What happens to your warranty after a lease buyout?
Quick insights
- Leased vehicles are typically covered by the manufacturer's factory warranty for the duration of the lease term.
- The factory warranty clock does not reset when you purchase your leased vehicle, so the remaining coverage depends on the original start date and mileage limits.
- If the factory warranty has expired or is near expiration, you may want to consider purchasing an extended warranty or vehicle service contract.
When you decide to purchase your leased vehicle, the warranty coverage continues from where it left off rather than starting fresh. The amount of protection you have depends on how much time and mileage remain from the original factory warranty. Learning how lease buyouts affect warranty coverage may help you plan for potential repair costs as the new owner.
Are leased cars under warranty?
Most leased vehicles come with a factory warranty that covers repairs for a period of time or mileage. The factory warranty begins when the vehicle is first sold, not when the lease starts. This means the warranty clock has been ticking since the original purchase date, and the lease term uses up a portion of the coverage period.
For a lease term of three years, the factory warranty may cover the vehicle for the entire duration. Bumper-to-bumper warranties last for three years if your lease terms is three years, which is common. If the warranty and lease end at the same time, there may be no remaining coverage if you decide to purchase the vehicle at the end of the lease.
Some warranties extend beyond the lease term. For example, a powertrain warranty may last for five years or 60,000 miles, which means coverage could remain after the lease ends. The remaining coverage depends on the original warranty terms and how much time and mileage have been used during the lease. Reviewing the warranty documentation before the buyout may help you understand what coverage remains.
Types of warranty coverage on a leased vehicle
A leased vehicle could carry multiple different types of warranty coverage:
- Bumper-to-bumper coverage: This covers repairs to components such as electronics, the HVAC system and other non-wear items. This coverage typically lasts for three years in most cases.
- Powertrain coverage: This covers the engine, transmission and drivetrain components. Powertrain warranties last longer than bumper-to-bumper coverage and may remain in effect after the lease ends.
- Roadside assistance: Many manufacturers include roadside assistance with the factory warranty. This benefit may expire when the bumper-to-bumper coverage ends.
- Corrosion coverage: Some warranties include protection against rust and corrosion. The terms for this coverage may differ from the bumper-to-bumper and powertrain warranties.
What happens to your warranty if you purchase your leased car?
The warranty does not reset when you buy out your lease. The coverage continues from where it left off, and the remaining time and mileage determine how much protection you have after the purchase. If you buy out your lease before the term ends, the warranty may remain active until its expiration date. If you wait until the lease ends, the warranty may have already expired.
The timing of the buyout and the vehicle's mileage both influence remaining coverage. If the vehicle has exceeded the mileage limit during the lease, the warranty may no longer be in effect even if the time period has not elapsed. Reviewing the warranty terms and odometer reading before the buyout may help you understand what coverage remains. Once the factory warranty expires, any repairs become your responsibility.
Extended warranty considerations for lease buyouts
After the factory warranty expires, you are responsible for repair costs on the vehicle. An extended warranty or vehicle service contract can help cover repairs once the original coverage ends.
- Coverage gap: If the factory warranty has expired or is near expiration at the time of buyout, an extended warranty can help bridge the gap between the original coverage and the years of ownership that follow.
- Cost factors: The price of an extended warranty varies based on the vehicle's mileage, make and model, along with the deductible and coverage level you choose.
- Long-term ownership: If you plan to keep the vehicle for several years or a drive high mileage car, an extended warranty may help cover repairs as the vehicle ages.
- Short-term ownership: If you plan to sell or trade the vehicle within a year or two, an extended warranty may not be necessary depending on the remaining factory coverage.
- Third-party options: Extended warranties may be available from third-party providers in addition to the dealership. Comparing options may help you find a plan that fits your budget and coverage needs.
The bottom line
When you buy out a lease, the factory warranty does not reset and the remaining coverage depends on the original terms. If the warranty has expired or is near expiration, you may want to consider an extended warranty to cover repairs as the vehicle ages. Understanding how much coverage remains and evaluating your ownership plans may help you decide whether to purchase additional protection.
