What Is a Dealership Warranty? (2023 Guide)

When you buy a new or used car at the dealership, you’ll likely be offered an extended warranty backed by an auto manufacturer. These dealership warranties offer comparable coverage to plans from third-party providers, but they’re often more expensive. In this article, we at the Guides Auto Team will break down dealership warranties and how they compare to plans offered by independent companies.

If you opt to purchase a third-party vehicle service contract, our team can help you make a wise choice. We’ve researched and ranked the best extended car warranty companies to make it easier to find your perfect match.

Just about every authorized auto dealer offers manufacturer-backed extended warranty plans. For new cars, these vehicle service contracts are extensions of the factory warranty. Many automakers offer long-term protection for certified pre-owned (CPO) vehicles as well.

Either way, a dealership warranty is designed to cover damage incurred through normal use or due to workmanship flaws. Wear and tear components like brake pads and wiper blades aren’t covered, and you’ll want to look elsewhere after damages caused by theft, vandalism, severe weather or car accidents.

Dealership Warranty vs. Third-Party Warranty

third-party providers. Each type of warranty will take care of damages caused by regular use or workmanship issues. However, there are a few factors that differentiate these two warranties:

• Coverage options: There are usually fewer coverage choices from car dealerships.
• Pricing: Dealership warranties are typically more expensive, though promotions can lower rates. Auto dealers are also likely to roll an extended warranty into the payment on your vehicle, meaning you’ll likely pay interest on the warranty.
• Repair shops: Most dealership warranties require you to have repairs done at their own shops. On the other hand, independent coverage providers usually let drivers take their vehicles to any certified repair facility after a mechanical breakdown.
• Eligibility standards: It’s tough to get an extended warranty for cars with over 100,000 miles on the odometer from the dealership. That’s because they usually have much more strict eligibility requirements for the age and mileage on used cars. You may also need to purchase a dealership extended warranty during your vehicle’s factory warranty period.
• Time frame to purchase: You’ll probably be required to add dealership extended coverage before the end of the manufacturer’s warranty on your car.

Note that most dealership warranties are typically administered by third-party warranty providers. It’s much easier for automakers to let other companies take care of vehicle protection plans, even if repairs and parts come straight from the car brand.

There’s a lot to be said for the convenience of purchasing an extended warranty directly from a dealership. For one thing, you don’t have to go through the process of evaluating various vehicle warranty providers. You also gain peace of mind knowing that your car will receive expert care from an authorized service center in the event of a covered mechanical breakdown.

To make sure that you’ll benefit from a dealership warranty, consider how much coverage you want, the average repair cost of your new car and any extra fees that might be involved. Also consider whether an independent auto warranty might be a better choice for your vehicle.

Pros and Cons of Dealership Warranties

Below, we’ve listed out a few advantages and disadvantages of buying an extended auto warranty from the dealership to help you decide whether it’s the right call for your needs.

Pros of Dealership Warranties

Weigh these strengths of dealership warranties when considering your options: