I want you to be very, very careful when shopping for a new car extended warranty. There's a tremendous amount of garbage out there. Internet Start-Ups are everywhere, consumers aren't getting their repairs paid for, and Dealers push really hard for you to purchase their products.
One question I get asked all the time is - What makes one extended warranty better than another? There's actually two reasons....
One, does it cover engine damage due to over-heating. And two, do the repairs get paid for by the Warranty Company before you leave the repair facility.
Most extended warranties (even many manufacturers) don't cover over-heating and in my opinion don't qualify as a true extended warranty. If the warranty you're considering will pay for damage associated with overheating, you're in pretty good hands.
And if you're considering an extended car warranty that requires you to pay for a major repair and then reimburses you at a later date....run for the hills. You're just asking for trouble with this type of warranty.
You'll typically have 3 options when looking to purchase a warranty. They are:
1. A Manufacturer's Extended Warranty sold by a Dealership
2. A Non-Manufacturer (Aftermarket) Extended Warranty sold by a Dealership
3. An Extended Warranty sold by an Insurance Company
With the Manufacturers Extended Warranty sold by Dealers, you're pretty safe. You're vehicle gets repaired by Pros and the Warranty is solidly backed.
The only issues I have with these warranties is the way they are sold and whether or not they cover over-heating. Dealers can essentially charge whatever they want, or....whatever they can get from an unsuspecting buyer.
Here's an example of what can happen - I recently spoke with a young lady in Florida that ended-up paying more than $4,600 for a new car warranty....and she didn't even know it.
The Dealer had buried the amount they charged for it in the contracts and she never caught them doing it. And since the Manufacturers don't police their Dealerships well, Dealers will continue to charge whatever they believe they can get.
Make sure you remember to read what's covered - over-heating has to be covered. If it's not, pass on the Manufacturer's warranty.
A recent development regarding extended warranties are non-manufacturer warranty products, or aftermarket warranties, sold by Dealerships. These products are usually offered by small companies which many times have limited financial resources to honor any warranty claims.
So, why would a Dealer push a warranty from an "aftermarket" company, you ask? It's simple - Money. Dealers can make a lot more money selling these warranties because the profit levels are significantly higher than those offered by the the Manufacturers.
If the Dealer is offering an extended car warranty from an outside company, make sure you pass on it. If not, you're just asking for trouble.
A third option for extended coverage are warranties offered and backed by Insurance Companies. They can be a solid option - but you have to be very selective and very careful with any choice you make. Over the years, I've heard numerous horror stories about car owners spending tremendous amounts of money - only to have the Warranty Company deny a claim.
The first thing I recommend you do is check with your Car Insurance Company to see if they offer an extended warranty product. If it meets your mileage and time needs (5 years - 100,000 miles for example), isn't to expensive, covers over-heating and pays for any repairs before you take your car home - think about purchasing it. That warranty is usually going to be a good choice.
If your car insurance doesn't offer an extended warranty, there are perhaps 20 or so large companies that can help. However, more than 75% of these companies have negative ratings or complaints on file with the Better Business Bureau. Always check the BBB first to make sure you're dealing with a quality company.
One company I highly recommend is Warranty Direct. They typically have the lowest-cost new car warranty coverage's available, and they:
- Let you use the Repair Facility of your choice
- Pay the Repair Facility before you leave
- Give you Free 24x7 Roadside Assistance
- Offer an EZ Pay Financing Plan
- Have been in business for more than 27 years (long before the Internet);
- Serve almost 2.4 million customers;
- Offer 5 different levels of extended warranty coverage to meet whatever needs you have
- Give a Money Back Guarantee
- Have a stellar record with the Better Business Bureau;
- Are a Forbes Top 200 Company.
They keep their promises, answer the phone when you call and pay for your repairs - while you're still at the shop! Overall, Warranty Direct's New Car Warranty Coverage is a very solid choice...and a company worth taking a look at when you're wanting the best new car extended warranty