I was looking at a used 8 on a dealers lot and noticed the used car warranty is for 5 years bumper to bumper. Is that correct? So is it better to buy a slighty used car with the lower price and longer warranty?

It's probably an extended ne aftermarket warranty that has been tacked onto the price or partialy subsidized by the dealer.

Inquire about the warranty, see if there are any deductibiles or what not. If it is indeed a factory B-to-B then go for it.