5 basic things you need to check before taking out a car warranty

By Chad Lückhoff

These are the five things that you should consider before taking out an aftermarket or extended warranty on your next car purchase.

You may be offered an aftermarket or extended warranty when you purchase a vehicle, be it used or new, but there are a few things you need to consider before readily accepting the terms and conditions and agreeing to an additional monthly deduction. While it may be able to help you out of a bind, it's not always necessary.

Here's our list fo the five things you need to consider before proceeding.

Know what is covered and what isn't.

It's important to thoroughly read through the terms and conditions of the warranty to see what is covered and what isn't. Many aftermarket warranties will have different tiers and schedules that will cover different things. As is often the case, they will stipulate to what value they will cover certain areas or items ie: the cooling system to the value of R4 000.

Knowing what the warranty covers and what conditions need to be met are essential. It's advisable not to sign on the dotted line before having a thorough read through, so don't be pressured into signing, especially when you're sat down in the F&I manager's office after signing for a used vehicle.

Who is backing it?

Always check who is the backing company when taking out an aftermarket or extended warranty. Is it being backed by the manufacturer, the dealership or a third party? It goes without saying that warranties backed by manufacturers are preferred but a comprehensive warranty from a  dealership or third party doesn't mean that it's not worth the paper it's written on. Ensure that the dealership or third party is a reputable company with a long-standing history in the motor industry. Avoid any warranty that comes backed by an unknown or unheard of institution or a dealership that is relatively new and not well established. The company or dealership could fold and leave you with no coverage.

What is the car's history with repairs?

You are buying a car with a service history right? Well, you had better. We would recommend that the only time you buy a car that is missing a service history is if you know the brand and model very well, if you are aware of the history of the car or if it's a classic car of sorts – but then you wouldn't be looking at a warranty either, would you?

Some models are more prone to breakages than others (we're looking at you 1990's Land Rover) and a full service history will place your mind at ease, knowing that the know issues have been addressed. You want to make sure that a regular service schedule has been kept and that it hasn't missed the important services, such as timing belt services. The more documentation, the better.

Also, make sure that there are no timeframe irregularities in the service book. If a car was only going for its annual service in the early years but then suddenly had two services a year, either the car started giving problems or the driving routine changed. This is a warning sign and will take careful consideration.

Are you getting the best deal?

You're not going to be able to call around and compare quotes while seated in the dealership, so it's best that you do a little homework before you sign the agreement. Most dealerships will have a preferred warranty supplier as there is a business agreement where a commission is paid when the dealership signs up a new client. This will have the dealership pushing you to take the one they offer, but you may very well be able to get a better price, improved coverage or just a more comprehensive deal elsewhere.

Go into the dealership armed with your quotes and don't be forced into signing.

It's worth noting that for any car older than 10-years that is being financed, a warranty may be required by the financial institution before approval will be given on the finance.

Do you really need this warranty?

Aside from the point above (with regards to vehicles older than 10-years on finance), ask yourself if you really do need this warranty. The money that you'll be spending each month could very well be placed aside for times when things do need replacing. While this takes a lot of self-discipline, having a savings account for the maintenance of your car is a great idea. Warranties will cover breakages but will not cover wear and tear items, like tyres, brakes or clutches. This is where your savings can cover the costs of these consumables. It can cover the cost of a dealership service as well.

Yes, a warranty can ensure that you are not left with any surprises down the line, but if the car you are looking at buying is clean and has been well maintained, you shouldn't have any major issues. This will also largely depend on the mileage that you do and the roads that you drive. A car that works hard may benefit from a warranty whereas a car that merely does the school and work run can run for years without issues.