The Extended Warranty

 
So you've successfully battled your way through to agreement on a price.  All that remains is to drive off in your new car. Sort of.  You're not actually out of there yet, so there remains time to attempt to scam you even more.  Not a moment is wasted to try to get more money out of you.  Just remember, every minute you are still there is another minute and another opportunity for them to scam you.  Not that you should get in a hurry.  But...

There just remains the final details of the final cost.   These details are almost spoken under the breath by your salesman.  Spoken very fast in a quick, upbeat way as if he was slipping these details in with comments like, "...and you're really gonna love the way it blah, blah, blah...and let me see...o.k., total with the rust proofing, scotch guarding of the seats, and the extended warranty....and it just drives so great and blah, blah...the total comes to $$,$$$.$$.  You're gonna love blah blah"

So many people get ripped off after they have already closed the deal. They get you on the extras and the warranties at that point.

The extras are things like rust proofing and scotch guarding.  It seems pretty straight forward but you would be surprised at how many people get taken on these. The trickiest closing cost scam is the extended warranty because the language used is so confusing...

But remember:

This is not the warranty that the factory gives you for the car; no, it's put on by the dealer and you will pay through the nose for this warranty.  Why is this warranty going to be such a rip-off?  Hmmm, let's see:  It's a warranty sold by the same people who have just attempted to pull a dozen different scams on you whether you were aware of them or not....do you think they would suddenly start acting responsible and sell you a good, worthwhile warranty?!  I'll give you a hand here:  the answer is a resounding NO.

It is a warranty that supposedly covers the cost of fixing the car should it break down on you. To understand this, you have to know the dealer’s language.

Extended warranties often do cover any repairs that you may require during your coverage period, but there is often some information that you are not told about...

Information like:  the extended warranty is usually effective only up to a certain amount of mileage or term period; whichever happens first.

The warranty will also only cover certain types of problems.

If your extended warranty doesn’t cover every part of your car, why bother?... 

...Because the parts that these warranties typically cover are the car parts that rarely break down until long after the car has been in service and the warranty has run out.  You can be sure that the items that you will most likely need fixing will NOT be covered.  Why pay for a warranty for items that won't break down? 

Most extended warranties don’t cover the larger problems, just the smaller ones. If your engine conks out, you may be left in the lurch.

You shouldn’t even consider buying an extended warranty if you are only leasing the car for a small time period like 36 months.

If you do want an extended warranty:

Perhaps it is better only for longer periods of leasing like 60 months, and even then, add up what you would have spent on the warranty by then.  Often you'll discover you could have saved for a new engine by the time 60 months of warranty payments is done.

You will only really want to get a warranty on a more dependable car like a Lexus, Honda, or Toyota.  These warranties will be cheaper because they have such a good track record but if they do break down, the otherwise expensive costs of fixing them will be covered.

You will also want to get a warranty that is not only effective immediately, but from a respected financial institution that won't go belly up before the warranty period expires.

Don’t ever purchase an extended warranty directly from the dealer.

For one thing, we already know how well they have our 'best interests in mind.'  Instead look at sites on http://www.LendingTree.com for an online warranty because being online gives you all the time you need to assess your warranty properly without getting pressured by your good 'friends' at the dealership.

As with any insurance policy, watch out for deductibles because you don’t want to get stuck paying for deductibles that you thought were covered by the warranty.  Many 'normal' car insurance policies that have low rates will have deductibles for things like windshields to be $400 or more. 

Now let’s look at some of the other extras that dealers get you on at closing....

It can be very irritating how many dealers will try to weasel even more money out of you in the end on stuff that you really don’t need at all.  But, as we said before, as long as there's an opportunity to squeeze more money out of you, their attitude is why not try?

You may be made to feel that these last things are absolutely life-or-death items you must have for your new car.  It's only after you've had time to sit down in a quiet area at your home will you realize that you've been 'had'...

Next:  Click on "Common Extras at Closing"

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