Vehicle Warranty - Explainer

As an important part of our car finance service, Jade Finance provides general advice to our customers on a range of insurances including vehicle warranties. It is not surprising that many of our customers have many questions in regard to both new and used car warranties.

We provide these hints, tips, explanations and advisories to assist you in understanding general warranty issues and invite you to direct specific questions to your Jade Finance consultant.

  • Warranties are a form of insurance or guarantee offered by either car manufacturers, car dealers, sellers or all to cover the cost of certain aspects of repair and damage to your vehicle. Essentially a promise to rectify faults subject to their specific conditions and terms.
  • Terms such as unlimited kilometres, extended warranty, 5 year warranty and others, appear in many car sales advertisements and can be used as an incentive to attract buyers. But understanding exactly what is and is not included in your car warranty requires careful study of the fine print.
  • Not all car warranties are the same.
  • A warranty may be set for a period of time from date of purchase or the number of kilometres the car has travelled. The standard car warranty historically was around 3 years or 30,000 klms but with the reliability of vehicles increasing, the trend has been to offer warranty for 5 or even more years and many offer unlimited kilometres.
  • The time and kilometres is easy to grasp. What is actually included is not always as clear.
  • The Australian Competition and Consumer Commission (ACCC) regulate the car warranty sector as part of their consumer activities. At a state level, fair trading and consumer departments may also have additional legislation over the sector.
  • Regardless of the use of warranties as an incentive to purchase, under consumer law, consumers are automatically covered to some degree for some aspects of all consumer purchases. The regulations may differ from state to state and according to new or used cars, and dealer versus private sellers.
  • A Statutory Warranty (under the law) covers new car purchases for defects, for 12 months or 20,000 klms. The manufacturer often then adds their individual warranty of more years or more kilometres.
  • The warranty is limited to whichever milestone you reach first: that is, if you have a 3 year 30,000 klm warranty and you reach 3 years but have only travelled 20,000 klms, the warranty still expires at the 3 year mark. If you use your car a lot and cover 30,000 klms in 2 years, your warranty expires at the 30,000 klm mark.
  • Tip: to take full advantage of a warranty, book your vehicle for a service prior to reaching the milestone to ensure any defects under the warranty before the warranty expires.
  • Statutory warranties (under the law) only cover used cars purchased through a dealer, with the specific terms and conditions varying across the states. If purchasing a car from a private seller, check with the consumer department in the seller’s state for details of what is covered under state consumer trading laws.
  • Individual second-hand car dealers may offer their own warranties in addition to what is covered under the law.
  • If you purchase a second-hand car which is within the manufacturer warranty guidelines, you are advised to confirm with the manufacturer if the warranty is still valid.
  • What is actually included in a warranty? It may be parts only, labour and parts, or some other configuration of inclusions. If you’ve ever taken your brand new car in for its first service and been shocked at being charged for oils and other consumables, you’ll understand!
  • Some dealers sell extended warranty plans as an optional extra. If this is suggested to you, the decision will depend on your individual vehicle usage and with all insurance policies, you should study all aspects of the policy.

Understanding your position under the law in respect to car warranties compared with what is offered by the seller, is essential to differentiating substance and spin with this type of insurance.

For more information on vehicle warranties, speak with a Jade Finance Consultant. Call 1300 000 008

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