Do I Lose My Warranty If I Refinance My Car?

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Automotive Content Editor

Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.

, Automotive Content Editor - August 20, 2021

Whether you have a manufacturer warranty on a new car or an extended warranty on a used vehicle, you typically don't lose your warranty if you refinance. However, there are exceptions to every rule – let's take a closer look!

A Closer Look at Auto Warranties

There are a few different services that bear the commonly-used name warranty.

When it comes to new and certified pre-owned (CPO) cars, you receive a manufacturer warranty that protects the vehicle, covering repairs for a certain amount of time or number of miles. Three years or 36,000 miles is the most common starting point for new car warranties, but some are longer or shorter or cover a different amount of miles. CPOs have some form of manufacturer-backed warranty, though they typically aren't as comprehensive as an original manufacturer warranty.

When you finance a used vehicle, you may have the chance to purchase an extended warranty. These are also called service contracts, and they are more like an insurance policy, covering select repairs. These can typically be purchased at any time from an auto insurance provider, but you're usually offered one at the time of purchase from the dealership finance and insurance manager. These plans may require a deductible or may require you to pay for repairs before sending you a reimbursement check.

Refinancing With a Warranty

Refinancing closes out your current auto loan contract and replaces it with another one on the same vehicle. This can be done through your original lender or a new one, and the most common reason for refinancing is to get a lower monthly payment. You can usually do this by either qualifying for a lower interest rate or a longer loan term, or both.

Since refinancing pays off your original loan, so even if you have an extended warranty payment rolled into your loan, it would be covered, too. Your warranty is then paid in full, and you're covered for whatever your policy term on the service contract is. A manufacturer warranty follows the vehicle, so your warranty isn't affected as long as you're still within the coverage limits when you refinance.

Refinancing Requirements

To refinance your car, you need to meet lender requirements such as good or improved credit score, vehicle mileage, and loan amount. Lender requirements vary for refinancing, but typically you need to meet these requirements:

  • You must be current on your loan.
  • The vehicle value must be equal to or greater than your loan amount.
  • The car has to meet the requirements of the refinancing lender, such as age and mileage.
  • Your loan must also fall under lender guidelines.
  • The vehicle must have a clean title.

If you're refinancing a car with good credit, you're likely to have an easier time of it than a borrower with poor credit. However, if you originally took out a bad credit auto loan, and your credit score has improved, then you may be in good shape for refinancing.

The key though is not to wait too long to refinance. If you don't have much left on your loan, you may end up paying more money than necessary, especially if you refinance to a longer loan term.

Lastly, remember that you're signing a new contract with a new interest rate, and possibly a longer loan term. It's wise to wait until you've established a solid payment history on the loan before you attempt to refinance. In the case of bad credit refinancing, you're not likely to be eligible for at least one year after signing your original contract.

Could My Warranty Be Impacted?

No, both a warranty and a service contract should survive your refinancing. However, some contracts specify warranty stipulations, such as cancellation upon refinancing. These are rare, but it's worth perusing your auto loan and warranty documents carefully before making a final decision.

Even though refinancing doesn’t typically nullify your auto warranty, there are a few things that can. Did you know that repairs aren’t covered under warranty in every case? Here are just a few examples of things that can void your warranty:

  • Misuse of your vehicle – If you're using a financed car for anything other than personal use, such as delivery driving, or offroading, damages and repairs aren't covered, and your warranty may be canceled altogether.
  • Title changes – If your vehicle’s so damaged that it's issued a salvage title after repairs, your warranty is void. This means that even if the car is within the mileage and time limits of the warranty, your vehicle doesn’t have that protection and you pay for any future repairs out of pocket.
  • Odometer tampering – If a mechanic discovers that your odometer has been tampered with, such as being rolled back before being traded in, your warranty suffers the consequences and is no longer valid.
  • Aftermarket alteration – If you sup-up your car, or make any other adjustments to your car's original parts while you're financing, your warranty is void.
  • Improper vehicle care – Believe it or not, some manufacturer warranties can be void if you don't take care of your car according to the manufacturer's guidelines. If your car goes in for a warranty repair, but it's found that you've never changed the oil, or taken proper care of the fluids in the car, you're going to pay for those repairs yourself.

Ready to Refinance, or Look for Another Car?

Refinance away, now that you know your warranty isn’t affected if you do. But, if you decide refinancing isn't the way to go, and instead want to get into a different vehicle with a new auto loan, we want to help.

At CarsDirect, we've cultivated a nationwide network of special finance dealerships that have the lending resources you need to get a loan in many credit situations. You can also start your car-buying journey right here by researching vehicles on our new and used car pages. Don't stress over searching for a lender, let us do the legwork for you. Simply fill out our fast, free, no-obligation auto loan request form, and we'll get right to work for you!


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, Automotive Content Editor

Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.

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