Consumer Blog
Car extended "warranties" - are they worth it?
Not in most cases, according to Consumer Reports. A recent report by the nonprofit magazine found that only about a quarter of consumers who buy extended service contracts (the correct term) on their cars ever see their money back in savings on repairs.
As we've mentioned here, AG Nixon recently launched a massive legal action against several extended service contract companies for, among other things, sending out misleading mailings and postcards to consumers. Remember these companies are usually not associated with your car manufacturer and have no idea when your factory warranty expires.
One consumer reported getting several of these mailngs - and she has never owned a car.
Also, a new Missouri law requires the companies offering these service contracts to register with the Missouri Department of Insurance. You can check with the department to see if a company is registered at 1-800-726-7390.
The word warranties in the headline is in quotes because these are actually extended service contracts. This blog post explains the difference.
Technorati Tags: automobiles, shopping and spending, solicitation, MVESC, auto extended service contracts, auto extended warranties, car extended service contracts, car extended warranties, motor vehicle extended service contracts, motor vehicle extended warranties, moagoconsumer, consumer protection
Posted by on April 8, 2008 12:00 am :: Comments (6) :: Permalink
6 Responses to "Car extended "warranties" - are they worth it?"
says:
March 29, 2008 3:29 pm
can i cancel a service warranty if i change my mind?
says:
March 31, 2008 9:16 am
To Beverly:
Probably depends on the terms of your contract. If you're paying monthly without a long-term contract, you can probably cancel. That's usually the case with insurance policies, cable TV, etc. But if you do have a long-term contract, much like a cell phone contract, you may be on the hook for a while.
If on the other hand, you paid up front for a year's coverage (really bad idea by the way, which violates rule # 2 of our 4 consumer rules to live by), you will probably have a hard time getting your money back.
says:
April 4, 2008 10:04 pm
I purchased a 2003 dodge truck from a used car lot.I also purchased an extended warranty at the same time.On the warranty paper work,they have seals and gaskets and four wheel drive checked as covered under my warranty and the mileage is documented as 106,939.The fine print says that these things are not covered on vehicles with more than 100,000 miles but when i asked the salesman if these things were covered he assured me that they were.Now i am stuck not being able to get my truck fixed under my warranty and the salesman admitted he was wrong. Is there anything I can do?
says:
April 7, 2008 9:29 am
To Trevor:
This is a common problem we see in many different industries -- verbal promises don't match the written contract.
Still, I encourage you to file a consumer complaint with our office.
says:
May 9, 2008 12:03 am
I recently purchased a used car from a dealership. When we were signing the papers on the sale of the car, I was sort of pressured into signing several different papers. When the deal was done and I walked out the door with the keys. I was handed an envelope. The finance guy said all of the papers that I needed were in it, plus I would get the title in the mail in 1 to 2 weeks. I noticed that the service contract was 25% of the worth of the car and being financed. The only thing in the envelope, was the bill of sale... there was nothing with my signature. I went back to the dealership and expressed my discontent of them adding the service contract to the note. The finance manager said "the deal is done; you can't get any money back. We can cancel the service contract, but they are not going to give you a dime back". I then asked if that violated any Missouri laws. I then told him that I had done some research and was informed that I had 30 days to request for it to be canceled with a refund. He then stated "you can take any refund and apply it to the loan, but your payments to the bank will not change". I then told him that I would just refinance... he then went into a 30 minute lecture on how it was in my best interest to keep the contract. I asked him then, if I could get the name of the company who was providing the service contract, he then wrote it on his business card and told me to call him if I was starting to question anything else on the issue. I then asked again about the lack of papers I got when taking the car. I told him that I had a right to any paper that held me responsible to any obligations. He then said "we are a known company; you will be getting everything you signed and the title in a week or so". Travis, Here are several questions for you. Do I still have a right to a refund if I cancel the service contract? I know on several different levels there was some very unethical stuff done. Do you think there is enough error in how the finance guy or the dealership is handling the sale, to make a consumer complaint? If I do make a complaint… without any of the paper work or title, what do I risk in filing one?
says:
May 12, 2008 10:07 am
To Jason:
You may have the right to cancel, but that will just depend on the contract your signed. There's nothing in federal or state law giving consumers the right to cancel a purchase like this.
I would encourage you to file a consumer complaint, just as we encourage any consumer to do that when having trouble with a business. See the link in the comment above yours.
