Secret Car Warranty Information: Negotiation Tips for Buying Auto Coverage Plans

January 27, 2012

If you are thinking of purchasing an extended warranty from a car dealership, you should be aware that car warranty information provided by the dealership may not always be accurate or omits very important details regarding coverage. Car dealerships usually earn a profit on every aspect of a car deal - including the selling of a car warranty. Here are some car warranty facts that car dealers may choose to conveniently leave out.

May Not Be Needed

Most new car dealerships will attempt to sell you a new car extended warranty, even if you don't need one. When purchasing a new vehicle, you should always ask yourself how long you really expect to keep it.

If you expect to keep the vehicle for more than three or four years, an extended warranty may be a good idea. If you're the type of car buyer that trades in a vehicle every two or three years, then the car manufacturer's bumper-to-bumper warranty will usually be more than adequate.

Extended warranties can be expensive, and adding one to a vehicle you don't intend to keep for more than a few years will usually only add unnecessary costs. If the dealer is insisting that you need an extended warranty, be aware that it may simply be a tactic to increase the dealer's profit.

There Are Other Car Warranty Companies

Another common tactic used by car dealers is to tell you that only the dealer specified warranty can provide additional coverage for your vehicle. What they almost always fail to tell you is that there are literally hundreds of car warranty providers and insurance companies that can provide extended warranties. Never feel like you have to use the company that the dealership recommends. You can also consult with an auto warranty broker who can communicate with multiple warranty companies on your behalf.

Same Warranty - Different Prices

Sometimes a car dealership will offer a warranty from a nationally known warranty company that also sells coverage directly to car owners. If this is the case, you will often find that the same type of warranty is available for purchase directly from the warranty provider, at a much lower price. If you're interested in an extended car warranty, do some research on applicable plans and policies before visiting the dealership. It could save you up to 50% or more.

Hidden Deductible Costs

If the dealership offers you a warranty plan that seems to be inexpensive, you should take a careful look at the contract and see what type of deductible the plan requires. Always check to see if the contract specifies a particular deductible amount and type of deductible required.

Some car warranty providers allow you to pay a single deductible at the time of repair or service. Some require that you pay a separate deductible for each type of repair - even if various types of repairs are made at the same time and by the same mechanic or repair shop. Charging separate deductibles for each type of repair can often add hundreds of dollars to your out-of-pocket expenses for a single repair visit.

Vehicle Service Contracts Are Not Warranties

Sometimes dealerships offer vehicle service contracts to consumers. You should never confuse these with an actual extended car warranty. A vehicle service contract will require that you take your car in to the dealership for repair and service. You should also be aware that if the dealership closes its doors or goes out of business, the vehicle service contract will be worthless.