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MotorHeadline: We’ve been trying to reach you

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By Taylor Bryant

Extended Car Warranties

“We have been trying to reach you about your car’s extended warranty.”

Um. No.

Everyone has received this phone call from time to time. There are even numerous scams in the marketplace that take your money and offer no protection at all. With the increase of cost and complexity in car repairs, an extended warranty may seem like a great option, but the reality is that it is a complex world of large upfront costs and fine print.

First off, third-party warranties are not warranties at all.

These are service contracts provided by a company that is not owned by a car manufacturer. They come in a variety of coverage options, from powertrain coverage for engine and transmission repair, to full bumper to bumper coverage. Most buyers of third-party warranties are purchasing a used vehicle and buy the warranty at the point of purchase.

Third party warranties are attractive to many buyers because they can be financed with the purchase price of the vehicle. The price will vary per each vehicle model and options package. Some are transferrable to future owners if you decide to sell, which can make your car more valuable to a potential buyer.

The disadvantage of these types of warranties are that they are only as good as the company that is offering it.

If the company goes out of business, most of the time the buyer is out of luck. They are also full of loopholes and fine print which can be intentionally misleading.

For instance, if your vehicle has a major component fail, such as an engine, the warranty company can opt to replace your engine with a used engine from a salvage vehicle. They have set prices they pay for car repair labor, and if the shop you choose wants more than that, you will have to pay the difference. They will also send an adjuster to the repair facility to inspect the vehicle and approve the repair, which may add days to the repair time.

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A manufacturer provided extended warranty is the closest option to a true extended warranty. These are sold by the dealer of the car that you own. They are fully backed by the company that made your car and are sold in differing levels of coverage and mileage expiration. These warranties usually can be financed into the price of the vehicle or can be paid for after the sale. With use of this warranty, you will get factory trained technicians repairing your vehicle with original equipment or remanufactured parts.

The only issue with manufacturer extended warranties are that only the dealer can service the vehicle, so having one close to where you live is a must. Also, these warranties traditionally cost more than third party warranties, and are only available for purchase if your car is new or has lower miles. An inspection of your vehicle by the dealership may be required as well before your coverage starts.

The Certified Pre-owned warranty is what I suggest

A CPOW attached to a used car purchase and can be offered by a vehicle manufacturer or larger used car dealers, such as Carmax. They range in coverage and mileage expiration, and most have deductible levels. The repair methods and parts sourcing may vary, so it is important to find out what happens when you need a repair and which systems are covered. The price of the warranty is added into the purchase price of the vehicle.

Certified pre-owned vehicles are inspected by technicians for needed repairs before the sale, and have standards such as no major accidents, maintenance lapses, or title issues. They are also inspected to make sure things like tires and brakes have over 50 percent of their life left, or they are replaced. Each provider has their own standards that can be shared with you when you ask, and you can even see the technician inspection paperwork if you would like.

Scott Hudson is the senior reporter for The Augusta Press. Reach him at [email protected] 

2 COMMENTS

  1. Another disadvantage is that some extended warranties require approval of the repairs before the mechanic picks up a wrench. I know a person who had their transmission replaced at the brand’s dealer without first obtaining approval from the warranty company. The claim was denied in accordance with the policy fine print and he paid the entire cost of the repair.

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