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Questions and Answers
What is the main difference between guarantees and warranties?
What is the most common type of warranty in the automotive industry?
What does the powertrain warranty cover?
What is unique about the warranty for hybrid and electric-powered vehicle systems?
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What does the federal emissions warranty cover?
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Are extended warranties legally required to be provided by all manufacturers?
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What are service contracts?
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What is the main benefit of manufacturer-supported extended warranties?
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What should customers do before purchasing a warranty or service contract?
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What is the main difference between guarantees and warranties?
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What is the most common warranty in the automotive industry?
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What is the duration of the basic warranty for most vehicles?
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What does the powertrain warranty cover?
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What is unique about the warranty for hybrid and electric-powered vehicle systems?
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What does the federal emissions warranty cover?
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What are service contracts?
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What is the main difference between manufacturer-supported extended warranties and basic warranties?
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What should customers do before purchasing a warranty or service contract?
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Which type of service contract may reputable shops refuse due to slow response times, constant negotiation, and substandard repairs?
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What is the positive benefit of purchasing a certified used car agreement?
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What should service providers do to protect themselves, their company, and their customers from harm or loss in dealings with outside companies?
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Study Notes
Understanding Warranties and Guarantees for Vehicles
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Customers often confuse the terms guarantee and warranty.
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Guarantees are typically found on lower-priced items and promise a refund or replacement if the product fails to meet its intended use or fails within a specified time.
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Warranties are found on more expensive and complex purchases such as cars, houses, and electronics, and commit to repairing defects, including the replacement of components, but do not provide a refund or replacement as a remedy for failure.
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The most common warranty in the automotive industry is the new vehicle warranty provided by the automobile manufacturer.
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The manufacturer's warranty is a limited warranty that specifies in detail the conditions under which warranty coverage will be honored or denied, as well as limitations on the extent of repairs or adjustments.
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The manufacturer's basic warranty is generally referred to as a bumper-to-bumper warranty because it covers the entire vehicle, and its period ranges from 3-5 years or up to 60,000 miles.
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The basic warranty states that repairs must be performed by authorized dealerships, and warranty coverage may be limited by state laws.
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The powertrain warranty covers the engine, transmission, and drivetrain of the vehicle, and its duration ranges from 5-10 years or up to 100,000 miles.
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Hybrid and electric-powered vehicle systems have a unique warranty that provides extended coverage for components such as electric drive motors, controllers, and storage batteries, ranging from 8-15 years or up to 150,000 miles.
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Passenger restraint systems such as seat belts and airbags carry a warranty that extends beyond the basic new vehicle warranty.
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The corrosion perforation warranty covers premature rust-through of original body panels and is limited to perforation due to rust, not surface rust or discoloration of panels.
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The federal emissions warranty covers all components that directly affect the ability of the vehicle to maintain its emission of specific pollutant compounds into the atmosphere, with a minimum coverage of 2 years or 24,000 miles and extended coverage for catalytic converters, electronic emissions control units or computers, and onboard emission diagnostic devices.Understanding Vehicle Warranties and Service Contracts
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Every new vehicle comes with a mandatory basic warranty that is standard throughout the industry.
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Customers can pay for additional warranty coverage, which may be provided directly through the manufacturer or a separate company.
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Extended warranties are not the same as new vehicle factory warranties and are not legally required to be provided by all manufacturers.
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Service contracts are essentially insurance policies that protect customers against unexpected costs or losses.
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Manufacturer-supported extended warranties are developed and sold through the financial branch of the dealer's corporation or an allied corporation that the manufacturer endorses.
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Manufacturer-supported extended warranties are not the same as the basic warranty and carry the limitations of coverage that any insurance policy would have.
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The benefits of manufacturer-supported extended warranties include being provided by and/or endorsed by the manufacturer and having the manufacturer encourage their entire dealership service network to accept all claims under these contracts.
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Under the basic warranty, the dealership has the authority in advance to diagnose and repair any problems that fall within the limits of the original warranty, without needing to ask for permission or approval.
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With a service contract or insurance policy, the service shop must obtain approval for repairs before proceeding and may require an inspection by a manufacturer-authorized expert for expensive or extensive repairs.
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Manufacturer-supported extended warranties make an effort to minimize these minor inconveniences, so they are virtually invisible to the customer.
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It is important to carefully review the terms and limitations of any warranty or service contract before purchasing.
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Customers should also be aware that the selling dealer may offer both types of extensions of coverages and should ask questions to ensure they understand the differences between them.
Service Agreements for Vehicles: Third-Party and Used Car Options
- Independent companies offer extended service agreements for vehicles, varying in size, credibility, and prices.
- Larger independent service contract companies work with a national network of independent estimators to minimize downtime for repairs and keep customers satisfied.
- Some independent companies are not reputable, and their low prices come with slow response times, constant negotiation, and substandard repairs, leading reputable shops to refuse their contracts.
- Dealers may offer both manufacturer and third-party service contracts, promoting the third-party contract for a bigger commission on the sale.
- Manufacturers are entering the used car service contract market, requiring all vehicles to go through a comprehensive, certified used car inspection and reconditioning process to meet certain minimum standards of age, mileage, and condition for certified status.
- Not all cars that go through the certification process meet the stringent certified used car status, and some are denied this status.
- Certified used car agreements are not part of the new vehicle warranty but are service contracts issued by an affiliate of the manufacturer, with the positive benefit of being manufacturer-backed and honored by their dealership service network across the nation.
- Used car service agreements are offered by a variety of independent companies, ranging from reputable to not reputable, with the same terms and conditions as new vehicle extended service contracts.
- Some used car companies sell their own internally developed and honored used car service agreements, which may appear to the customer as being offered by a bigger company or manufacturer.
- Many used cars are advertised and sold "As-Is," reducing the seller's liability to repair or replace the vehicle but not absolving them of all responsibility.
- States and territories have laws and regulations that provide some degree of minimal guarantee to protect consumers, and service providers should familiarize themselves with these and other vehicle regulations in their area.
- The best protection in all dealings with outside companies is to be aware of all possibilities, do research, and proceed armed with knowledge to protect oneself, one's company, and one's customers from harm or loss.
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Description
Test your knowledge on vehicle warranties and guarantees with this informative quiz. Learn about the differences between a guarantee and a warranty, as well as the various types of warranties available for cars, including the new vehicle warranty, powertrain warranty, and corrosion perforation warranty. You'll also discover the benefits of manufacturer-supported extended warranties and gain a better understanding of service contracts. Take this quiz to become an expert on vehicle warranties and guarantees.
