Extended Warranties on New Cars are Usually a Waste.

Divis Law does car fraud.
Dealers try all sorts of gimmicks to sell extended warranties on new cars, because they are essentially pure profit.

Lately we have had quite a few calls about extended warranties. We will talk more about the extended warranties and about service agreements on a later post; here we are going to focus on the practice of dealers using high-pressure tactics to sell extended warranties on new cars.

An extended warranty or service agreement is an additional warranty that will cover repairs to the car, beyond the manufacturer’s warranty. The way the dealer will present it varies. They might try to sell you “peace of mind.” They might try to tell you it covers things that the manufacturer’s warranty does not. The problem is, it probably doesn’t. Every warranty I’ve scrutinized to this point only covers repairs that are not covered by a manufacturer’s warranty; and often manufacturer’s warranties run for 100,000 miles.

So think about it. You’re buying an extended warranty that runs at the same time as a manufacturer’s warranty. It’s probably useless. The manufacturer’s warranty probably covers you adequately. By the time it runs out, so does the extended warranty you purchased.

Dealers try all sorts of gimmicks to get consumers to buy extra warranties on new cars because they are pure profit. It’s an extra 2,000, 3,000, 5,000 dollars – plus the additional interest, if the warranty is financed with the car itself – and it’s probably mostly useless, since the manufacturer is already obligated to fix most of the problems the car might have.

Generally you can buy an extended warranty later, and it makes the most sense – if you buy one at all – to buy it near the end of the manufacturer’s warranty period. That way you maximize the value of both.

Watch out if a dealer calls you the day after the sale to tell you there are additional documents to sign; or if they tell you that the financing company will only finance the sale if you buy the extended warranty; or if there is a problem with your documents and you need to redo them. These are all tactics that might be used to push an extended warranty on you without your knowledge or consent. Watch out also for appeals to fear and to your sense of security, and read the fine print: most likely, somewhere in that lengthy, difficult document, the extended warranty says it only applies after the manufacturer’s warranty; or only covers parts not covered by the manufacturer. I’m not sure what those would be – it’s a good question to ask the dealer.

If you think you’ve been sold a warranty that you didn’t consent to, contact Divis Law. We might be able to help.