Danger - used car ahead

When it comes to warranties, you get what you pay for, James Ruppert finds

Climb Everest, become a lion tamer, or buy a car. Statistically, what's the most dangerous thing that you could possibly do? You won't be surprised to hear it is probably buying a used car. Just think of what could go wrong - it could fall apart, or break down, or maybe just not be an appropriate vehicle. Whatever happens, it will cost a fortune to sort out. That is why used-car warranties were invented.

A survey produced by HPI-Equifax last month, which examined used-car buying habits and the market in general, revealed that the most popular reason for buying a used car from a dealer is the availability of a warranty. They found that 33 per cent of used-car buyers believed a warranty provided essential peace of mind for consumers. This is good news for the dealers and manufacturers who have come up with a range of approved warranties to soothe worried buyers. Trouble is, how do you tell a good warranty from a bad one?

"You only get what you pay for," says Mark Barton, RAC marketing executive, who is adamant that a cheap warranty means spartan protection if something goes wrong. "Consumers have to read the small print and negotiate longer- term cover. Some dealers fob customers off with three months, but you should negotiate for 12 months or more. Of course, anything backed by the RAC is a first-class warranty."

He's right of course - if you don't read about the level of cover before you take the car, you can't moan if it breaks down and you're left in the lurch. Legally, when buying from a dealer there is an implication - provided you pay the retail price and provided phrases such as "sold without warranty", or "sold as seen" are not used - that the dealer will ensure the car survives satisfactorily for three months. If a dealer includes a warranty in the price - "free" warranties do not exist - then it is a mechanical breakdown insurance (MBI) package. The insurance is based on variable factors such as the age and mileage of the car cross-referenced with maximum claim limits and all sorts of complicated exclusions. Technically, then, an MBI is not a warranty and dealers should not describe it as such, but they do.

A common-or-garden MBI can present a lot of pitfalls. The worst that can happen is that, in spite of lots of impressive literature and signage, a dodgy dealer does not bother to underwrite a scheme, so there is never a chance of getting paid out. Some schemes cover just parts and not major components. "Wear and tear" clauses are convenient get-outs on a high- mileage used cars. An MBI can actually exclude existing faults at the time of purchase - presumably the whole point of having cover in the first place.

It gets worse when scheduled servicing has to be carried out by a garage of the dealer's choice, or when the dealer, through a bizarre "betterment" clause, can expect a contribution from the buyer if the car is repaired. There are clear and comprehensive MBIs from reputable operators such as the AA and their Motorsure policy. But more obscure policies offer little reassurance to the innocent used-car buyer. No wonder that manufacturers have flocked to launch their own approved used schemes.

Amongst volume sellers Vauxhall got there first by launching its Network Q scheme in Spring 1991. The vehicles covered, not just Vauxhalls, can be up to seven years old and come with a 114-point check, mileage verification and a 12-month, no-quibble warranty. It was hardly surprising that such a promise of quality went down well with buyers. According to Vauxhall's director of sales and marketing, Peter Batchelor, "We feel it is essential that car buyers have the same confidence when buying a used vehicle as a new one and that is why Network Q has been such a success, selling more than 100,000 cars in the first two years."

Vauxhall's example has been followed by more than 25 other manufacturers. There are variations in the levels of cover, but essentially these approved schemes put all used-car buyers on much safer ground than before. It still pays to read the terms and conditions to find out exactly how well covered you will be. Ideally the coverage should be for at least 12 months. The used car should be mechanically checked and also have its legal and service history guaranteed so that there are no doubts about the car's mechanical condition or legal status, guaranteeing that the car is not stolen, an insurance write-off and that the mileage is genuine.

There should be no restrictions on mileage during the course of the cover and provision for high-mileage used cars to be protected under the scheme. Within reason all components should be covered and any claims limit reasonable, usually up to the car's value. A comprehensive breakdown rescue package should include a replacement car and hotel accommodation, ideally Europe- wide. A commitment to an exchange policy if the car proves inappropriate or unreliable, and a discretionary attitude to a full refund, also inspire confidence.

Examining every manufacturer-backed warranty takes time and some have more confusing conditions than others. New entrants into the used-car market, such as Daewoo from Korea realise that the more comprehensive the scheme, the better. Their Daewoo Resale includes a 30-day exchange, or money-back guarantee, 116-point AA approved inspection, free mobile phone and free MoT tests for so long as the buyer owns the car.

Certainly, buying a used car can be a risky business, but if you have the right warranty, it can be an almost painless experience.

Bad Clauses

Exotics: prestige makes like BMWs and Mercedes, or sports cars.

Europe-wide cover: what's their definition of Europe?

Wear and Tear, or Reduction in Performance: a get-out clause.

Excluded Components, Turbochargers, exhausts, ABS.

Betterment: expecting the buyer to contribute.

Good Warranty Guide

Breakdown: comprehensive travel cover, membership of a rescue service.

Pre-sale checks: mechanical, finance, mileage, stolen, service history.

Claims: no limits on components, mileage or cost of claims.