These days, you can forget about buying a $1000 “beater with a heater” to get you around for a while. The prices of used motor vehicles can now be as high as what people once paid for brand-new vehicles.
That’s made more people than ever look carefully at the extended warranty options they’re offered from the dealership and other sellers. But, do extended warranties actually have much value?
You’d be better off banking your money
As one editor at Consumer Reports noted “Dealers and automakers sell extended warranties to make money. The consumer is only at a disadvantage with these things.” The appeal of the extended warranty is that the consumer can roll the payments into their loan when they buy the car, which makes the overall cost seem manageable.
However, extended warranties are expensive, and the legitimate companies are few and far in between. Many purposefully misrepresent themselves as connected with major auto manufacturers and dealerships. Even when you get a policy from a legitimate company, you may have trouble getting any benefit from your purchase. More often than not, claims are denied because:
- You don’t have complete maintenance records: Did you miss an oil change back when you were super busy with your job and life in general? You might have thought that was no big deal, but the extended warranty company can use that lapse to say that you didn’t properly maintain the vehicle and deny your claim.
- The repairs fall into one of many exclusions: The fine print on those extended warranties can be dense, and most of them don’t cover half of the things that consumers think they should. The list of what isn’t covered may be longer than the list of what is covered.
In almost all cases, you’d be wiser to just put a little money aside each month in case you need repairs and forget about extended warranties.
Scams targeting auto consumers are everywhere. If you fall victim to one, it may be time to find out more about your legal options.