Extended Auto Warranty Tips
How to Buy a Warranty for Your New or
Used Car Without Getting Ripped-Off!
 Is an Extended Auto Warranty Right For You?
An "Extended Auto Warranty," a "New Car Warranty," or a "Used Car Warranty" as it is sometimes called is an excellent investment when you purchase a new or used vehicle.
Now, having said that let me Warn You; There are
VERY FEW extended auto warranties out there that are worth the paper they are written on!
During my 37 year career working in car dealerships I've spent 8 of those years as a Finance Manager. One of the jobs of a Finance Manager in a car dealership . . . besides seeing to it that you walk out with the Highest Payment Possible . . . is to sell extended auto warranties. I've had extensive contact over the years with used car warranty companies and their products, and I've seen some very shady stuff go on!
- I've worked for dealerships who failed to forward the money collected on extended auto warranty sales to the warranty company, thereby invalidating the warranties purchased without the customers ever knowing about it!
- I've seen repair claims refused on the slightest technicality.
- I've seen repair shops go for months waiting for a payment from a used car warranty company.
- I've seen extended autowarranty companies go out of business, and leave people hanging with a worthless contract.
Yet, in spite of these problems, I still believe an
extended auto warranty is a good investment to make, provided you can find a first rate company that you can depend on and trust.
The
Price of Just Repair Job Can Easily Cost More Than the Price of the Extended Auto Warranty Itself!
It even happened to me! I once paid $900 for a 2 year or 24,000 mile extended auto warranty, and 3 pistons had to be replaced in my engine. The final bill was almost $2000!
Of course, I had to fight for a month with the extended auto warranty company! They weren't going to pay, because they were considering the repair "wear and tear!" You see, the parts hadn't actually failed yet. The pistons were just rattling like a bunch of ball bearings in an empty coffee can, but the motor was still running!
"Wear and Tear" was a gray area, that usually wasn't covered! Had the parts failed and destroyed the rest of the engine it would have cost them $4000, but then they would have covered it no questions asked! Go figure!
Why Purchase an Extended Auto Warranty?
It Gives You Peace of Mind! It Protects You Against the Rising Cost of Repairs! It Allows Repairs To Be Made When You Need Them! - It Adds Resale Value to Your Vehicle!
Extended auto warranties cost less the earlier you buy them. You will pay more for coverage as your vehicle ages and accrues mileage.
What doesn't make sense is to pay the car dealer a huge profit for simply printing the new car warranty contract! For example, a typical poor quality 3 year / 36,000 mile extended auto warranty might be marked-up by an auto dealer $1,000 or MORE! Why should you pay the auto dealer all that profit out of your own pocket just for their benefit? It makes no sense at all!
A lot of car dealerships are setting up their own extended auto warranty companies. So when your car does need a repair, guess who has to approve the claim? The Car Dealer! Good Luck!
Several years ago I worked for a new car dealer who had his own extended auto warranty program. He charged as much for his warranties as the most expensive warranties out there, yet his warranties never covered anything! There was always some technicality he could come up with to deny a claim.
Another dealer I know had his own warranty program, and he sold his dealership. Guess what happened to all the people with "Home Grown Extended Auto Warranties?" You guessed it! They got left holding a worthless piece of paper that they spent $1500 to $2500 for!
You've Been Warned! Buy an Extended Auto Warranty From a Car Dealer at Your Own Peril!
What To Look For When Purchasing an Extended
Auto Warranty!
if the plan lists the items that are covered, it is not a bumper - to - bumper plan. By definition, a bumper to bumper plan is exclusionary, that is, it will only list the few components that are not covered. Typically these include cosmetic and maintenance items.
Wear and Tear Protection
- This means that you are covered for parts that break as well as those that wear out. All covered parts in an extended auto warranty should include a "Wear and Tear" provision.
A lot of plans have "Wear and Tear Exclusions," such as struts, piston rings, valves or other expensive components that wear out and will not be covered. Beware of These Plans!
Overheating - Look for a plan that does not exclude damage due to overheating.
Roadside Assistance - You want an extended auto warranty that offers a free nationwide roadside assistance plan. You want to be covered per occurrence. Not an out-of-pocket reimbursement plan, that is tied to only covered repairs.
A Good Extended Auto Warranty Includes:
- Emergency Road Service
- Towing
- Emergency Tire Service
- Battery Assistance
- Gasoline & Fluid Delivery
- Emergency Lock-out Service
- Nationwide Coverage
- Toll Free 800 Number
- 24 Hours a Day/365 Days a Year Service
Some Additional Things to Look For Include:
Car Rental - Should your vehicle have to remain overnight for a covered repair, you're going to need wheels!
Trip Interuption - Should your vehicle become disabled more than 100 miles away from home, and the repair is covered under your contract, reimbursement for lodging and meals should be provided.
Nationwide Coverage - You should be able to receive repairs at any repair facility in the US or Canada.
Choice OF Deductibles - $0, $50 and $100 deductible options should be available.
Renewals - A provision should be offered so that the plan can be renewed for continuous one-year terms for as long as you own your vehicle.
Transferable - You should have the ability to transfer your coverage when you sell your vehicle, for a modest fee, which will increase your vehicle's resale value.
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