Extended Warranties Are Usually Worthless

Posted by Chuck Masterson

An extended warranty can apply to an automobile or any other large purchase. But the truth is, they are rarely worth it. Truth be told, what they call an extended warranty is not really a warranty at all. It actually should be called a service contract. These agreements are usually tacked onto your automobile purchase or other large purchase at the time of sale. Car dealers attempt to get an extra one to 3000 dollars out of you by having you sign the service contracts and pay money up front for any repairs not covered by the product warranty.

Most car dealers will do everything they can to sell you a service contract by telling you that they can cover some large repair bills that are covered by the standard warranty. of course the reason they do this is the service contracts are very profitable. In fact, sometimes 50 percent of the money goes straight into profits on the sale. The reason they can get away with this is that the coverage is usually not what you expect.

Most have exceptions or exclusions such as the following:

No maintenance records. you need to be able to produce records proving that you have maintained their vehicle according to the manufacturer’s maintenance schedule. If you don’t have proof, you don’t get coverage.

Wear and Tear? Normal wear items such as brake pads and shoes, gaskets, hoses, clutches, shock absorbers, and belts are typically excluded. These are the items that are expected to “wear out” through normal use of the vehicle and are the owner’s responsibility. These items are the ones most likely to require repair during the first six years of your car’s life.

Breakage of a noncovered part. Damage caused by non-covered parts are not included in your contract coverage even if they do cover items that are under contract. For example hoses are not covered by the contract, so if a hose breaks and causes major engine damage it won’t be covered even if major engine failure IS covered.

“Investigative surgery” like you leave your contract is not going to cover “exploratory surgery” on your car to find out the problem is, unless the problem turns out to be covered. This sometimes means you’re going to pay part of the repair costs upfront before the garage even starts to investigate the problem.

Limited repair options. You may have a hard time getting repairs on your vehicle, because the service contract limits where you can have the repairs done. The agreements sometimes severely limit who can work on your car by restricting the repairs to a certain number of places. On top of that, some service contract providers have a bad reputation in the service center won’t even honor the contract. They’ll ask you to pay for the repairs, and you have to try and get reimbursed for yourself.

Considering all these problems, chances of you actually receiving any peace of mind by using a service contract are slim. Unless of course you never actually need the contract, which is the most likely scenario. Considering the way cars are being made these days chances of you needing major repairs are pretty slim. In most situations the profits are just going into the company’s pocket and you’ll just be throwing a money away by purchasing an extended warranty.

Tags: Cars

Under Cars Tags: Cars