If you are buying a used car beware of extended warranties scams, the seller will likely encourage you to purchase an extended warranty to help protect against unexpected or costly repairs. Although a extended warranty may seem like a good idea, it could overlap with the vehicle’s manufacturer’s current warranty.
So before you spend the extra money, do a little research to see if it makes sense to buy a extended warranty. The coverage of these types of contracts varies widely.
Extended warranties for cars
A extended warranty is a promise to make (or pay for) certain repairs or services. Although extended warranties are sometimes referred to as an “extended warranty,” these types of contracts do not meet the definition of warranty established by federal law.
A extended warranty can be formalized at any time and always has an extra cost; A warranty comes with a new car and is included in the purchase price. Used cars can also come with some type of warranty coverage.
Research your options
Car extended warranties are sold by vehicle manufacturers, car dealers, and independent vendors. If you are considering purchasing a extended warranty, shop around and compare your options to understand exactly what you are buying.
Do I have to buy a extended warranty?
Generally, you are not required to purchase a extended warranty when you buy a car. You are also not typically required to purchase a extended warranty to obtain financing. If the dealer tells you that you have to purchase a extended warranty in order to access financing, contact the lender to find out if this is true.
Some people have had trouble canceling their extended warranty after learning that it was not a requirement of the provider.
Also, beware of unscrupulous dealers who may try to put a extended warranty on your loan without your consent. If you see a charge for a extended warranty that you did not accept, have the dealer remove it before signing the loan agreement.
Does the extended warranty duplicate any part of the warranty coverage?
Compare extended warranties with factory warranties. New cars come with a manufacturer’s warranty that generally covers at least three years or 36,000 miles, whichever comes first.
A extended warranty may not offer you any benefits until the factory warranty expires. Before agreeing to purchase a extended warranty, carefully review the documents to see if this is the case.
What is the duration of the extended warranty?
If the extended warranty lasts longer than the period of time you expect to keep the car, ask if you will be able to transfer it when you sell your car, if there will be a fee or if they have contracts for shorter periods.
If you are purchasing a “demo” or demonstration car – a car that didn’t sell but has been rolled over – ask when warranty coverage begins and ends. Coverage may have started when the dealer put the car into service.
Who supports the extended warranty?
Find out who will perform or pay for the repairs under the terms of the extended warranty. It can be the manufacturer, the dealer, or an independent company. Many extended warranties are administered by independent companies called administrators.
Administrators act as claims adjusters authorizing payment of claims from dealers under contract. If the manager goes out of business, the dealer may continue to have an obligation to perform the service under contract.
Conversely, if the concessionaire ceases to operate, the manager may have an obligation to comply with the terms of the contract. Your remedies for enforcing claims will depend on the terms of your contract and / or your state laws.
Find out if the extended warranty is reinsured by an insurance company. In some states this is a legal requirement. If the contract is backed by an insurance company, contact your state insurance commission to find out if the company is creditworthy and if they have complaints against you.
Generally, the regulations applicable to insurance require that companies:
- Maintain an adequate financial reserve to pay claims.
- Base your contract charges on anticipated claims. Some extended warranty providers are known to have made huge profits because the cost of their contracts far exceeds the cost of the repairs or services they provide.
- Seek approval from your state insurance office for your contract premiums or charges.
Establish contact with state or local consumer protection or the local Florida Automobile Dealers Association to verify the reputation of the dealer and the administrator and to find out if they register complaints against the company.
You can also search the internet to see if you find complaints.
If you decide to purchase a extended warranty through a dealer – and the contract is endorsed by an administrator or a third party – verify that the dealer correctly submits your payment and sends you written confirmation. Some people have found out too late that the dealership failed to remit payment to the manager, putting them without coverage several months after they signed a contract.
If you have reason to believe that your contract has not been implemented as agreed, contact your local or state consumer protection office in Florida
Generally, the price of the extended warranty is based on the make, model, condition of the car (new or used), the coverage and the length of the contract.
The initial cost of the contract can range from one to several thousand dollars. In addition to the initial charge, you may have to pay a deductible. Find out if the deductible will apply for each visit or for each repair.
This can make a big difference to your pocketbook. Let’s say you have a $ 100 deductible and three parts of your car need to be repaired. If you have a deductible per visit, you have to pay $ 100. If you have a repair deductible, you have to pay $ 300.
Extended warranties often limit the amount that will be paid for towing the car or for the cost of renting a replacement car while your car is undergoing repairs – which means you have to cover the remaining cost. . Transfer or cancellation fees may also apply if you sell your car or cancel the contract early.
What does the extended warranty cover?
Few contracts cover all repairs. Generally, common repairs to parts such as brakes and clutches are not included in extended warranties. Best advice: If a part or system is not listed in the contract, assume it is not covered.
Beware of outright exclusions that deny coverage for any reason. For example: If a covered car part is damaged by an uncovered component, your claim may be denied. Or if the contract specifies that only “mechanical damage” will be covered, problems caused by “normal wear and tear” could be excluded. If to diagnose a problem with your car you have to disassemble the engine and it is discovered that some parts that are not covered must be repaired or replaced,You may have to pay for the cost of labor for disassembling and reassembling the motor.
You may not have full coverage, even for those parts that are covered by the contract. Some companies use a “depreciation factor” to calculate coverage, meaning that based on the number of miles on your car, the company may only pay you partial repairs or replacement costs.
How are claims handled?
When your car needs repair or service, you can choose from many authorized service dealers or repair centers. Or, you may be required to take your car to the dealer for sale. This could be inconvenient if you bought the car in another city. Find out if your car will be covered if it breaks down while you are traveling or if you take it far if you move.
Some auto extended warranty companies and dealerships offer service only in specific geographic areas. Find out if you need a prior authorization from the extended warranty provider for repair work or towing service. Be sure to ask how long the authorization takes; whether you can get authorization outside of normal business hours; and whether the company has a toll-free hotline for authorizations. Call the phone number before purchasing the contract to see if you can communicate easily.
You may have to pay for covered repairs and then wait for the service company to reimburse you. If your extended warranty doesn’t specify how long the refund normally takes, ask. Find out who will handle claims if you have a dispute with the extended warranty provider and need to use a dispute resolution program.
Is the use of new or reconditioned parts authorized for covered repairs?
If this is an issue that is important to you, ask if the authorized repair shop maintains a good stock of parts. If parts are not available and the shop has to order them, it can lead to delays in repairs.
What are my obligations?
Under the contract, you may have to follow all of the manufacturer’s routine maintenance recommendations, such as changing the oil and changing the spark plugs. Otherwise, the contract could be void. To prove that you have carried out the correct maintenance of the car, keep detailed records, including the receipts of the works.
Find out if the contract prohibits you from taking your car to a separate station for routine maintenance or doing the work yourself. The contract could specify that the dealer who sold you the car is the only authorized place to service the car.
Beware of car warranty scams
Be wary if you receive correspondence or calls advising you that your car warranty is about to expire. Companies that send these types of letters or make these types of calls may try to create the impression that they represent your dealer or the manufacturer of your car. Since they are trying to make their offers sound like an urgent matter, they use phrases like Motor Vehicle Notice , Latest Warranty Notice, or Warranty Breach Notice – and instruct you to call a toll-free number for more information. Do your research before you believe it.
These deals are more than likely coming from businesses that have nothing to do with the warranty on your car and want to sell you extended warranties – more precisely known as extended warranties – that often sell for hundreds or thousands of dollars. If you respond to a call from a business offering these so-called extended warranties, before getting any details about the extended warranty, you may hear high-pressure sales tactics, as well as requests for personal financial information and a down payment. And if you buy a extended warranty for your car, you may find that the company that offered it to you will not continue to operate long enough to meet its commitments.
Avoid car warranty scams
If you receive correspondence or calls related to the renewal of your vehicle warranty, please do not take it at face value. It may be a long time before your vehicle’s warranty expires – or it may have already expired. If you have any questions about your warranty, read your car manual, call the dealer who sold it to you, or contact the vehicle manufacturer.
Be alert if they speak to you too quickly. Telemarketers offering car warranties often use high-pressure tactics to hide the real motive behind their calls. Take your time. Most legitimately operating businesses will give you time to think and provide you with written information about an offer before asking you to commit to making your purchase.
Never give out personal financial information or any other sensitive information, such as your bank account, credit card, or Social Security number – or your driver’s license number or Vehicle Identification Number (VIN) – unless you know who you are dealing with. Opportunistic scammers often ask for this information during an unsolicited sales offer, and then use it to commit other scams against you.
Be wary of unsolicited sales calls and recorded messages. If you registered your phone number with the National Do Not Call Registry, you should not receive live or recorded sales calls, unless you have specifically consented to receive them, have purchased something from that company within the last 18 months, or have requested information from that company within the last three months. To know more about this, read “Robocalls” = Pre-recorded automatic calls . To report violations of the National Do Not Call Registry provisions or to register a phone number, visit DoNotCall.gov or call 1-888-382-1222.
Warranty protection for used cars
When shopping for a used car, look for the Buyers guide that should be posted on the side window of the vehicle. The FTC requires that all used cars sold by dealerships display this Guide. The Guide indicates whether a extended warranty is available. You must also indicate whether the vehicle is sold under warranty, only with implied or “as is” warranties.
If the manufacturer’s warranty on the used car is in effect, you may have to pay a fee to get the coverage, which makes it a extended warranty. But if the dealer absorbs the cost of the manufacturer’s charge, the coverage is considered a warranty.
Implied warranties only
There are two common types of implied warranties. Both are unspoken and unwritten, and are based on the principle that the seller is liable for the operation of the product. Under a “merchantability guarantee,” the seller promises that the product will do what it is supposed to do. For example, a toaster will toast bread or a cart will work. If the car does not work, the law of implied warranties says that the dealer must repair it (unless he sold it “as is”) so that the buyer receives a working car.
A “fitness for a particular purpose warranty” applies when you purchase a vehicle based on the dealer’s advice that the vehicle is suitable or adapted for a particular use, for example a particular vehicle that is suitable for towing a trailer .Usually, used cars are covered by the implied warranties under applicable state law.
As is – No warranty.
If you buy a car “as is,” you must pay for all repairs, even if the car stops working on the way home from the dealership. But if you buy a extended warranty from a dealer within 90 days of the date you buy the car, state “implied warranties” law may give you additional rights.
In some states the sale of most used cars is prohibited “as is”. Other states require the use of specific words to disclaim implied warranties. In addition, some states have used auto legal remedies known in English as “lemon laws,” which establish protections for used car buyers by providing for a refund or replacement of the car in the event that the vehicle has serious operating defects. To find out the applicable laws in your state, contact your local or state consumer protection office or the attorney general’s office.
For more information, read Buying a used car.
If you have a problem with a extended warranty, first try to resolve it with the provider. If that doesn’t work, contact your Florida State Attorney General , Florida State Insurance Commission , or local Florida Consumer Protection Agencies . You can also file a complaint with the Federal Trade Commission (FTC) .
If you think you are a victim of a car warranty scam, file a complaint with the FTC . Although the FTC does not intervene in individual disputes, the information you provide may indicate a consistent pattern of possible violations of the law that require action by the Commission.
If you are in the market for a new or used car you’re probably going to junk your old car. If you are in the North Brevard or Titusville Florida are give us a call at 321-209-7777 or fill out our contact form at AUTOJUNKER.COM