What are the types of car warranties?

A car warranty protects you, the buyer, against any issues or defects in the car due to manufacturing. It’s a promise from the manufacturer that if these defects occur, they’ll cover the costs of repair.

Most car warranties will cover all parts and accessories found in the car that was put there at the manufacturer's factory. It may also cover some accessories that are attached at the dealership if they’re approved by the manufacturer. Ensure you read the warranty document to understand what’s covered and what’s not.

Three main car warranties are available in Australia with brand new cars and used cars purchased from licenced dealers. You could be offered a manufacturer’s, statutory, or extended car warranty when you buy your vehicle. Before deciding which car warranty is suitable for you, understand each type of car warranty.

Manufacturer’s Warranty

All brand new cars come with a manufacturer’s warranty which will cover any defects or faults found in your car due to some part of its manufacturing. This means that if you notice a manufacturing defect or the manufacturer announces finding one, the warranty will cover the repair costs. There may be some limitations placed on your manufacturer’s warranty, but in general, all costs will be covered by the manufacturer. 

Most standard manufacturers’ warranty will be for three to seven years. This period often depends on the manufacturer and dealer. You’ll often also have a kilometre-driven cap on your manufacturer’s warranty. This means that if you buy a car with a three-year or 200,000km warranty and drive 200,000km before the three years end, the warranty period ends. Manufacturers’ warranties are transferable, which means if you buy a used car that’s still under warranty, you’ll still be covered.

Statutory warranty

There are two types of statutory car warranties, a new car statutory warranty and a used car statutory warranty. With a new car statutory warranty, you’ll usually be covered for 12 months or 20,000km and will cover most defects for cars below the luxury car tax. 

The more common statutory warranty is the used car statutory warranty. These are sold by licensed dealers of used cars and are helpful if your car is less than ten years old or has not travelled 100,000-160,000 kilometres. The dealer you purchased the car and warranty from will cover most things related to safety, reliability and roadworthiness. A used car statutory warranty usually covers your used car for three months or 5,000 kms. There is no option to purchase an extended warranty period for statutory warranties. However, it could still be beneficial to help protect your used car purchase.

Extended car warranty

Many new car dealers offer you the option to purchase an extended car warranty which extends the coverage of your manufacturer’s warranty beyond the standard period. You may choose to purchase this extended warranty before your warranty period ends or at the time of buying the car. It’s best to check with your dealer and know the average price of an extended car warranty before finalising anything.

If you’re looking to purchase a car with a car warranty on offer, there may be a few things you wonder about before making your purchase. Here are a few tips to help you decide on your purchase:

•  Buy from a licensed dealer to get a warranty for both new and used car purchases. If you're buying a used car, you should still do your own checks as a buyer, including a car history check using the vehicle identification number (VIN). And if you’re buying a new car, you may want to research the vehicle to ensure there aren’t any known defects or issues.
  
  
•  Find out when a car warranty starts. Most car warranties will begin at the time of purchase or the car being marked as sold. Before agreeing to the warranty period, you should check the contract and speak to your dealer about when the warranty begins.
  
  
•  Know your rights. Before purchasing a car and car warranty, be sure to understand what your rights and obligations are under warranty. The Australian Competition and Consumer Commission (ACCC) states all vehicles must be fit for purchase even after the warranty period ends. You may still have some protection if a defect is discovered outside the warranty period.

No, a car warranty will not cover damage caused by an accident or general wear and tear. If there is a manufacturing defect or any issue with the design, car warranties will cover that. Car insurance is what will cover you for any damage caused by accidents. General wear and tear to things like tyres, or the engine isn’t covered by anything you are expected to keep up with regular servicing to help prevent this. You also don’t have car servicing covered in your car warranties. 

Car warranties won’t cover car accidents, so you may want a comprehensive car insurance policy if you want assistance beyond mechanical repairs.