February 26, 2006

Hi Tony

I recently purchased a new vehicle with an extended warranty and GAP coverage insurance also. After further review of these items, I realized that they were way overpriced. I since then canceled both of them but was told by the dealer that the refund would affect the "total of payments" and not the "amount financed," that in the long run I would pay less.

Does this make any sense?

I could not get a straight answer out of them. They originally lowered my interest rate to accommodate what I could afford payment wise, but I'm still confused on how all this works.

I'm convinced that they are still getting paid from these warranties since they were so helpful in helping me to cancel. They asked me to leave the room and a couple of managers talked to the Finance Manager and I was called in and it was all handled. Could you explain what this means?

Shouldn't the refund come off the "amount financed" so I would owe less, or are they messing with the numbers and I'm actually paying the same?

And where is this refund supposed to go and how is this process supposed to work? Sorry for all the questions but I just feel like something is not right. Thank you in advance for your time and response.

Thanks,
John

Answer:

Hi John,

The refunds will go directly to your bank where the vehicle is financed. The loan contract and the payments will not change, but the total amount you owe will change as the refunds will be taken off the end of the loan. So if you make it to the end of the loan you will have fewer payments to make, or if you pay the loan off early the refunds will be reflected in the actual payoff.

The key is making sure the car dealer processes the refunds right away.

I've answered similar questions for some of my website visitors and I have posted them at Warranty Questions. You will get a lot more insight into the refund process by reading these.

All my very best...

Tony Iorio

Additional Question From John:

Hi Tony,

Sorry to bother you again but I just wanted to thank you for your response and ask another question if I can. In my case, why was the Finance Manager more than willing to help me cancel if he is losing his commission?

Or is he? Are they manipulating the numbers to where he is still getting paid? He originally told me that they did not do cancellation at the dealership, only the bank handles that and when I proved him wrong, he helped me and said it was no problem because he does not work on commission. Does this sound right to you?

Thanks again Tony. I know your busy and I appreciate your help.

John

Answer:

Hi John,

Well John, this Finance Manager has lied to you at least twice! He told you the dealership doesn't do the cancellation, and he told you he doesn't work on commission. All bull!

He has no choice but to cancel the warranty once you request it, BUT . . . him just doing the paperwork on the cancellation while you're there does not mean he's going to follow through and complete the cancellation.

You must stay in touch with the Office Manager at the dealership, the warranty company and your bank until the cancellation is complete and credited against your loan. Don't believe for a second that this guy is looking out for your best interests. And remember, if he sits on the paperwork without completing the process your refund will be reduced.

That said who knows what else these guys have up their sleeve. The fact that they had to meet behind closed doors while you waited outside does not exactly instill confidence in them. Watch them closely. Get copies of everything. Contact the bank and make sure they didn't change any of the figures on the loan to make up for the warranty, and don't sign any new loan contracts.

Take care . . .

Tony Iorio