Understand Auto Extended Warranties
Auto extended warranties are the service contracts the dealer will try to convince you to buy when you purchase a vehicle.
Typically they will cover repairs after the included warranty expires. If you lease your vehicle and will turn it in at the end of the contract, an extended warranty probably isn’t for you. But if you plan to own the car for several years or more beyond the included warranty time frame, you may want to consider an extended warranty for your vehicle. Some of these loans may have a buy back at the end of the term or if you sell or trade your car in for another. The buyback will return the cost of the warranty to you if the buyer doesn’t use it. If you are offered that type of deal, it’s one you probably shouldn’t pass up. I had a buy back warranty that cost $700. At the end of the warranty period, I brought my car and certificate to the dealer for verification that no warranty work was performed on my car and I got my $700 back. It was a nice addition to the down payment for my next new car that I bought shortly after the warranty expired.
The cost of auto repair can be an expensive proposition these days. The cost of the warranty may seem expensive at the outset but an auto extended warranty can pay for itself with just one major repair bill such as air conditioner or transmission repair. An extended warranty will take the worry out of car repair.
Buying auto extended warranties is not as straight forward as it may seem. First off, the salesman and business manager might have a stake in selling an extended warranty. They may get points or bonuses for selling the warranty. There is nothing wrong with adding incentives for the sales staff but it shouldn’t be done by pressuring the customer into something they may not want. If you are buying a new vehicle and are being pressured with scare tactics to buy an extended warranty, get up and walk away. The dealer isn’t worth doing business with.
Secondly, if you are interested in auto extended warranties, make sure you understand all points of the contract. Read the warranty carefully and go over it point by point with the salesman or finance agent. Understand the limitations and the qualifiers. For instance, you may be required to have the repair work performed at the dealer or a designated repair station. But what if you are out of state or more than 100 miles away from home? How is the warranty affected? Other things to check in the auto extended warranties are: Will you be required to pay for the repair then get reimbursed once the repair is approved? Will you have any recourse if the repairs are not completed in a timely manner or not completed to the customer satisfaction? What if the warranty repair is not approved, then what? Before you sign on the dotted line, make sure you understand all the in’s and out’s of the deal.
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