"Lifetime Warranty"

You might have seen this advertisement before: Free Lifetime Powertrain Warranty!

We know this "All Too Well." The coverages always have some "Blank Space." Will the warranty get you "Out of the Woods?" Okay, that's enough Taylor Swift references, let me just shake it off and get into it.

Personally, I like lifetime warranties; but, I wouldn't send a client hours away to a more expensive dealership to get one. They can pay out, and there can be value in them! However, you need to know the rules, how to maintain the warranty, and what the limits are. Just like everything else in the car buying world: go into it cautious and skeptical.

What Dealers Don't Always Tell You

• Coverage limits: Often only major engine and/or transmission components are covered (i.e. the powertrain). Some cover more than others.
• Maintenance requirements: Skip a single oil change or are a few miles late for that oil change, and you could lose coverage.
• Non-transferable: Sell or trade your vehicle, and most warranties vanish.
• Deductibles & fees: Some require a deductible to be paid before the warranty will pay out.

Coverage limits:

To show how much these can vary, here are two real examples from actual contracts. (fun fact: both of these warranties are from the same dealership, just two years apart)

This is why reading and understanding the contacts are very important. Both of those limits of liability are very different from each other, and both are very different from what the salesperson tells you when they say "you're set for life with this warranty." This is why Your Car Haggler will review contacts for our clients, so they know exactly what to expect and how to keep the coverage active.

The first warranty coverage is limited by the amount you paid for the car. If you purchased a $50,000 car, the max payout is $50,000. There is no limit on the amount per component. Only limited by the value of your car at the time immediately prior to the malfunction: its current value.

Under the first warranty, if your $50,000 car is worth $25,000 in year 5, you can get a new engine covered (estimated cost of $9,000). Year 6, you could get another engine; year 7, another engine. As long as the cost of the repair does not exceed the current value of your car, and the lifetime payout does not exceed $50,000 (the price of your car initially) ...you are covered.

The same example as above, the second warranty will reach it's limit of liability (the lifetime max payout) at the first $9,000 engine.

Note: there could be some cars where the second warranty is better, depending on the MSRP and when the warranty is needed (year 5 or year 15).

With a lifetime warranty, car dealerships say this is "free;" but, we all know nothing is free , it is already factored into the price. And, unfortunately, whatever warranty the dealership offers, that's it... we don't get to choose one lifetime powertrain warranty over another.

Maintenance requirements:

These are always pretty basic, follow your factory required maintenance and have records of it! Most lifetime powertrain warranties (and all warranties really) only require that you follow the factory required maintenance; but, you need to follow it follow it, down to the day and/or mile.

Factory required maintenance is pretty simple: oil changes, tire rotations, filter changes, etc. But, you need to have evidence of it. Going to a dealership that reports to carfax? That's perfect! It will be on your carfax report.

Changing your own oil or filters? I joke that you'd need a video of you doing it, with a copy of the receipt, and that days newspaper in frame the entire time. But, it is not really a joke.

If your oil change is due every 5,000 miles or 6 months (whichever comes first), don't be late by a mile or a day, the warranty company can deny your claim for violating their terms.