Extended Warranty Myths and Misconceptions
Here are some age old lines that you will hear about extended warranties. All of these sales pitches are carefully crafted to trick you into purchasing over priced coverage from the dealership. They don't want you to know that you can get the same, or better, coverage for a much lower price online.
- I don't need an extended plan, I have manufacturer's coverage
- I'll just buy my warranty at the dealer, it's convenient
- The dealer told me I have to buy extended coverage now
- The dealer told me the bank requires one for loan approval
"I don't need an extended plan, I have manufacturer's coverage"
When your coverage expires, that's when all hell can break loose. You could be exposed to large repair costs. Once the manufacturer warranty ends, the extended coverage kicks in. It's crucial to buy early, the newer the car, the lower the cost. Just like life insurance, the longer you wait, the more it will cost, so if you plan to buy a warranty, lock in your savings now while your car is young and healthy. Your policy may include additional benefits like towing, car rental, toll free assistance, trip interruption and lost key lockout.
"I'll just buy my warranty at the dealer, it's convenient"
Wrong. It costs more at the dealer, who are just middlemen, marking up a product which you can buy directly from the company for much less. Car dealers often resell the coverage policy to you at 2 to 3 times what they paid. I get complaints from buyers whose dealers tried to sell them new car extended warranties for $3,000-$5,000. Dealers do not show you the contract in advance, so you have no idea what you are buying. Marketing brochures are not contracts and they leave out details that bite you in the butt later. Sure it's convenient to just buy a policy while sitting at dealership, but it's also convenient to go online and buy a better one for half the price.
"The dealer told me I have to buy extended coverage now"
Car dealers love to tell you this to force you into buying now. Once you leave, they lose their chance of selling you that extended coverage. They make their highest commissions on these products, plus they want you paying interest on that $3,500 policy too, which increases your cost by hundreds of dollars. Buy directly from the source.
"The dealer told me the bank requires one for loan approval"
Some car dealers will lie to you and tell you that you must buy an extended warranty to qualify for the loan (see our Top 10 Car Dealer Scams). This of course is not true! All extended car warranties can be refunded 100% in 30 days if no claims have been made. If you were forced to buy coverage that you didn't want or don't need, get your money back! Other consumers complained to me the dealer sold them an extended auto warranty, but never sent payment to the company! No matter what the dealers tell you about me, they can't argue with my tips on how to choose the best protection plan.