Transferring Car Warranties: Understanding Change of Ownership Coverage Plans

January 27, 2012

When buying or selling a vehicle, any car warranties that are associated with the vehicle may or may not be able to be transferred. Depending upon the type of warranty that covers a particular vehicle, coverage for that car can be transferred to the new owner and may also offer additional value for the vehicle. However, you should be aware that not all warranties are transferable; even if a warranty does qualify for transfer, the process may not be automatic and may require some effort by both the buyer and the seller.

Manufacturers' New Car Warranties

If you're buying or selling a vehicle that still has the balance or remainder of a car manufacturer's new car warranty, very little is required in terms of transferring the warranty to the buyer. All car manufacturers maintain national databases that associate warranty information with the VIN number of the vehicle in question.

When a vehicle is sold or otherwise transferred, the manufacturer warranty follows the vehicle and not the owner. For example, if you purchase a two-year-old vehicle that has 20,000 miles on the odometer, the manufacturer's warranty is still valid for another year or 16,000 miles, in most cases. If the manufacturer offers a longer warranty, the balance of the remainder automatically transfers to the new owner after the sale of the vehicle.

Aftermarket Warranty Transfers

Aftermarket warranties are those sold by companies other than the original car manufacturer. There are many types of aftermarket warranties available and some are transferable. Whether an extended aftermarket warranty is transferable or not will usually depend upon the terms and conditions contained in the warranty contract. In fact, a single warranty company may offer both types of warranty contracts: those that can be transferred and those that cannot.

Many times, the ability to transfer a warranty service contract is an option that is designed to entice buyers to purchase the extended warranty option. A warranty service contract that can be transferred will cost a little more than one that can't be assigned to a new owner.

Even if an aftermarket warranty is able to be transferred to the new owner, it is never done automatically. In most cases, the original owner of the vehicle will be required to contact the warranty company and provide authorization to transfer the warranty. Likewise, the buyer of the vehicle may be required to contact the warranty company and provide new personal and contact information.

Some warranty companies allow you to do this by phone, while others may require that you write a letter and sign it before a transfer can be initiated. If you are unsure if your warranty is transferable or not, you should contact the warranty company before selling your vehicle.

There May Be Costs or Fees

Even if your extended warranty is transferable, some companies charge a fee or service charge to complete the transfer. The amount charged to transfer a warranty may be determined by a set amount or percentage included in the terms of the warranty contract, or it may be in the form of a nominal service charge amount that is determined at the time of transfer. While most warranty transfer fees only include modest administrative service charges, some transfer fees may run as high as $100 to $200, depending on the company and the cost of the original warranty service contract.

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