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Factory or Third-Party: What is the Difference When it Comes to Auto Warranties?

26 March 2018 No Comment

Technical or legal terms lend themselves to incorrect interpretation quite easily, especially if you’re not well-versed in them or if this is your first time trying to resolve such matters. We get it, that’s why we’re going to do our best to explain the difference between factory and third-party warranty in simple and humanly-understandable terms:

A factory warranty comes with your newly-purchased vehicle

For example, upon buying your new Audi, you will get an Audi factory warranty like the following one: http://www.carchex.com/content/audi-factory-warranty. That warranty comes directly from the manufacturer of said vehicle. It’s not sold separately, but included in the price of the car.

What does a factory warranty cover?

Simply put, a factory warranty covers you in cases of defects discovered in your vehicle. However, it’s important to understand that a factory warranty is meant to address any issues taking place in the manufacturing process, not the ones that would surface as a direct consequence of incorrect usage or outer damage.

A third-party warranty does not have anything to do with the original manufacturer

Aside from being a completely independent arrangement, it’s important to keep in mind this type of warranty is mostly meant for the period after the original factory warranty expires.

What does a third-party warranty cover?

It covers repair and replacement, particularly the types of repair that aren’t covered by the factory warranty.

Factory warranties come with an expiration date

Usually, this is around a couple of years. If you, however, still want to continue with it even past that date, you’re going to need to go to your manufacturer and purchase an extended factory warranty.

What’s the main point of a third-party warranty?

One of its most important aspects is that it eliminates the fear of encountering a high spike of costs along the way if something goes wrong, so it basically nullifies the possibility of you not being able to cover it.

There are differing levels of coverage

Just like you’ve probably grown used to seeing with the rest of the warranties, you need to be careful that your policy won’t leave you hanging. In other terms, you need to make sure you’re protected for at least the most common unfortunate scenarios that can play out on the road.

Third-party contracts can be purchased at any time

The factory warranty is limited to new cars, but a third-party one can easily be attached to an older vehicle.

Third-party warranties offer more flexibility

With factory warranties, you’re pretty much tied to the mercy of the manufacturer. With a third-party warranty, you can take your vehicle to any repair shop of your choosing (unless, of course, some contract prohibits you from doing so).


While the legal speak might seem complicated if you have no legal training, most of the times, it merely comes down to how carefully you’ve read it through (even if you allow yourself to cheat a little bit and have some form of legal dictionary next to you). If you still have some questions, just go to your local car dealership, and they’ll be more than happy to explain everything to you.

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