In the used-car market, the seller has superior information about the car's condition, placing the buyer at an information disadvantage. It also increases the chance that the car being sold is a "lemon." A substantial warranty can provide the buyer with valuable additional information about the condition of the car, reducing both asymmetric information and adverse selection problems. Too extensive a warranty (e.g., an unlimited "bumper-to-bumper" warranty) will give the buyer less incentive to take care of the car because the buyer is effectively insured against the damage that lack of care would cause.