Auto extended warranties

   / Auto extended warranties #11  
Alan, I don't know anything about the auto warranties you're inquiring about, but in my RVing days, I read lots of horror stories about the ones on RVs. I've only bought an extended warranty on two vehicles in my life; first one in '82 and was never needed; second one on the '99 car we now have, so not needed so far. I generally consider them to be a poor investment, but if I buy one, it would have to be from the dealer.

Bird
 
   / Auto extended warranties #12  
Alan,
I have no direct experience with online warranties only bad experience with a dealer offered extended warranty on a lemon VW in the past. Do take a look at the website though, it even has specifics about GMAC warranties.

There are many car buying strategies that are good. What has worked for me is to think of the total price only. Figure up what you're willing to pay based on invoice, add extended warranty cost, subtract an appropriate trade in value and down payment, and negotiate the total price only. Don't let them bamboozle you with talk of the poor quality of your trade in, they're just trying to insult you and make you emotional to close the deal fast. Pay cash or arrange financing before going to the dealer. If they have good financing at the dealer, still negotiate price only, they'll try to confuse you with talk of low payments, down payment etc.
Some things that make you lose negotiating leverage are fewer dealerships to go to, popularity of the car you want among others. If these are things you already know, forgive me I'm not trying to insult you, only trying to pass along some good advice. On that website the general car buying tips are excellent.

http://www.carbuyingtips.com/warranty.htm
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   / Auto extended warranties #13  
Grant,

<font color=blue>negotiate the total price only</font color=blue>

I agree, that is an excellent approach. I once bought an Explorer and the dealer (after much haggling) was within $37 of my price on a ~$24,000 car. We got in the car to leave fully expecting the salesman to come running out to meet our offer, but nope. Told my wife as we drove around the block "I think we have his lowest price". Went back paid the extra $37 and bought the car.

Al
 
   / Auto extended warranties #14  
My wife had an extended warranty on a Chrysler Laser she owned. She bought the warranty from the dealer she bought the car from. It wasn't a Chrysler warranty. Several years later, we had some expensive engine problems, and found out that the company which had written the warranty was in bankruptcy. The dealer was no help, and neither was the state insurance commissioner. To add insult to injury, she had financed the car AND the warranty so that she paid interest on the amount of the extended warranty. No more Chrysler products and no more extended warranties.
Bob
 
   / Auto extended warranties #15  
When you're looking at buying an extended warranty for a new vehicle, there are a few issues to look into:

First, research whichever company you are planning to buy a warranty from. Websites like Warranties Direct, 1 Source Warranties (which, BTW, I've heard negative/horror stories about), AutoServiceContracts.com, WarrantyByNet.com, WarrantyGold.com, et al, are simply sales agents who sell a policy from a national insurance company. In cases, the agency will be owned by the parent insurance company, but not always. It doesn't make a huge difference if you do your homework. Make sure the PARENT company is going to be around. Is it a company you have heard of? Whoever provides your car insurance might also provide extended warranties. These companies will most likely be around to honor the warranty. If you haven't heard of the company, do as many searches for information on them as you can. Ask tje selling agent as many questions (including "tell me about xyz company") about them as you can think of. If you're at any point unsure of this company, or read something bad about them (use your own judgment on what is a genuine complaint, and what is an irate customer who wants them to cover something outside of the contract), then move on to another company you do feel comfortable buying from.

Second, and really just as important as the first point, is the actual claims process. You are going to be dealing directly with the insurance company for claims, and they employ many people who have it in their minds to deny every repair they can, if they can extract enough information out of you or your mechanic to justify doing so according to the terms of the contract... or in cases, based on terms not in the contract. An example being, the contract might state that a part, say, suspension control arm bushing, is covered, but the fact that it is squeaking and not clunking might easily give them reason to deny the repair due to the squeaking being from normal wear and tear, which is of course excluded from the contract.

More on claims process... ask your agent EXACTLY how the claims process goes. Most likely, you will get something jolly and good, like...

"Say you have a breakdown... well, you take your car to an authorized repair shop or dealer, and have them diagnose the problem. They call our claims authorization number, get a credit card number from us, and an authorization number, and make the repair. All you pay is your x $ deductible!" ... sounds great.

First issue to deal with is the repair shop or dealer that doesn't want to deal with a warranty company. They may have had past (bad) experiences with getting charge backs on payments, or no payments, among other things. They may not have the time to wait on hold with the warranty company, or may not like dealing with the sometimes quick to try to deny coverage claims officers.

Another issue to deal with, assuming your repair is covered and authorized, is the actual payment. Does the contract CLEARLY define who will be paid, and by which method, and when, after a claim is authorized? Or does it cover the entire payment section of the contract with "You will be reimbursed for all authorized claims"? if it is not clearly defined who pays who, and when, and by which method, you could and will be looking at being hassled to get paid for the repairs. First of all, they will tell you that the company policy has changed and they no longer pay by credit card unless in the case of an emergency repair. This means you will have to pay your repair shop and then deal with getting reimbursed for your repair yourself. You will have to get a fax number from the claims officer, and fax a copy of your invoice, with authorization number and ABSOLUTELY NO errors in information, names, part number, amounts, etc. Everything has to be in line and to their liking. Then, they will mail you a check. Sometimes in 5 days you will get it... sometimes two weeks, sometimes a month. Since your contract doesn't state the payment terms with a "within x days" mention, they can take all the time they please to pay you. And they probably will.

Once you get the check, you will have to put it in an account in your name, and clearly endorse the check with your name, otherwise they might refuse payment on the check.

Yeah, it sounded simple and straightforward. To get your claims authorized and paid, by any method, either you or the service advisor/manager at the shop or dealership you use for service, will have to make at least 3-4 phone calls, likely 1-2 faxes, be patient, calm, and precise with the warranty company. Not to say it can't be done, it just can be more of a hassle than you might think.

What to look for to avoid what I just outlined, is a clearly outlined authorization and payment section of the contract, that includes timely payment to the repair shop by credit card before or immediately after the repair. You might not find that, and in that case even if the salespeople promise payment to the shop by credit card, I would assume that they will likely want to reimburse you by check well after you paid for the repair.

This sort of explains why some repair shops and dealers don't like to deal with extended warranties.

Do yourself a favor, and get the claims authorization number before you buy a contract. In the event that you have to deal with these people, it helps if they are courteous. Call them up and ask for them to explain the claims process. If you're greeted with a snotty tone like "this is the CLAIMS line, sir!" then perhaps they could use a few more employee relaxation breaks. /w3tcompact/icons/wink.gif Not to say the company is good or bad based on the operator you get just making a call to their claims center, but IMO it's worth a few minutes to call them. You just might get on the line with someone willing to tell you a bit about the company.

The other important consideration to look at is the coverage of the contract. Read it carefully. If you're buying a new car, do not buy a contract that covers parts listed. Only buy a contract that covers "everything but" a list of "not covered" parts and items. Usually things like brake pads, interior and exterior trim, light bulbs, wheels and tires, windshield wipers, etc. Also of course, guidelines for what type of maintenance you are required to perform to maintain the warranty coverage can be expected, and you may be required to produce documentation in the event of a major failure of a major component like the engine or transmission. Additionally, I have heard of insurance companies sending out technicians to inspect a repair before authorizing, if it is expensive enough to justify one last ditch effort at denying coverage. /w3tcompact/icons/wink.gif This is routinely done with manufacturer warranties as well, if a major part fails. Definitions of these types of things would be nice to see in a contract, but I doubt you'll ever find a contract stating something along the lines of "we'll do everything we can to deny your coverage."

Other things to look for in the coverage section, are restrictions on things like turbos or superchargers if equipped, factory-installed trailer hitches, alarms, and other options.

Also, parts damaging other parts is a tricky area that can leave you with expensive repairs not covered by the warranty. Say an abnormally worn and loose timing belt snaps or skips at 37,000 miles, and although replacing the belt might cost $200, the failure left the engine with bent rods and damaged valves (maybe more), and $3,500 in damage. Does the warranty cover all that the timing belt "took with it", or just the belt?

While you're at it, read the "only covered if" parts of the contract real carefully.

Even considering these warnings, the coverage on new car contracts is generally very good, and in most cases a "bumper to bumper" policy that covers everything on the car except a list of not covered parts, will leave you with manufacturer warranty-like coverage for up to 84 months/100,000 miles.

As for justifying the warranty... it's really just like any other insurance. On one policy I haven't made any claims. On another, it had paid for itself plus $250 in less than a year.

BTW, I have dealt with AutoServiceContracts.com and WarrantyByNet.com on the sales end, and Heritage TPA and Royal-Sunalliance on the claims end, and would deal with either again. However, the same coverage from Royal was about half of what Heritage was. FYI, WarrantyByNet.com no longer sells Royal-Sunalliance policies. I'm not sure what they sell. /w3tcompact/icons/wink.gif

Hope this helps...

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   / Auto extended warranties #16  
Just avoid the whole issue by buying a Honda or Toyota. They won't break.
 
   / Auto extended warranties #17  
Alan L

I have run into third party warranties. A customer had an third part warranty on a VW passat with a 2.0L 16V engine. The timing belt jumped under a load and caused engine damage. All the valves were bent. A few pistons had some damage done to them. The warranty company sent an adjuster 2 times to our shop to look at it. Warranty company would only cover damaged parts and pro rated them for the mileage. It took the warranty company 6 weeks to figure out what to do with the car. Customer was not happy at all. He ended up putting in a reman engine from VW. The warranty payed for only the parts needed, but customer paid the difference for the new engine. The warranty company was a real pain to deal with, as a shop and for ther owner of the car. I do not know if this warranty company was an internet company or not. I don't even remember their name. We did have another customer with a GE warranty company. There were good to deal with. Customer replaced alternator, wiper motor, drive axles, and bearings. They warranty company didn't give us any hassel at all, payed us before we did the work. I have heard of some warranty companies going out of business. I personally don't need it beacuse I fix my own and get my parts at cost.

I just remembered, when we purchased our new Chevy 2001 2500HD 4wd is summer they offered us a GM extended warranty. I don't have the figures in front of me but seem pretty close to what you said.

Insurance/warranty, great if you need it, expensive if you don't need it.

Derek
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   / Auto extended warranties
  • Thread Starter
#18  
Thanks a million guys for the detailed information. We bought the new truck today and while we aren't picking it up til Monday I can still think about warranty. I turned it down but am still thinking about it. At the last minute after the financiing and all was all signed they offered to knock $100 off of it so it would be $1,820 or so for 5yr/100K miles, a GM warranty.

Now they are saying I can pay it over 18 months with no interest. I could stop paying at any time and the length of warranty would be pro-rated. I can get 4yrs 75K for only $1100 which might not be a bad idea. One thing is for sure and that is I will shy away from the 3rd party warranty because of your help - especially Mohammed's explanation of the hassle I might have to go through. Whether we go with a warranty at all remains to be seen.

As I suspected, they only offered $9500 for my '97 'burb, so I still have it. Hopefully I can get $12K or so for it. The truck had a sticker of $43,178 and we ended up at $35,000 even after taking into account the $2500 of incentives. The $35K is $3,254 under dealer invoice, but of course they recover $2500 of it with the incentives. Strangely enough, I got $1000 for owning a Ford pickup!

Any further debate on whether or not to get the warranty is welcomed!

Alan L., TX
 
   / Auto extended warranties #19  
Someone may have already mentioned this, but if you are financing your automobile through the dealer, you can sometimes get a better interest rate if you agree to purchase the extended warranty through the dealer. This has worked on my last two Ford purchases. The second time, which was three years ago, the "finance guy" wasn't even aware of the program until I mentioned it to him. He looked it up in some 4 inch binder. In both cases I received a 1/2 percent better rate, which ultimately paid for the warranty.
 
   / Auto extended warranties
  • Thread Starter
#20  
Glen, you're right. If I was buying a Toyota or Honda I wouldn't think twice about going without the warranty. I drove a Corolla 240,000 miles from 1989 to 1997 and had very little trouble along the way. My brother now owns the '92 Honda Accord I bought my daughter when it had about 40K miles on it. Right now it has 175K miles and is running like new.

Unfortunately neither one has what we wanted. Toyota has the Sequoia but its only about the size of an Expedition and they are getting sticker price ($42 plus) for them.

Our grown kids and grandkids like to go on outings with us, and with all the "stuff" we carry around we need both the third row seat and the room behind it. That leaves only the Suburban (Yukon XL) or the Excursion. The Excursion ride is a little harsh, my wife says its too big to drive, and the gas mileage is less (unless you spend $4K for the powerstroke diesel). Plus I swore in 1988 that I would never buy another new Ford (I have a '95 F150 I bought used) because we had a 1986 Taurus that shifted itself into reverse and slammed into the 3/4 ton pickup behind it, doing $3000 damage. I won't get into Ford's a$$hole reaction.

Alan L., TX
 

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