So what is the difference between “Certified Pre-owned” and “Extended Service Contract?” Well as you have probably noticed, Used Car ads from used car dealerships are using the “Certified” word to their benefit. They aren’t living up to the promise of a car that is backed by the manufacturer with an impressive warranty and top-notch dealership experience. What the customer walks away with is an “Extended Service Contract” and will end up paying more for it. A person who purchases an Extended Warranty is not the same as a true certified pre-owned vehicle. Certified pre-owned vehicles must pass a rigorous inspection (determined by the manufacturer) and meet very stringent limits in terms of mileage and condition. On the other hand, an extended or aftermarket warranty can be purchased for virtually any car. While there are no guarantees in life, buying a certified pre-owned car can seriously lessen the risk inherent in buying a used car.
So the terms “extended warranty” and “aftermarket warranty” are actually misnomers, since the strictest sense of the word, these aren’t warranties at all. Like warranties, they cover repairs and/or regular maintenance for an agreed upon period of time. True warranties are included in the price of the product, extended warranties are really “service contracts,” since they cost extra and are sold separately.
The service contract can be purchased at the time you buy your vehicle, though you could also purchase this much further along in your ownership experience. Your contract is with the dealership, not the manufacturer. If you are one that feels that planning for what could happens makes you feel better, then why not? However, if you had bought a true “Certified Pre-Owned” vehicle, you really wouldn’t have to worry about that. These certified pre-owned vehicles are worth their weight in gold.
Follow me to Part III where I will share with you what questions you should be asking when purchasing an extended warranty.
