Don’T Get Burned By An Extended Vehicle Warranty - Just Say...

Watch out for these high price rip off artists.

I have been a shop owner since 2001 and managed multiple shops prior. I have sold some of these so called aftermarket used vehicle or extended mile warranties and my auto repair shop reluctantly honors many of them currently.

Here is what I have found.

Many of them are not worth the paper they are written on. At most they cover 50% of the repair cost. They have a deductible or co- pay for each repair you have performed. The better ones will only have a deductible for each visit, usually from $0-$100. They also cap the amount of parts and labor they will pay out. Example: parts cost $325, labor cost $80 per/hr times 3.5 hrs equals $280 in labor, total repair cost is $505 plus taxes and supply charges. The warranty contract usually will not pay sales tax, fluids, shop supplies, hazardous material fees, the full labor rate, full labor time, the full parts cost or any other item not directly related to the covered component. You then have to minus your deductible as well.

Many of the contracts will use a version of this format to pay out your CLAIM. Notice this word they are an insurance company. They are not in business to pay out claims. They are in business to make money. I have seen so many customers so mad after buying an aftermarket warranty and then being stuck with it for 2-3 years thereafter and still paying for it half of the time.

One of the problems you will face is the swindling salesman on the phone or at the used car dealership. He gets paid up to 50% commission to sell you that warranty. These are a huge money maker at used car dealerships and the banks who finance them into your loan contract. These sales people will lie and tell you “this covers everything” with a big smile on their face. The sales person knowingly sells the warranty because they do not repair cars so they do not have to honor the warranty

 When is it a good idea to purchase an extended warranty you might ask?

I would highly recommend purchasing the dealer extended warranty on higher end cars $40-50k plus as the average repair on these vehicles will exceed $1000 dollars almost every time. If one is not available to you at time of purchase you can seek out one of the aftermarket versions.

If you are the second or third owner of a higher end vehicle I would highly recommend purchasing the warranty as well. Typically most of us are not used to paying out a thousand or two every time our vehicle goes into the shop for repairs. With these sensitive computer systems, high priced accessories, and the need to replace and reprogram thousand dollar computers and modules I think it would be foolish not to so you can add a few years of security and peace of mind to your vehicle purchase.

Keep in mind the average cost of a good extended warranty plan will cost $1200-$2000 or more.

Should you even consider buying an extended warranty for your vehicle make sure you call around your area and find out who honors the warranty. You may also ask you local repair shops or dealerships opinion of the company as they will know more about them in your particular area. You will also want to very carefully read what is actually covered and included in the contract. If you need clarification then ask.

I have come across only a few companies in the past that I would recommend. I do not work for or sell any of their products. Guardian Warranty, Wynn’s Warranty the dealership extended factory warranty and some of their aftermarket warranties that they accept. If the new car dealership will honor the warranty it’s a safe bet you probably have a good one.

In closing my heart goes out to everyone who has been burned by these companies and their sales people. I hope I have shed some light on this industry and their pitfalls.

Sam Postema 

http://www.Professionalfleet.com

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Don’t Get Burned By an Extended Vehicle Warranty - Just Say No!

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sam-postema

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