Refinancing a car loan can be confusing, particularly if you haven’t done it before. One question you might have is whether your car warranty (or warranties) will continue under your new loan. 

If so, breathe easy — most manufacturer warranties do remain in effect. Don’t let that keep you from trying to refinance and get a better auto loan rate. 

But what about non-manufacturer car add-ons like extended warranties and vehicle service contracts? Those are different. We’ll cover why that is below.

What Is a Car Warranty?

A car warranty is an agreement from your car’s manufacturer to repair mechanical defects for a period of time or mileage after you purchase your vehicle. 

A bumper-to-bumper or “comprehensive” warranty is always provided by the manufacturer when you buy a new car. For example, your new car’s warranty may provide coverage for three years or 36,000 miles, whichever comes first. 

Used cars may or may not include a warranty. Sometimes the manufacturer’s warranty is still in effect. There are also a handful of states with lemon laws for used cars which require varying types of coverage, much like a warranty. However, most states do not offer any sort of protection from defects or failures, even if the seller lied about its condition. 

Vehicle Service Contracts and Other Car Loan Add-ons

When you purchased your car, you might have purchased other extras to cover additional repairs over an extended length of time. The cost of these extras (like GAP waivers or vehicle service contracts) is often rolled into your original car loan or your refinance loan, but you can also buy these products later.

A vehicle service contract covers specific mechanical failures and repairs for a specified timeframe or up until the mileage limit is reached. A VSC is not an extended warranty. Instead, it functions more like insurance – you file a claim and pay a deductible to cover the remaining costs – and is offered by an independent provider, not the car manufacturer.

The price of a vehicle service contract can range anywhere from a few hundred dollars to more than a thousand dollars, depending on your vehicle, coverage selection and where you buy it.

Maintaining Your Car Warranty During Refinancing

If you’ve decided that it’s time to refinance your car loan but are concerned about maintaining your warranty or add-ons during the process, don’t be. A new car warranty stays with the vehicle, regardless of the status of your car loan.

The issuer of your extras and add-ons may or may not honor your contract even after the contract has been paid off by the refinance loan. In most cases:

Refinancing your car loan will not cancel your vehicle service contract. However, it’s important to review your original agreement with each provider to make sure that your terms aren’t affected by refinancing your loan. 

Refinancing your car loan will cancel your GAP protection plan. The original loan has been paid off, so there is no longer a financial “gap” to protect. You will need to purchase a new GAP waiver for the refinance loan.

Don’t Let Warranty Concerns Keep You From Refinancing

To recap, refinancing your car loan shouldn’t make you lose your warranty or vehicle service contract, but you should check the fine print of your plan’s details to confirm. So go ahead and find yourself a better auto loan. Your wallet will thank you later.