Save Money on a Used Car Warranty

The next time you buy a used car, your transaction will probably go like this - you'll eventually agree on a price, sit down to sign the papers and the dealer will ask you if you'd like to purchase an extended warranty.

This warranty will likely be expensive, limited, unclear and difficult to understand. To avoid finding yourself in that situation, keep reading for tips on how you can save money on a used car warranty.

1. Check the Original Warranty

If you're buying a car that's less than five years old, it may still be covered under its original manufacturer's warranty. Depending on the mileage, age of the car and terms of the original warranty, you could wind up paying for double coverage.

Instead, ask to see the car's original manual and warranty information to make sure you're not over paying by verifying the covered number of months and mileage. If the warranty coverage is close to the end of its life and you still want an extension on your protection, then compare the coverage - and perhaps more importantly what is not covered - carefully against the cost.

2. Look for a "Certified" Used Car

Certified used cars are vehicles, typically off-lease, that have been thoroughly inspected and then deemed certified by their manufacturer. These used vehicles are then sold with an additional warranty.

By purchasing a used car that comes certified from the manufacturer, there's little need, if any, to purchase an additional warranty protection from the dealership since you'll have the coverage you need in the original.

3. Know the Difference Between a Service Contract and a Warranty

A warranty protects certain aspects of the vehicle - typically those that are most unlikely to break down - and is included in the price of the car, while a service contract covers standard repair and maintenance over a particular period and consequently costs more.

Before you buy a service contract, ask yourself if it's duplicating the warranty coverage, whether the likely cost of anticipated repairs will exceed the cost of the contract, how much the contract actually covers, and if there are service fees or cancellation charges associated with it.

Based on your assessment of the vehicle - or the evaluation of a trusted mechanic - you will need to project likely service expenses you will incur during the warranty period to determine whether the contract is cost efficient.

4. Before you Buy, Read the Contract

Before you purchase any form of extended warranty, make sure you read the warranty information extensively. Where there are any components of the contract you don't understand, ask for clarification and keep inquiring until you understand. If you feel the warranty document is unclear, request that the dealer write out the specifications for you on a signed piece of paper.

For example, if the dealer tells you the vehicle is covered for any and all air conditioning or heating problems, but you don't see that clearly spelled out in the warranty document, ask him or her to write that out for you as an addendum to the contract with his and a manager's signature.