Dealership Warranties Vs Third-Party Warranties

Dealership Warranties Vs Third-Party Warranties
Monday, 3 April, 2023


Cars are an essential part of our daily lives, providing us with the mobility and convenience we need to get around. However, over time, wear and tear can result in unexpected repair and maintenance costs, which can add up and put a considerable dent in your budget. That being said, this is where a car warranty comes in handy, offering drivers peace of mind by protecting them against unforeseen expenses. 


In this blog, we'll take a closer look at the differences between dealership warranties and third-party warranties (known also as grey market warranties), what they cover and how they can benefit you as a car owner. Whether you're in the market for a new car purchase or already own one, understanding a vehicle warranty is crucial for protecting your investment and keeping your car running smoothly for years to come.


Dealership Warranties


Dealership warranties are provided by an authorized dealership when you purchase a new or used vehicle. Although typically more expensive than third-party warranties, they are generally considered to be more reliable and cover repairs, maintenance and services for a certain period or mileage. For example, Markazia Lexus offers a Basic Warranty coverage for 48 months or 100,000km, whichever comes first. 


#Pros of Dealership WarrantiesCons of Dealership Warranties
1Coverage: Dealership warranties typically cover a wide range of high-quality repairs and services by trained technicians who use original factory parts. Cost: Dealership warranties can be pricier and the cost can vary depending on the coverage plan you choose. It's important to carefully consider the cost of the warranty and weigh it against the potential repair expenses.
2Convenience: Dealership warranties allow you to conduct all vehicle repairs and services at one location, saving you the time and hassle of taking your car to multiple shops for different services.Restrictions: Dealership warranties may have restrictions on the types of repairs and services covered. For example, they may not cover repairs due to wear and tear damages, or may only cover certain parts of the vehicle. 
3Peace of mind: Dealership warranties grant access to excellent customer services and a wide range of benefits such as roadside assistance, plus you won't have to worry about unexpected repairs and expenses.  


Third-Party (Grey Market) Warranties


On the other hand, third-party warranties are provided by third-party companies that are not authorized by the auto manufacturer or dealership. They are typically purchased separately from the vehicle and cover repairs and maintenance for a specified period or mileage. Their attractiveness to customers typically comes from their lower cost compared to dealership warranties, but they may also have more coverage restrictions and limitations. 



#Pros of Third-Party Warranties Cons of Third-Party Warranties 
1Lower Cost: Third-party warranties are often cheaper than warranties offered by the original manufacturer or dealership. Coverage: Third-party warranties are customizable and can extend similar coverage to the manufacturer and dealership warranty, including parts and labor.Trustworthiness: Third-party warranty providers are not subject to the same standards as a dealership, which can lead to concerns about trustworthiness and responsiveness. You are advised to research the warranty provider and read reviews before purchasing a third-party warranty.
2Flexibility: Third-party warranties may offer more flexibility than manufacturer warranties, such as the ability to choose your preferred repair shop or certified mechanic.Coverage: Third-party warranties may not offer the same coverage as dealership warranties. For example, they may not cover certain parts or damages.
3 Cost: Third-party warranties are often cheaper than dealership warranties, but they may still be expensive. It is important to conduct a cost comparison between both warranty types to determine which is worth the investment.



Factors Affecting Warranty Pricing


The cost of a warranty may vary depending on several factors, including:

  1. Vehicle model, age and mileage: The more high-end, older and higher mileage a vehicle is, the more expensive the warranty will be.
  2. Coverage plan: A comprehensive package with a longer duration, additional benefits and all vehicle components covered will be costlier than basic coverage.
  3. Location: The car warranty price can vary depending on the location, given that labor rates and part costs vary from city to city.
  4. Warranty provider: Reputable companies with good customer reviews may charge more for their warranties.


In conclusion, choosing between dealership warranties and third-party warranties depends on your personal needs - yet one thing remains true and that is they can be valuable financing to protect your vehicle and budget in the long run.


As the local Lexus dealership, we welcome you to our showroom on Mecca Street to explore firsthand the best car warranty plans we have to offer.




  1. What is the difference between a car guarantee and a warranty?
  • A car guarantee promises that the vehicle is free from defects for a shorter period and covers specific issues - such as paint, upholstery or audio system.
  • A car warranty is a longer contract that covers specific repairs or replacements for a set period or mileage, protecting the owner from unexpected and costly repairs.
  • A car guarantee covers specific defects, while a warranty covers broader issues - such as engine or transmission problems.


  1. What is a third-party warranty (grey market warranty)?

Third-party warranties are sold by third-party companies not authorized by auto manufacturers or dealerships. They cover repairs and maintenance for a specified period or mileage, and are purchased separately from the vehicle. While they are cheaper than dealership warranties, they may have more restrictions and limitations.


  1. What is a basic dealership warranty?

A basic dealership warranty is a limited warranty provided by the dealership at the time of purchase, which typically covers certain components and repairs for a limited time or mileage.


  1. Does a warranty mean free repair?

Not necessarily. A warranty covers the cost of repairs or replacement for covered components or issues, but it may not cover all expenses or be completely free, as there may be other costs associated with the repair process.