Car ownership doesn’t come cheap.

Whether one owns a new or used vehicle, there’s no escaping the thousands of dollars that go into maintenance fees and unexpected repairs every year. Fortunately, there’s one thing that can make or break this deal: warranties.

Smart car owners invest in valid car warranties for protection. Not only will a warranty save the owner money in the face of a breakdown, but it can also increase the car’s resale value.

Cars Protection Plus looks at how having a valid warranty positively impacts a vehicle’s resale value, along with why it’s such an attractive feature for potential buyers.

Why Car Warranty Coverage Matters

A car warranty is a guarantee that the manufacturer carries the responsibility of repairing and replacing defective parts of the vehicle over a certain period of time. It’s a way of protecting the buyer from manufacturing defects and faulty components that their newly-purchased car may have.

Depending on the manufacturer’s policy, a car’s warranty usually lasts 2 to 5 years.

Types of Warranties

• Factory: This is the most basic type wherein the manufacturer repairs or replaces faulty components within a certain number of years or distance covered, whichever comes first.
• Extended: Once the factory warranty expires, car owners have the option to purchase an extension. This coverage will be more or less the same as the factory warranty, depending on the dealership.
• Bumper-to-Bumper: Also referred to as exclusionary warranty, this type is usually availed on top of the factory or extended warranties. It provides protection for vehicle components that are not included in standard coverage.
• Road-Side-Assistance:  This coverage is for instances of vehicle breakdown on the road. It provides roadside assistance or towing services at little to no cost.
• Powertrain: The powertrain warranty covers a car’s powertrain components like the engine, transmission, driver shafts, axles, gaskets, and seals, among other specific components. Some dealerships may already have this included in their bumper-to-bumper warranties, while others will offer it separately.

While these dealership warranties offer good coverage for a vehicle, they can be quite expensive. As an alternative, a lot of car owners turn to a reputable third-party vehicle service contract provider to purchase their warranties.

Third-party car warranty plans offer almost identical coverage, but usually at a cheaper price. New or used cars, regardless of their factory warranty status, can qualify. More often than not, these providers add their own attractive perks to sweeten the deal.

How Warranties Increase a Car’s Resale Value

To put it simply, a car with an active warranty attracts more buyers and sells quicker than those without. It serves as a seal of quality that buyers recognize immediately, a huge perk that they know could be worth thousands in the long run.

Having a valid warranty communicates to potential buyers that the vehicle is a low-risk investment. It tells them that:

• The vehicle is well-maintained, as warranty providers require owners to follow a strict maintenance routine in order to keep the warranty active.
• Any previous maintenances, repairs, and replacements have been done by a certified mechanic or auto shop
• They can save money in the long run

Because of this, buyers will ultimately be willing to pay the owner’s asking price (or more) without even asking for a discount.