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EXTENDED WARRANTY

Rip-off Report: $6,391 in New Car Warranties

August 13, 2015 by admin 1 Comment

Buying a new car is a hassle, with more than half of all buyers surveyed indicating that they consider car salespeople “untrustworthy” according to research from DMEautomotive (DMEa). That lack of trust is also higher with women as many ladies believe that they are being taken advantage of when negotiating a new car deal.

Recently, a good friend purchased a 2015 Toyota Corolla from a local dealership. That deal was conducted with her daughter and son-in-law present. No trade in was conducted and my friend managed to save a few thousand dollars by negotiating a lower price and obtaining a few cosmetic upgrades at no additional cost.

It all seemed like a good deal until the dealership’s business department got involved. That’s when said customer was talked into buying no less than five warranties, including a costly extended service agreement that added $6,391 to her final price, state sales tax included.

warrantiesFor the record, I received permission to share my friend’s story with our readers in a bid to warn others what can go wrong when buying a new car. In this case, things went terribly wrong, but there is some good news to report as well: with some special work, all five warranties were rescinded. Yes, there was pushback on the dealer level as each high-profit warranty was contested. It took repeated phone calls and visits to the dealer to get the charges reversed, something you can do if you are similarly tagged with pointless new car warranties.

New Car Warranties

Before we look at my friend’s story in detail, new car shoppers should consider a few points when buying a vehicle.

First, all new cars come with standard warranties. Typically, you receive a bumper-to-bumper warranty for at least the first three years or 36,000 miles, whichever comes first. This means you are covered for anything that can go wrong with your car beyond the general maintenance. Sure, there are a few things that may not be covered and you may still be responsible for some repair costs, but for the most part those expenses are covered by the manufacturer.

Second, all new cars come with other warranties. If your car’s exterior shows signs of rust, the manufacturer will fix the problem at no charge to you. Rust warranties typically last from five to 12 years. Further, most do not have a mileage limit. This means if you drive 200,000 miles in five years, you would still be covered.

Third, new cars also come with powertrain warranties. Perhaps most worrisome for new car buyers are failed parts. Especially major components such as the engine and transmission. After all, if one of these parts fail, you’re looking at repair bills of several thousand dollars. Fortunately, warranties of five years and 60,000 miles are common. Some manufacturers, such as Hyundai and Kia, offer 10-year, 100,000-mile powertrain warranties.

Beyond the Standard Warranties

My friend had not purchased a new car in 15 years. Her previous ride was a premium Japanese make, a model that gave her no major problem. Typically, said friend drives just a few thousand miles each year — her old Acura had barely passed the 50,000-mile mark when she began shopping new.

But like so many other buyers, she was worried that her new car might eventually cause her problems. That worry became evident once she and her family members were sitting in the business office discussing warranty options. Despite her family telling her to not buy the offered warranties, she went ahead and did so. This was easier to do when the business manager said that she “could cancel at any time.”

Right there, a big mistake was made: although the warranties could be canceled, getting it done required multiple phone calls, personal visits to the dealership, and not a little angst. Had she delayed canceling, her warranties would have been pro-rated. This means she would receive a refund minus the time already used.

Warranty Considerations

Personally, I am not against special warranties completely. Cars that have a so-so repair history might benefit from an extended warranty. But that begs the following question: why would you buy any vehicle with reliability problems? It just doesn’t make sense and it may cost you much in time, money and aggravation.

See Also — 7 Types of Car Warranties

Filed Under: Special Tagged With: CONSUMER ADVICE, consumer tips, EXTENDED WARRANTY, NEW CAR, Toyota Corolla, WARRANTIES

The Typical Fees When Buying a Car

July 14, 2015 by admin Leave a Comment

Ford Fiesta

You have found the car of your dreams, carefully negotiated the final price and are ready to sign the purchase agreement. Pay careful attention here as there are any number of fees, taxes and charges that can drive up your overall cost. Certain expenses, including dealer extras, may be avoided. Here’s what you need to know about the typical fees when buying a car.

1. Destination charge. You usually cannot avoid the destination charge, what represents the cost of transferring a vehicle to the dealership. These costs vary, but typically range from $895 to $1,150, depending on the vehicle. When reviewing your contract, look for secondary charges that may indicate an additional delivery fee. Have that cost struck from your purchase agreement.

2. Title and registration. Fees related to acquiring the title and registering your vehicle with the state cannot be avoided. What you can avoid is doing the paperwork yourself. Let the dealer handle this matter; take note of the documentation fee — the cost of having the dealer handle this step for you. A $100 to $300 charge is within reason.

Hyundai Sonata

3. Sales tax. This will be your greatest “add on” expense when buying any car. Some states calculate the tax based on the final cost of your car. Other states calculate that cost based on your new car’s final cost minus your trade in. In some cases, you may end up paying your state a few thousand dollars in sales tax.

4. Dealer markup. You may have negotiated the best price you could for your new vehicle and feel that you have come out a winner. Then, you look closer at the purchase agreement and see a “dealer markup” charge. That’s an expense a dealer may try to pass on to you, especially for a high-demand vehicle. Contest this fee or at least negotiate for a lowered cost.

5. Advertising charge. Who knew that you might have to pay for an advertising surcharge? Dealer associations may charge the dealership for a local advertising initiative, one that the dealer may pass on to you. You may be able to get this cost removed from your contract, but not always.

Chrysler 300 Limited

6. Dealer preparation. Your dealer may pass on the cost of preparing the car for sale to you. So-called “dealer prep” means removing the protectant and the coverings required to safely transport a new vehicle from the factory to the dealer. This cost should be removed from your contract as manufacturers routinely reimburse dealers for the cost.

7. Disability insurance. Agree only to this type of insurance if you don’t have it through your employer. What it offers is coverage for your car payments while you are unable to work. Chances are you can find this insurance elsewhere for a more reasonable cost.

8. Credit life insurance. If you die, then your survivors can pay off your loan with credit life insurance. It is term life insurance or what expires once you have made your final car payment. Ensure that the coverage is sufficient and inexpensive.

Nissan GT-R

9. Dealer upgrades. There are a number of services and add ons that your dealer will be happy to tack on. For instance, if you request heated seats for a vehicle without them, you will pay that cost. Don’t agree to undercoating, VIN etching, paint sealant or fabric protection. Undercoating is already done at the factory level. The other services you can do yourself and for little cost.

10. Extended warranty. Should or should you not buy an extended warranty? Consider getting one if you plan to keep your car for many years or well beyond the time limit for the bumper to bumper and powertrain warranties. What you should know is that the best warranties are backed by the manufacturer directly or through a third-party source approved by the manufacturer. You also do not need to rush your decision here — you can sign up for a warranty later. Review your contract options and choose the warranty plan that is best for you.

Chevrolet Colorado

Fees and Considerations

If you lease a new vehicle, obtain GAP insurance. GAP or guaranteed auto protection insurance will protect you if your new vehicle is stolen or totaled. It fills in the gap between the vehicle’s residual value and the payments you owe on the vehicle. This is a worthwhile expense that can save you thousands of dollars.

See Also — Smart Car Leasing Options For Savvy Consumers

Photos copyright Auto Trends Magazine. All Rights Reserved.

Filed Under: Car Tips Tagged With: ADVERTISING, CAR TITLE, CREDIT INSURANCE, DEALER MARKUP, DOCUMENTS, EXTENDED WARRANTY, FEES, GAP INSURANCE, LIFE INSURANCE, NEW CAR, REGISTRATION, SALES TAX

About Your New Car Extended Warranty Plan

March 30, 2013 by admin Leave a Comment

You have just concluded a deal to buy a new vehicle when the salesman’s talk turns to something you had hoped he would not bring up: a new car extended warranty. Your purchase already includes a bumper-to-bumper warranty, a powertrain warranty, a warranty against rust and even roadside assistance. New car extended warranties are not cheap and you think that you can do without one. Your thinking is probably right.

Extended Warranty

Before you sign on the dotted line for a contract that may not worth its price, consider the following points:

1. The warranty may be redundant. An extended warranty is really a service contract, what covers the cost of certain parts and repairs on your vehicle. What you might not know is that the warranty may kick in right away, overlapping your current coverage. If it does, you may be paying for something that you are getting anyway.

warranties2. An extended warranty may be offered for the wrong reasons. Be careful if a car dealer insists that you need to buy a service contract as a condition for new car financing. That assertion is usually a false one and can be disproven with a call to your lender. Check your sales contract, too, as a dishonest dealer may tack on a service contact without your knowledge.

3. The company that holds the warranty may not be the manufacturer. Some car manufacturers offer extended warranties and back these just as they do with their other warranty coverage. Some contracts, however, are held by third parties or administrators, companies that pay out claims. If your administrator goes bankrupt, who will pay for the service? You may also want to contact your states insurance commissioner to learn if the contract is underwritten by an insurance company. If so, find out if complaints have been made against the insurer and whether it is solvent.

4. The service contract may cost you a mint. When offered a service contract, you may discover that there are several levels of coverage available. Compare each plan and learn if deductibles apply. Some plans charge a deductible for each part replaced while others deduct only for the entire service order. Quite easily, you may find yourself agreeing to a service contract that will cost you thousands of dollars. Consider how long you plan to keep your vehicle, whether the contract is transferrable or if it would simply be more cost effective to bank your repair costs as you go along.

5. The quality of parts used. Replacement car parts can be terribly expensive. They can also be of varying quality too. You want to find out if the car parts offered are new or reconditioned. You may also want to consider how reconditioned parts may be treated by your manufacturer should something go wrong. Parts should be readily available too — you don’t want your car to sit in a shop while you wait for an overseas delivery to come in.

6. Know who can and will fix your car. You buy a service contract through your dealer and the fine print reveals that you are restricted where you can take the car for service. Okay, fine. On further inspection you learn that those places are limited to the dealer and his network, but that does you little good if you need service while out of town. Moreover, if you should move away and take your car with you, then what? If an extended warranty is restricted by geography, you may want to look elsewhere.

Personal Considerations

There are a few more matters for you to consider when exploring your extended warranty options.

First, what are your responsibilities as a consumer? You still need to follow the owners manual when maintaining your vehicle.

Second, can you buy the service contract later on? It can be easy to get pulled into something that you do not want or need only to find it difficult and costly to cancel the contract later.

Third, are you getting roped into a scam? Most such scams happen away from the dealership as third parties learn that your current coverage is about to expire or may think that you did not opt for a service contract. Hang up on those callers and shred posted solicitations.

When all is said and done, do you still need an extended warranty? Maybe not. Understand what coverage you are getting with your new car and, if you want long-term coverage, you may be better served to shop for one when your new car warranty is about to expire.


See Also — What to Look for in a New Tire Warranty

Filed Under: Ownership Experience Tagged With: DEALER, EXTENDED WARRANTY, MAINTENANCE, NEW CAR, REPAIRS, SERVICE CONTRACT, WARRANTY

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