What Are Common Pitfalls On Warranty Plans

warranty plans

I think you have to automatically assume a 100 percent markup," Phil Reed, consumer advice editor at Edmunds.com, said about car dealerships offering warranty plans. The misconception about shopping around for an extended warranty quote online is that all the companies operate solely on the internet, with no formal establishment. However, car dealerships spend a good deal of time "shopping around" online as well. One of the most lucrative aspects of the car sales industry is the extended auto warranty. Many consumers are shocked to learn that car dealerships function like any other retail outlet, marking up not just the cars but all of the finer details as well. It makes sense, then, to do a little homework online and figure out what a reasonable price should be, prior to hunting for cars.

One common problem people run into is to fail to read and understand the agreement before they get work done. Knowing the right questions to ask your warranty company is crucial, experts say. For instance, ask if you can get the work done at any shop, or do you have to look for a certain certification, or in some cases return to the dealer? Additionally, is your car covered for "wear and tear" damage or just mechanical failure?

You should have a comprehensive list of all the parts that are/aren't covered! Sometimes you'll get a "bumper to bumper" warranty that covers everything except for the wear items, like brakes and tires, while other times you'll get a "power train" warranty, which covers the engine and transmission. While it's rare to find a company that offers coverage for everything, you should ensure that some of the most expensive repairs will be taken care of.

Another thing to watch out for with warranty plans is when they start. Some people assume if they buy extended warranty coverage that it will automatically begin when their manufacturer's warranty expires. However, more often than not, the coverage begins the day you purchase it. If may be thinking, "Well, why can't I just wait and buy my extended auto warranty later?" Yet auto warranty companies aren't stupid. They jack up the prices the longer you wait and the older your car is, which gives you less coverage as the years progress. For instance, if you were to buy your coverage from Warranty Direct within the first 100 miles of driving your new car, then you'd be covered for 7 years or 100,000 miles for $1,100; whereas, if you waited until your manufacturer's warranty expired after 3 years, then you'd only get 4 years of coverage or 100,000 miles for $1,950.

Some people need warranty plans, while others can get by simply saving money each month for anticipated repairs. Regardless, the best way to protect your investment is to get regular oil changes, air filter changes, fluid top-ups and tire rotations. Don't let things wear down until they wreak havoc on other parts of your vehicle. Before you visit your dealership to buy a car, do a little bit of internet research and get an extended warranty quote. You'll be happy you had that bartering chip later.