Warranty: Definition & Types

Instructor: Yuanxin (Amy) Yang Alcocer

Amy has a master's degree in secondary education and has taught math at a public charter high school.

Most things that you buy at the store usually come with a warranty. Read this lesson to learn how a warranty can help you, as well as the various kinds of warranties available to you.


You just purchased one of those fancy curved television sets last week. You have been loving this new purchase. All your shows look terrific on it, and playing your games on it has been a dream. But now, all of a sudden, the television starts to flicker after just 30 minutes. You know you didn't kick the television where it hurts or anything stupid like that. What can you do? You can go to the warranty that came with the television.

A warranty is a guarantee, usually in written form, from the manufacturer of the product promising to replace or repair the product within a certain time period. A warranty basically says that this is a quality product and the manufacturer promises that the product will last a certain period of time. Most new products come with a warranty. Some used products also come with one. In this lesson, we will take a look at some different types of warranties that you can get depending on the product you buy.

New Car Warranties

When you buy a new car, you typically receive the manufacturer's new car warranty, which guarantees the car will run and not break down for a given amount of time or miles driven, whichever comes first. For example, if the warranty is a 100,000 mile, seven-year warranty, then the manufacturer is promising to fix the car if it breaks down within the first seven years of car ownership or the first 100,000 miles driven on the car, whichever comes first.

If you reach 100,000 miles driven in six years, then your warranty ends then. If, after seven years, you've only driven the car for 50,000 miles, your warranty still ends. Even though you have the warranty for this period, it doesn't mean everything is covered. You have to read the warranty information carefully as it specifies which parts of the car are covered. Generally speaking, oil changes and general maintenance are not covered. Those are expenses you need to make yourself for the care of the car. And some warranties are even voided if you don't perform the needed regular maintenance.

Typically, if you have a new car warranty that lasts this long, it is generally for the powertrain components of the car only. This means the engine, transmission, and any other moving parts connected to the tires. If any of these components breaks down during this period, you will get them repaired and fixed for free under the warranty.

Some car manufacturers offer a more extensive warranty for a shorter period of time, such as a 36,000 mile, three-year warranty that covers the whole car from bumper to bumper. With this type of warranty, if your radio breaks down, you can get it repaired for free, or if your air conditioning doesn't work right, you can get it fixed.

Used Car Warranties

If you buy a used car, you won't get the same warranty as a new car. And it depends on where you get your car from. Some car manufacturers sell certified used cars with a warranty. The warranty typically is a carryover from the original new car warranty but doesn't cover everything the new car warranty covers. You will need to read the fine print of your warranty to know what is and isn't covered.

Typically, though, for used cars, you will receive a limited powertrain warranty that's carried over from the new car warranty that covers the engine, transmission, and axle parts. For example, if you purchased a three-year-old certified used car with 40,000 miles on it, and the new car warranty is a 100,000 mile, seven-year warranty, then you will have a 60,000 mile, four-year warranty on your used car. You get the remainder of the new car warranty. These certified used cars may also come with a short-term warranty, such as a twelve-month or three-month warranty from date of used car purchase that covers more parts.

If a used car is purchased from an individual or is not a certified used car from a manufacturer, it may not have a used car warranty at all.

Full Warranties

Now, if you are purchasing anything over $10 from a store, it will have either a full warranty or a limited warranty. This is actually a law called the Magnuson-Moss Warranty Act, which was passed in 1975, and it says that any product sold for over $10 must have either a full or limited warranty or a combination of the two.

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