Car Warranty and Its Impact on the Resale Value of a Car

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sangeet
Aug 21, 2019
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One of the less thought out or researched parameter in the sale or purchase of a car is the warranty period. Most of us hardly think about it unless we get into a situation where just after purchasing the car, something goes wrong with it. In such a scenario, we instantly start seeking all the details about the warranty and the things that are covered under it. Information about the warranty is even more critical in the used-car market as it directly impacts the reliability of the used car which is one of the most important concerns for buyers. If you are planning to sell your car which is still under a warranty cover, you are sure to get higher value from the deal. We explain here in detail the concept of warranty, extended warranty, and why you must consider this important aspect while making any decision related to sales or purchase of a car.

1) What is a Warranty?

Every car manufacturer offers a warranty which is defined in terms of the number of kilometers or time period in years. For example, consider the case of the popular Ford EcoSport SUV which comes with a warranty of 100000 km / 2 years. The warranty specifically means that Ford will replace or repair any part (covered under the warranty plan) free of cost if it damages prematurely because of the manufacturing defect. This warranty will remain applicable for 1,00,000 kilometers or 2-year period (whichever is earlier). In other words, Ford is assuring the customers that the SUV will function in the desirable, trouble-free manner at least for the said time period or kilometers driven. Sometimes manufacturers also provide some specific kind of warranties which apply on the mechanical parts such as engine and transmission wherein any defect or malfunction in working of engine and mechanicals is going to be covered under the warranty period with no cost implications for the customer.

2) What is Extended Warranty?

The concept of extended warranty has become popular in the past few years with more and more people realizing that opting for an extended period of warranty is actually a beneficial deal for them. Some customers also believe that driving the car beyond the warranty period provided by the manufacturer could possibly lead to some malfunctioning or failure in working of the car. This, in turn, will be having cost implications for them and therefore, it is best to opt for extended warranty.

For purchasing an extended warranty, you have to shell out some extra money but on the positive side, it will provide you complete peace of mind. Investing in an extended warranty is particularly useful in case you are planning to hold onto your car for a longer period of time (say 5-6 years at least). Continuing with the example of EcoSport, Ford provides the facility of extended warranty which can be purchased for the 3rd year, 4th year, and 5th year with a cost ranging between Rs 11,400 (up to 3rd year) and Rs 30,289 (up to 5th year). It’s always recommended that you should go for an extended warranty for the trouble-free ownership experience. However, while you purchase an extended warranty for your car make sure you take care of some of the important things mentioned below:

a) Assess the quality of service provided by the manufacturer and if you find quality levels unsatisfactory, it is better not to opt for extended warranty.

b) Check for the coverage that extended warranty provides and if the coverage is not comprehensive, it is not worth to invest in the contract.

c) Go through the list of things covered under the extended warranty and make sure there is no duplication in terms of covering the parts which have already been covered in the insurance policy.

d) Read carefully the terms and conditions of the extended warranty as these might have important revelations in terms of the cost associated with the purchase of the contract.

e) Talk to the customers who have already availed the facility of the extended warranty and their feedback will help you to make a final decision whether to purchase it or not.

3) Warranty/ Extended Warranty and its impact on resale value

If you are planning to sell your used car which still has a warranty cover, it is considered as a big plus for the deal. Not only will it provide you a better resale price but also reassures prospective buyer about the trouble-free ownership experience in the future. The ideal scenario for selling your used car is to put it out for the sale before the warranty on it expires. In such a case you will be able to find plenty of potential buyers who might be ready to pay extra for your car because of the warranty cover. In sum, selling the car with extended warranty will help you primarily on two aspects:

a) It will position you as a credible owner who has taken good care of his/her car. In other words, you have invested in your car over the years and this aspect is going to make a positive impression from the prospective buyer.

b) It also implies that you are quite aware of the negative things that could possibly happen to the car in future and as a precautionary measure, you have purchased the extended warranty to cushion yourself against any major breakdown.

If you are facing any difficulty in selling your old car, you can contact CarDekho Gaadi for a seamless selling experience. The company has more than a decade of experience in the field of automobiles and is one of the most trusted names in the used car market. Not only you will get the best price of your car at CarDekho Gaadi but you can also avail the free [RC transfer,]( https://www.gaadi.com/blog/free-rc-transfer

) loan closure assistance, and more. You can sell your car in a single visit and what’s more, you get the money instantly into your account once the deal is done.

Also Read:-Challenges You Face While Selling Your Car

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