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Used Car Warranty

published  First Published: 18/05/2011
Article written by: Nigel Brookson


A used car warranty is a promise from the warranty company or used car dealer to rectify faults; including parts and labour, that may occur during the warranty period on covered components. Before purchasing a used car warranty you should read the warranty terms and conditions relevant to your car; in particular the covered components and scheduled servicing requirements.

A used car warranty is like an insurance product for your used car designed to protect you from large out of pocket expenses, should your car suffer a mechanical failure. Some used car warranty products are classed as insurance products, and some are not so it is important for you to understand what your car is covered for when you buy it, and your options for purchasing warranty products; as some must be bought at the same time you buy the car.

It is important to note that one of the pitfalls in buying a used car privately is that there is no statutory warranty protection, as this only applies to a car purchased from a licensed car dealer.

Types of used car warranties
There are basically two types of used car warranty; a used car statutory warranty and a used car warranty that can be purchased through a used car dealer from a warranty provider or administrator such as National Warranty Company. You can read more about the National Warranty Company Website to be better informed about the warranty products on offer.

  1. Used car statutory warranty
    Applies to all cars bought from a dealer; not privately, and as it's a state government requirement that used car dealers must adhere to, the conditions vary from state to state. Generally speaking though the car is covered if it has traveled less than the specified Km's, and under the specified age as stipulated by each state government. The warranty period is usually 3 months or 5,000 Km's traveled after purchase, and covers items on a car relating to safety, reliability and roadworthiness.

  2. Used car warranty products

    The second type of used car warranty can be divided into 2 types; used car warranty products that are insurance products and those that are called 'discretionary'.

    • Used car warranty products that are insurance products
      There are a number of warranty companies throughout Australia that offer used car warranty products for purchase, so there is bound to be a product out there that will cover the used car you are buying. If you are buying the car from a used car dealer, chances are that they will have several options for you to consider. This type of used car warranty generally exceeds the list of covered components, and the time frame of a statutory warranty. Often you will have a choice of the covered period ranging from 1 to 5 years with 20,000Kms per year being typical. These used car warranty products issued by the holder of an AFS (Australian Financial Services) Licence follow the general insurance code of practice, and clearly spell out what is covered and what is not covered with the warranty, and there will be an insurance contract in place.
      • Extension of car manufacturer's warranty
        An extended manufacturers warranty is often an example of a used car warranty that is an insurance product. The name can be a little mis leading though as there are often components that are not covered under the original manufacturers warranty; which are considered part of normal wear and tear. There are also some extra benefits built in such as towing, car hire and accommodation. You must purchase this type of used car warranty while the car is under the original manufacturers warranty terms and conditions. In most cases; usually for a fee the warranty can be transferred to another owner should you decide to sell the car, which gives the vehicle extra value.
    • Discretionary used car warranty
      A discretionary risk warranty means that you are entitled to have your claim for assistance heard, but that the warranty provider is not obliged to pay all claims that come within the terms and conditions of the warranty. The warranty provider may decide to make a contribution to your claim, pay the whole claim or not pay anything towards your claim; at its sole discretion. A discretionary warranty does not offer the same protection that an insurance policy may give you, so it is important that you read the pds (product disclosure statement) for the different types of warranty before you make a decision.

What is not covered under a used car warranty
The list of components not covered under a used car warranty typically apply to both statutory and purchased used car warranty products and include:

  • Any items listed on the defect notice
  • Routine adjustments and services
  • Tune ups
  • Batteries
  • Tyres or tyre tubes, batteries, fitted airbags or radiator hoses (however tyres must be roadworthy at time of sale)
  • Lights (other than a warning light or a turn indicator light used as a hazard light)
  • Installed radio, tape recorder or CD player
  • Clocks, cigarette lighters and tools other than jacks and wheel braces
  • Defects arising from an accident or misuse of the vehicle (i.e. motor sport)
  • Decorative items not part of the mechanical performance of the car such as paint work, upholstery, trimmings etc.

You should read your warranty conditions and further check with the used car dealer and /or state government authority for which items are covered and which are not. If any faults are found, you might be able to pursue the dealer to repair them before you buy.

Generally speaking across Australia, the following types of vehicles do not come with a statutory warranty:

  • Motorcycles
  • Caravans
  • Restorable vehicles
  • Commercial vehicles
  • Vehicles being sold on consignment for a private seller
  • Vehicles purchased at an auction




Related Article: National Warranty Company


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Comments made on Used Car Warranty

Mike Weston
16 Jun 2011 14:06:45

I have had a used car warranty with National Warranty Company on two used cars. Neither cars suffered a mechanical failure but it was worth having the warranty for piece of mind; just incase of a mechanical breakdown.