Cadillac offroad – isn’t covered, and acts of God, like flooding from a natural disaster, are also not covered.

What’s confusing is that people often refer to the basic limited warranty as the factory warranty. If you hear someone say, “The factory warranty lasts for 5 years or 60,000 miles,” this is the warranty they are most likely talking about.

Powertrain Warranty

The second core coverage that is a part of almost all factory warranties is the powertrain warranty. The powertrain is what it sounds like: the train of power from the engine to the wheels. Powertrain warranties will usually cover the following:

• Engine, including internal parts and the engine block
• Transmission or transaxle
• Drivetrain (2WD, 4WD, AWD)

The powertrain warranty is usually inclusionary, so the contract will list the parts that are covered. Under this warranty, coverage is only for defective parts or installations that were made at the factory. A transmission repair because of misuse or neglect won’t be covered. Some powertrain warranties may require a deductible for repairs.

Other Parts Of The Factory Warranty

There are a few more coverage types that can come with a manufacturer warranty. These include:

• Corrosion coverage: This warranty covers the cost of replacing sheet metal that has rusted through. It usually requires a hole to have formed in the metal, and it may not cover surface rust. Corrosion coverage can vary between different parts of the car.
• Roadside assistance: Many brands today offer roadside assistance. These programs can be tied to the powertrain warranty period, or they can have a separate duration. Some may also require deductibles or only offer allowances toward roadside assistance.
• Emissions warranty: Federal law requires emissions parts to be covered for defects. Most emissions parts are required to be covered for 2 years or 24,000 miles, though some parts like the catalytic converter or emissions control unit are covered for 8 years or 100,000 miles. Manufacturers can follow the minimum guidelines or offer more coverage for these parts.
• Maintenance: Some auto brands cover regular maintenance for a period of time. This coverage is usually short in duration. For example, Toyota covers regular maintenance on new cars for 2 years or 25,000 miles.

These are all fairly standard components of a factory warranty. At this point, we also want to mention another special case. Original equipment manufacturers (OEMs) can offer warranties on specific parts. For example, Mopar offers a 2-year/unlimited-miles warranty on many of its parts for Chrysler, Dodge, Jeep, and Ram vehicles.

That means a transmission part replaced toward the end of the powertrain warranty could be covered or another two years. Since Mopar is the parts and service division of Chrysler, this can be called a factory warranty, though it’s not what most people mean when they use the term.

Looking at the bumper-to-bumper warranty, the shortest duration on the market is generally 3 years/36,000 miles (many brands including Subaru, Nissan, and Mazda offer this). The factory warranty period offered by most brands is 4 years/50,000 miles. Also, these are the brands’ general warranty periods, though there can be exceptions.

Let’s break that down a bit. These coverage periods have a specified number of years and miles. Your factory warranty expires when you meet either of those limits. If you work from home and rarely drive, you might have many miles left when you meet the time limit.

Alternatively, you could burn through a manufacturer warranty with extensive driving. In that case, your five-year warranty could expire after only three if you hit the mileage limit. Currently, there are no unlimited bumper-to-bumper factory warranties. That makes sense because things will start to break down at some point even if you follow the maintenance schedule.

Powertrain Warranty Duration

We see longer coverage options when looking at powertrain warranties. In all cases, powertrain warranties offer coverage periods that are either the same as or longer than the brand’s bumper-to-bumper warranty. That’s because the powertrain warranty covers far fewer parts, and these parts should last if the manufacturer built a solid vehicle.

While there aren’t any fully unlimited powertrain factory warranties on the market today, Hyundai, Mitsubishi, and Kia all offer 10 years/100,000 miles for new buyers. That is the best on the market right now, though Chrysler, Dodge, Jeep, and Ram have offered lifetime powertrain warranties in the past – between December of 2007 and 2009.

Another thing to note is that the warranties for 10 years or 100,000 miles just mentioned only apply to the original owner and are not transferable. Any subsequent buyers will get a 5 year/60,000 mile warranty retroactive from the original purchase date.

Comparison Of Popular Factory Warranties

If you’re in search of a new vehicle, the coverage associated with the factory warranty could be an important factor in your decision. Let’s examine the term lengths associated with a few popular manufacturers.

While this table isn’t a comparison of all warranties on the market, it’s a representative sample. Volkswagen has the best bumper-to-bumper warranty term length, while Hyundai, Mitsubishi, and Kia are all tied for the best powertrain warranty term length.

Toyota has the shortest factory warranty, a middle-of-the-road powertrain limited warranty, and the shortest roadside assistance period. On the other hand, Toyota is the most dependable mass-market brand according to a recent study by J.D. Power. Instead of offering a long factory warranty, Toyota uses its reputation for dependability as its main incentive.

Certified Pre-owned And Secondary Buyers

Many car brands offer certified pre-owned (CPO) options. These are cars that have been inspected and refurbished either by the manufacturer or another authority. They will typically come with some factory warranty coverage, as well. The factory warranty on a CPO car can continue the full coverage term, extend coverage, or start as a new contract with the second buyer.

For example, Hyundai’s CPO program lets a secondary buyer enjoy the full terms of both bumper-to-bumper and powertrain coverage. So, a two-year-old CPO Hyundai would have three years left on the bumper-to-bumper warranty and eight years left on the powertrain warranty. However, if the Hyundai is not CPO but just used, the next owner will only get 5 years or 60,000 miles on the powertrain warranty from the start date.

If you’re buying a used car that is not CPO, make sure you have the previous owner transfer any unexpired warranties to you. Most factory warranties are transferable, though the process isn’t automatic and may require a small fee. With a transferred warranty, the car is covered through the original warranty period in most cases, though you might not have perks like roadside assistance.

Whether it’s been a few years since you bought your car, or you just bought a used one, finding out if you still have factory warranty coverage is relatively easy. The first step is to locate your vehicle identification number (VIN).

Some automakers allow you to search for your car’s warranty information on a website. However, make sure you can log in or register with your VIN number and see information about your exact vehicle. Don’t just go by the generic warranty for that model year since cars can be bought and put in service up to a year ahead of time.

A better way is to call a dealership of your car’s make. Ask them to look up your warranty coverage through your VIN in their database. They will be able to see the in-service date and tell you if your coverage goes through January or December, for example. You can do this even if you purchased your car used from a private seller. All brands should have dealership locators online for you to use if you don’t already have a phone number to call.

Drawbacks Of A Manufacturer Warranty

The one constant between all manufacturer’s warranties today is that they expire. Most manufacturers allow you to extend your warranty, but that is not included in the regular price of the car. From the brand’s point of view, it wouldn’t make sense to offer an unlimited bumper-to-bumper warranty that was also free.

While a factory warranty can’t require you to go to the dealership for repairs, it’s a good idea to do so. That’s because the dealership can record each service in its database. This makes it easy to keep track of your service history. A lapse in maintenance can void a manufacturer’s warranty, while a good service history can help you sell your car later on.

Toward the end of your factory warranty, it’s also a good idea to take your car into the shop and see if anything needs to be fixed. That way you can make sure any covered part gets replaced if needed. When your factory warranty expires, whether it’s a bumper-to-bumper or powertrain warranty, you’ll have to cover the full cost of repairs unless you have extended protection in place.

An extended warranty, in strict terms, is a warranty offered by the manufacturer that expands the coverage period for your vehicle. However, the term is also used to describe vehicle service contracts, which are dealer and third-party warranties that offer a large range of coverage options.

Looking at a manufacturer-backed extended warranty, you usually have fewer choices for coverage. This is an add-on that many dealers offer at the time of purchase. The brand often requires you to have service performed at your dealership to keep the extended warranty valid. Also, some dealer extended warranties are only available to purchase when you buy your new car, or within a specific time frame.

Some extended warranties will start when your manufacturer warranty expires, and some will begin the day you purchase them and overlap with your current coverage. The main thing to do when presented with an extended warranty at the dealership is to sit down and read the whole contract. Make sure you understand the terms and limits before you add it to your new car.

Extended Coverage With A Third-Party Provider

Another option for extended protection for your vehicle is to go with a third-party warranty. This contract obligates a service organization to cover parts and labor for whatever repairs are outlined in the warranty. The nice thing about these warranties is that they often let you see any repair shop you’d like, and many pay the shop directly.

Benefits of Third-Party Warranties

The two main benefits of third-party extended warranties are that they have flexible terms and they preserve your monthly budget forecasting. Typically, you can find extended warranty options that apply even for older vehicles or vehicles with high mileage. This is not the case with factory warranties, which usually have to be purchased in a short time frame.

Thinking about your budget, extended warranties can help you avoid sudden costs and manage your monthly bills. According to a 2018 Federal Reserve report, four in ten Americans would have a hard time paying for an unexpected $400 expense with cash or savings. Instead of cash, many of those surveyed would have to turn to credit or even payday loans to cover the expense.

Cost of Vehicle Repairs

Cars are complex machines and expenses like the one mentioned above aren’t uncommon. For example, replacing an exhaust gas recirculation (EGR) valve on a Ford Focus can cost between $193 and $298, according to RepairPal. Replacing the window regulator in a Dodge Charger can run between $624 and $670. Also, replacing a timing belt and crankshaft position sensor on a Kia Optima can cost between $845 and $916.

If you’re able to plan for sudden bills for replacement parts like this, that’s great. However, many people aren’t. Young people and college students often drive older model vehicles that are at risk for expensive repairs. Additionally, they usually aren’t as established in their careers as older generations, and one repair can use up a whole paycheck.

What it really boils down to is if you want to make a reasonable payment for peace of mind, or if you’d rather budget for costly repairs on your own.

Since extended vehicle warranties aren’t limited to manufacturers, there are many options on the market. To narrow things down, we wanted to find out which companies offered the best service and value. Recently, we reviewed and compared the top third-party extended car warranty companies. A few companies rose to the top, including Endurance, CARCHEX, and CarShield.

Using Endurance After Your Factory Warranty Ends

Our choice for Best Coverage provider is Endurance. The provider offers direct-to-consumer extended warranties, unlike many third-party brokers in the extended warranty industry. This means warranty services all come directly from Endurance, and the company handles all claims directly. There’s no middleman or underwritten provider, and excellent customer service during the quote and claims processes is a focus of many of the positive Endurance warranty reviews.

Benefits to using Endurance include:

• Ability to choose any licensed repair shop
• Direct claims
• One free year of the Endurance Elite Benefits, which includes roadside assistance, rental car reimbursement, towing coverage, key fob replacement, and repair financing
• Zero-interest monthly payment plans
• Option to add an Endurance protection plan to cover systems such as your car’s air conditioning

Using CARCHEX After Your Factory Warranty Ends

In our research, CARCHEX was the company that stood out as the provider that is Best for Used Cars. CARCHEX has been in business for over 20 years now and maintains an A+ rating with the Better Business Bureau (BBB). It has been endorsed by major brands like Edmunds.com, Kelley Blue Book, and CARFAX and has received numerous recognitions, including:

• Thoroughly Reviewed 2017 Top Pick
• A five-star rating on TopConsumerReviews.org for six years in a row
• The BestReviewsHub.com Best Choice Award for four years in a row

CARCHEX always makes its customers’ satisfaction a top priority. It guarantees that calling in for a quote won’t put you on the line with a high-pressure salesperson. When you call, CARCHEX will put you in contact with someone who can help you make sense of the plans, which is helpful because,  like all legal documents, the contracts can be confusing.

Using CarShield After Your Factory Warranty Ends

CarShield also stood out in our research because it’s the Best Value third-party warranty provider on the market. CarShield offers a wide range of coverage options, including plans for high-tech and specialized vehicles like motorcycles and ATVs. Another nice thing about CarShield is that many of its plans are available on a month-to-month basis.

Some more advantages of CarShield are:

• Most plans include perks like 24/7 roadside assistance and rental car reimbursement.
• You either pay $0 or a small deductible of up to $100 at the repair shop.
• You can go to any United States or Canadian certified repair facility.
• CarShield pays the repair shop directly for covered services.
• The provider has over 15,000 Trustpilot reviews