Automotive knowledge, From My Old Blog, Know Your Vehicle, Speaking from Experience, Vehicle Maintenance

Factory Warranty vs. Service Contract

Welcome back blog readers,

This post is from my old blog during a time when I was working in the automotive industry as a Parts Advisor.

Due to the vast amount of calls and questions I receive at work, I thought I would take a moment to break things down.

It appears to me that many finance managers do not thoroughly explain the Warranty or Service Contracts that they upsell our customers. Perhaps the general public only hears what they want to hear because the term “Bumper to Bumper” includes everything under the sun, right?……….. WRONG!!!!!!!

So I will do the best I can to break things down and explain the differences between a Factory Warranty vs a Service Contract.

Before we go on, here is my disclaimer… I am not a Finance Manager, I do not work for the New/Used Car Department, I do not know the factory warranty for every car ever made. In this example, I will be referring to Chrysler, Dodge, Jeep warranty because that is the line that I have worked with for over 10 years. Mopar Parts is my specialty, I have been cross-trained in the Service Admin area and I have dabbled in the Mopar Warranty area as well.

First up is the Factory BASIC Warranty… In the USA it is 3 Years or 36,000 Miles, whichever happens first. In Canada, it is 3 Years or 60,000 Kilometers, whichever happens first. The factory Basic Warranty covers such items as weather strips, sensors, switches, belts, hoses, calipers, wheel cylinders, interior/exterior trim, thermostats, radiators, water pumps, steering/ suspension components, various seals and gaskets, EGR Valve, emission hoses, vapor canister, fuel pump, all heating and A/C components. Honestly, there are too many individual components to mention, but you get the idea.

Next up is the Powertrain Warranty…. this is not purchased separately, it comes with the Basic Warranty from the Factory. The Powertrain Warranty varies in time and length, but for the most part, the coverage lasts from 5 to 10 years or 60,000 miles (100,000 kilometers) to Limited Lifetime. Limited being the key word there… Now the Powertrain Warranty covers such items as the Engine and its internal parts, internal seals/gaskets, lifters, rods, pistons. It also includes the Transmission and its internal components, gears, bands, flywheel, torque converter, seals/gaskets, pumps. It also includes the Driveline components, axle shafts, u-joints, front/rear differential and their internal parts, and the transfer case and or the power transfer unit and their internal parts. Again, there are far too many individual parts to list, but I hope you get the idea.

There is also the Extended Federal Emission… Basically, this is the Catalytic Converter and the typical coverage is 8 years or 80,000 miles (130,000 kilometers)

Now that we have covered a good portion of the factory warranty and its respectable coverage, we will now move on to Service Contracts.  A Service Contract is something that is purchased separately to go along with the remaining Factory warranty. There are many Service Contracts available, depending on how much coverage you want, or how much you want to spend. Before you sign your name on the line, PLEASE read it the terms carefully! For the most part, a Service Contract will entitle you to various perks for a limited time. Such perks like Roadside Assistance, Towing, Rentals, Road Hazard, Extended coverage for the basic warranty, Free Oil Changes and Tire Rotations for a limited time.

Here is the biggest misconception about warranties… Many customers have the mentality that they have a “Bumper to Bumper” warranty and that everything under the sun is covered for as long as they own the vehicle. Sadly that is not true. Customers still need to do the Routine Maintenance that is required, like having the oil/filter changed every 3 months, getting the Driveline services done, changing the Air Filter, and doing any other routine services that are recommended from the factory. Many customers are surprised to hear that these routine maintains must be done in order to maintain the terms of your warranty. If you have never changed the engine oil and filter and your odometer reads 35,000 miles and your engine is starting to act up, you can not expect the warranty to kick in. It is your duty to maintain your vehicle!

There are certain items that are not usually covered by the factory warranty. These items are considered “Wear Items” and are hard to determine. Such items include Brake pads, Brake shoes, tires, bulbs, wiper blades, and alignments. Everybody has different braking habits, the brakes pads will wear down it is inevitable, just as bulbs have a shorter life than most parts. Now, this is not to say that brakes, tires, and bulbs are never covered, I have seen a few cases where they were. Just understand that these items wear every time they are used. Really the cost of a tail lamp bulb is cheaper to change yourself than it is to take the time off of work to bring your car into the dealer, have a lube tech take 10-15 minutes to replace the bulb and all of the paperwork that is done in order to process the claim.

Warranty questions are rarely  YES or NO questions. For example, when you call and ask if your ball joints are covered. I can not give you a YES or NO answer. Regardless of whether you have a 2008 Caliber with only 24,000 miles on it. At this point, you have a 50% chance that your ball joint is covered because you fall within the terms of the Warranty. However, the vehicle needs to be inspected at the Dealership. If upon inspection it has been noted that you have obviously abused the vehicle and enjoy running over curbs, then NO your balljoint is NOT covered. If your service history shows that you have not been having the routine maintenance done including greasing the suspension, then NO you would not be covered. But if you have been maintaining the vehicle and the part has worn prematurely then YES, your balljoint is covered. I can not stress enough that you have to bring the vehicle IN before we can determine what is covered. For the record, if the concern is not covered under warranty, you WILL be billed for the diagnostic time.

Another service that is not covered is Wheel Alignments. If you have a part covered under warranty, like ball joints, tie rod ends, steering linkage, basically any part that is associated with the steering or your suspension. While the part itself may be covered under warranty, the service to ensure that your alignment is correct is not covered. This is something that many customers find confusing and are often taken by surprise when they get a bill when they assume “Bumper to Bumper” covers everything.

The best advice I can give is read the terms of the Warranty and Service Contract thoroughly! Don’t fall victim to buying a Service Contract that covers power seats, power mirrors, power windows, sunroof, and air conditioning when you are buying a Base model with power nothing and no A/C. Also make sure that the Service Contract covers your transmission and driveline if you are buying an automatic with four wheel drive. Many only cover standard transmission (stick shift). Again, read the terms carefully as it makes no sense to buy a Service Contract if the parts covered don’t exist on the vehicle you are buying. Because it all sounds great from the salesman or the finance manager that says YES to all of your questions when in reality, they usually don’t have a clue.

Do not fall for the Flush services as the Factory does not recommend them as part of the routine maintenance. You should be changing the fluids routinely. Flushes are meant for high mileage vehicles (100,000 miles/kilometers) chances are the original fluid has lost its protective properties and may be dirty, vehicles that have been stored and not used for months or if you are removing the engine/transmission with a used engine/transmission. Otherwise you should be changing the engine oil/filter and (automatic) transmission oil/filter routinely. Power steering flush, Brake fluid flush, Coolant flush are only ever needed if those systems have been exposed to air/debris. If there is damage to a hose, metal line, a rubber boot has been torn that may allow moisture or dirt to enter the system, then yes, have that system flushed as those fluids have been compromised. I know first hand that many dealerships will try to upsell you on the flush services and 9 times out of 10 they are not needed. Having worked as a Parts advisor for over 10 years, I also know that flush services are not covered under warranty as many dealerships do not use the factory flush kits, they use an aftermarket company’s product (because they recieve perks).

I hope that this entry has educated you a bit, and you now know the difference between a factory warranty and a service contract.

I’m happy to answer any questions, keep in mind that this blog post was written over 10 years ago, so I may be a little rusty 🙂 Please feel free to Like, Share, Retweet if you feel that others may find this post informative.

Happy motoring ~ Hannah

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