Auto warranty is a service as per which the vehicle is repaired and maintained for free for a period of time by the auto dealer on behalf of the vehicle manufacturer. The auto warranty takes care of the cost of the repair and maintenance of the vehicle’s engine, power train, brake mechanism, drive train and steering system. The repairs and maintenance will be done for free during the warranty period, which lasts for a period of up to two years or three years depending on the make of the car.

There are two categories of auto warranty. They are used car warranty and new car warranty. The used car warranty, also called as after market auto warranty, is given to used cars. The new car warranty is given to brand new cars released by the auto dealer. There is a third category of auto warranty called bumper-to-bumper warranty. This warranty is valid for the entire life of the vehicle. The new car warranty is cheaper when compared to others because the features are less and besides, the car is brand new. Since the risk of insuring a used car is higher, the cost of the used car warranty is higher. The bumper-to-bumper warranty is given to luxury cars.