Quantifying the value of a warranty on a used car.

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Sat 30 Nov 2013 13:36
Quantifying the value of a warranty on a used car. - nathanr

Recently I've noticed some newer used cars have decent warranty periods on them, eg 10+ plate Toyota's, and the Kia's.

However, I'm finding it really hard to put a value on the warranty, many people I've asked seem to feel the warranties aren't worth much on a car which is already proven. Specifically it appears that warranties can be summarized as covering anything which can be classed as a "manufacturors defect", whereas pretty much anything that is likely to go wrong would class as "wear and tear" or "driver error", and thus not be covered by the warranty.

Since I'm in the market for a 1-4 year old car, I'm wondering whether warranty is something I should even be adding in to the equation, and if so what presedence should I be giving it?

example: Given 2 equivalent cars in every way of the same make model and variant, a 10 plate for 11k with no warranty, and the same car in a 11 plate for £13k with 2 years warranty left - is that warranty worth the extra £2-3k.

Thanks for any advice!

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Sat 30 Nov 2013 14:46
Quantifying the value of a warranty on a used car. - coopshere
If it is a manufacturers warranty and not an aftermarket one then if you get a major engine or transmission failure you will most definitely think it was worth it. On the other hand if you get two years of trouble free motoring then it isn't. It's all about the risk you are prepared to take.

However they are not two identical cars, the newer one is worth more and therefore you are not paying £2k for the warranty. Go to a website that will give you valuations of the two cars, e.g. Parkers Guide, and see what the difference in value is. Judging by your description so far the 11 plate car could easily be worth £2k or more than the 10 plate one.
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Sat 30 Nov 2013 15:55
Quantifying the value of a warranty on a used car. - Andrew-T

If you are talking about the remainder of a new-car warranty, that is part of the original package and might be useful. If it's an optional extra, its value depends on the price you put on your peace of mind. Generally speaking, given the small probability of expensive failure, you are better off putting your money in an interest-earning account and spending it when nothing has happened to the car, and especially if something does happen and you find it's not covered. If you have chosen your used car carefully the chance of needing the warranty is small - warranty sellers have to make a profit somehow.

Same applies to a fridge or a washing machine.

Edited by Andrew-T on 30/11/2013 at 15:57

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Sat 30 Nov 2013 17:54
Quantifying the value of a warranty on a used car. - nathanr

thanks for the feedback, in all cases it's manufactor warranty left over on the cars, and I've already had a major failure this year (vw passat estate, piston went through the engine block!), so hoping to avoid another.

I think I'm going to discount warranty from the equation and go with what feels right when I'm actually in the thing and driving it.

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