Urban Cars Blog presents: is the extended car warranty offer a scam? Let’s find out!
Have you ever received a robocall telling you about an extended car warranty offer? If yes, have you wondered if it was worth it? Before you even think of handing them over your credit card, read this article, because there are some things you need to know about extended warranty scams.
The notice saying something like “Our team has been trying to reach you about your car’s extended warranty” was heard by many drivers, and some of them were scammed. This technique works by playing with people’s deepest fears: if the worst were to happen, they wouldn’t be able to pay for engine failure, transmission problems, or other costs.
These extended warranties, or more appropriately termed extended service agreements, might occasionally live up to your expectations and wind up saving both money and peace of mind. But they can also be your worst nightmare a lot of other times. So who can tell if these car warranty offers are the work of con artists or if they’re true and useful?
Unfortunately, scams that involve extended warranties are quite common, and it’s easy to waste your hard-earned money on a worthless warranty if you don’t recognize the warning signs. And that’s why you have me here.
The best way to protect yourself from scammers is by knowing exactly what an extended car warranty offers. Otherwise, con artists will be quick to get your money and leave you with nothing. If you don’t want to feel like you were ripped off, always read the fine print.
So without further ado, here are our best tips on how to tell if an extended car warranty is a scam or not. It’s simpler than you think!
1. Pay attention to calls
When my tiny ladybug vehicle was 3 years old, I started getting lots of calls. While some of them were robocalls, others had real people on the other end of the line. Scammers tried hard to get me because I received lots of calls, letters, and emails for a couple of months.
It wasn’t a pleasant experience, so if you also receive unwanted calls regarding an extended warranty that could save you a significant amount of money on future auto repairs, you’d better stop and think for a moment.
Many people think that a $1,000 car repair bill will have a major negative impact on their family’s budget, so they start thinking that those claims are legitimate. There usually isn’t.
Some scammers will gather information about a consumer’s vehicle to make themselves appear authentic, and when they’re ready, the calls can begin. They might be accurate when they tell the customer that their factory warranty is about to expire or has already passed, but they also ask for personally identifiable information (PII), which can be used against them later on. Never give them details!
Experts say that the majority of the time, robocalls are scams, but calls where someone is truly on the other line can be problematic. It’s not always easy to detect the truth or a lie, so here’s what to do: if someone calls you and tries to sell you something you didn’t ask for, don’t say yes.
End the conversation and do your research on the company that the individual’s calling you from (ask them if they don’t share that piece of information with you). If you’re not sure about something, especially an extended car warranty you didn’t want in the first place, don’t give them details, and don’t purchase!
2. How to respond to calls
I know that constantly receiving calls about an extended car warranty can be frustrating, but that doesn’t mean you should accept the offer just so they can stop.
One of the worst things that could happen if you respond to these calls is having your identity stolen. As I’ve previously said, you should never give someone your personal information, regardless of how good of an offer they make you.
You can immediately filter a call by asking them to give you further details. When a call is legitimate and you’re interested in the offer, they should be okay with redirecting you to an official website that has additional information.
Moreover, they should never request payment details from you on the first phone call because the extended car warranty is a contract, and you should always be given the terms before making any payments.
Besides that, if you receive a robocall, hang up the phone without pressing any numbers, even if they ask you to. You can also use your phone’s “settings” option, and you could prevent the number from contacting you in the future.
3. What about misunderstandings?
Before you decide to buy any extended car warranty, it’s important to search the market and not be quick to decide. We’ve talked about scams until this moment, and while not every offer you received is the work of a con artist, some policies are trapped in a gray area: they’re not scams but aren’t great either.
Unfortunately, some legitimate policies can be hard for consumers to understand, and people end up thinking that they were scammed. Here’s something you should remember: comprehensive warranties don’t exist. Experts say that even the best policies that have plenty of coverage have their own exceptions.
There are a few types of extended car warranties that fall into the gray area, meaning that they’re not scams but not great deals either, so let’s talk about them in the following paragraphs.
4. Inclusionary policies
If you choose this type of extended car warranty, you should know that it only covers the auto parts that are clearly mentioned in the policy. This is why is important to check out the fine print and make sure you understand it.
5. Policies that only cover a particular amount of money
Another type of extended car warranty that is in the gray area is amount-based insurance. Instead of simply paying the bills, this one only covers particular amounts for certain parts and labor.
Even if the insurance you chose is top-notch, keep in mind that if your policy pays less than the market average, you might still be responsible for the remaining amount when your mechanic shows you the bill.
This is totally fine, but when you have to deal with it, it can sound like a fraud. Therefore, make sure to read the fine print, and if you can’t find the answer, ask them to give you details and explanations. Only purchase when you’re sure that you understand everything mentioned there.
6. Denied repairs
If you read what’s written on your extended car warranty, you’ll see that there are things the policy is responsible for as well as things the owner is responsible for. And one of your main duties is to take care of your vehicle.
Let’s imagine a situation that it’s easier to understand: you’re out and about driving and having a good time, when all of a sudden, your car starts to shake and your check engine light starts to flash. You quickly stop and dial for a tow truck.
After your beloved vehicle has been serviced, you might think about showing off your extended car warranty. All is well by now, but after some thorough diagnostics, your mechanic discovers that one of your engine’s cylinders is dead and needs to be replaced. You might feel relieved that your warranty will take care of it, but is that true?
The insurance company will want to investigate the problem, so they’ll send out an inspector. That person discovers that there’s a major sludge in your vehicle’s engine, and the oil is dark and thick. Here’s where the problems come in and your extended car warranty can’t save you: the company asks you to send proof of maintenance, which might include receipts for oil change services.
If you don’t have anything to show them, they might reject your claim. As I’ve previously said, you’re the one responsible for your car’s health. If you didn’t take care of your car properly (by following the manufacturer’s maintenance guidelines), your extended car warranty won’t be much help.
Last but not least, your extended car warranty doesn’t cover worn components, but there are some exceptions to the rule. So what about those oil changes for which you might need receipts? Those will be yours to pay. The same rule applies to tires, power steering fluid, belts, hoses, brake pads, and gearbox fluid.
7. Prices
If you think about getting an extended car warranty, you might be curious about how much they cost and decide whether they could be helpful or not. According to different sources, the median cost for an extended car warranty was $3,026 as of December 2022.
There are many types of extended car warranties that you could choose from, and each one has a different cost depending on the coverage level. If you want to know more about this topic, here’s a breakdown of a typical extended car warranty and how much you’ll have to take out of your pocket:
- Exclusionary: this is more of a premium extended vehicle warranty, and the cost is quite high, at $3,124;
- Mid-Level: you’ll have to pay no less than $3,060 to have particular services covered;
- Powertrain: this is more of a basic extended car warranty and is cheaper than the ones we’ve previously mentioned, at $2,893.
Experts say that the cost of an extended car warranty depends on many factors, such as your beloved vehicle’s model, mileage, age, your chosen provider, coverage level, and deductible.
Even though exclusionary contracts have higher price tags, the good news is that you’ll get protection for more automobile components than you would with a drivetrain or powertrain warranty.
8. Factors to keep in mind
We’ve previously discussed reading the fine print before signing anything and paying attention to details, so you know you made a good choice, but that’s not all.
It is very important to be informed and to understand everything when you buy a service contract or an extended car warranty. Some of these factors involve the warranty itself, while others are more focused on your own financial circumstances. Let’s take a look!
Coverage
When you choose an extended car warranty, you need to think about the potential repairs you could afford and the ones that your automobile is most likely to need.
For instance, if your vehicle is packed with high-end electronics, like a huge touch-screen infotainment setup or advanced safety systems, you’ll have to get a lot of money out of your pocket in case you need to do some repairs.
A basic powertrain warranty wouldn’t take care of these expensive items, so you should choose the one that has more coverage.
Deductible
The lower the cost of your extended car warranty is, the higher your deductible will be each time you make a claim. If you prefer a plan with a low or no deductible, be prepared to spend more on your coverage when you purchase it.
The places to get service
Another important thing to keep in mind when choosing the right extended car warranty is the place where you could have those repairs done.
If you purchase a vehicle service contract or warranty from an automaker, you’ll probably need to bring your car to one of the automaker’s franchised new car dealerships for servicing. The good thing about this is that you know for sure that your car is in good hands.
On the other side, if you get your extended car warranty from an independent provider, they might have different guidelines on where your vehicle can be serviced.
While some can be quite restrictive, others will have lengthy lists that include franchised new car sellers. Unfortunately, you might have to part ways with a repair shop you like in case it’s not on your warranty provider’s list.
Paying for repairs
Do you have to pay and wait for the warranty company to refund you, or does it transfer the necessary payment directly to the car shop you went to? That’s an important question to ask when you choose an extended car warranty.
You surely want them to cooperate with the store and pay them directly, so you don’t have to take care of any additional things. If you have to use a credit card to pay for yourself and the warranty company doesn’t refund you until after your payment is due, you might find yourself in a tight spot financially. Of course, that’s only if you have a high enough limit on your credit card.
Whether you have an extended car warranty or not, you need to take care of your car so that you can enjoy it for as long as possible. Less repairs means more money in your pocket, and that’s always a plus if you ask me.
If you have a hard time taking care of your beloved vehicle and you want a few easy tips and tricks on how to maintain it, I recommend you check out this fantastic book. It’s full of amazing tips that are easy to implement, and they’ll make the biggest difference ever.
Wasting money
Do you really need an extended car warranty? Probably not. Experts conducted a study in 2014 and discovered that around 55% of these policies were never used. If we were to do the math, that would mean thousands of dollars wasted.
So before you think about saying yes to an extended car warranty offer, think about whether the deal is legitimate or not; do your research and decide whether it’s good for you or not; and if you end up getting it, use it when needed.
Experts say that one way to decide whether you should purchase an extended car warranty or not is by thinking about how much you plan on using the vehicle you have. If you want to keep it for a long time but don’t want to spend a ton of money on unexpected or costly repairs, it might be a good option for you.
Do you know any other things about extended car warranty? Leave a comment below and let us know! If you want to read something else from Urban Cars Blog, here’s another post for you to check out: Leasing vs. Buying: What’s the Better Option for Retirees?
