One of the most common questions asked is about extended warranties. In general, for most consumer products, these warranties are bad bets (see
Washington Post,
Consumer Affairs, and
Smart Money), but automobiles are not typical consumer product purchases.
Replacing a cell phone, computer, television or refrigerator is easier, in many instances, than repairing the product.
Automobiles are a bit more expensive, repairing is usually easier to afford than replacing.
In any event, I don't wish to rehash the old discussion of whether one should or shouldn't purchase an extended warranty, since plenty of threads have discussed it, ad nauseam.
Rather I want to find our if members have purchased these warranties on
OTHER cars, that is,
BEFORE you purchased the TCH had you ever purchased an extended warranty?
I guess, the goal here is to find out, in general, how people fared with their investment decisions, prior to the TCH. Yes, the survey, like most, is flawed, since these cars are a lot different from prior auto purchases, but this is the best I can do.
Thanks!
Often confused...
- A warranty (-y not -ee) is the thing you purchase.
- If you purchase more than one you are buying warranties (-ies not -ees).
- The person offering the warranty is the warrantor.
- The purhaser of the warranty is the warrantee (-ee not -y)
- A few people who purchase warranties (-ies not -ees) are called warrantees (-ees not -ies)
So, the warrantee purchases a warranty or a few warranties. A few warrantees each purchase one warranty or many warranties.
One other point to consider (from the
Consumer Affairs website)
Quote:
...4. Warranty Underwriter May Go Out Of Business
When considering the purchase of an extended warranty, an important question is just who is guaranteeing this product? Is it the merchant who is selling the product or someone else? Will the entity providing the guarantee be around if you ever file a claim?
In August 2003 hundreds of thousands of American motorists found they were holding worthless extended warranty policies following the bankruptcy of National Warranty Insurance Co. Offering Smart Choice extended warranties through 5,000 car dealers nationwide, the company had about a million active contracts when it went under.
Though Smart Choice has been out of business over two years, some consumers are only now finding out they have a problem.
"I bought a 1999 Saturn in August 2002 and, at the same time, bought the Smart Choice extended car warranty for $1500.00. All of my routine service and repairs were done at the Saturn dealership; however, none of the repairs seemed to be covered under this extended warranty," Donna, of Cortland, Illinois told ConsumerAffairs.Com.
"In late 2004, I began looking into this matter and learned that SmartChoice went bankrupt, though I was never notified or received any compensation for the warranty. I have had to spend out of pocket dollars getting my car repaired. I have a car loan on this vehicle which also includes the $1500.00 for the extended warranty."
SmartChoice is not the only warranty company to have solvency problems. Toni, of Allen, Texas got a nasty surprise from Platinum Warranty Corp.
"I paid $2,200 for an extended warranty for my car from Platinum Warranty Corp. I found out, when I put my car in the shop for $4,000 worth of work, the company is under investigation for fraud by the Attorney Generals office for the state of Ohio. I'm out the cost of the warranty plus car repairs and rental car charges."
Stacey, of Hanover, Pennsylvania had a similar experience after purchasing a two year, 24,000 mile warranty from Platinum.
"Now that my car needs repairs, I call to get information on how to get the car fixed. None of telephone numbers are good, I get a recording saying this number is no longer in use!!! I cannot get in contact with them. And my car needs repairs. I have never even filed a claim with them. I purchased the warranty back in December 2004. What do I do? Where are they? Are they out of business?"
In fact, they are. Platinum Warranty Corp ceased operations September 30 after being sued by the state of Ohio last year and filing for Chapter 11 bankruptcy in May. A Cleveland bankruptcy court converted the Chapter 11 filing to Chapter 7 on October 12.
5. The Extended Warranty May Overlap Manufacturer's Warranty
The whole idea behind an extended warranty is that it will "extend" coverage after the manufacturers' warranty expires. So, before considering any extended service plan, you should always review the manufacturer's warranty to determine what it covers and how long it lasts.
If the manufacturer's warranty is for one year, for example, and you purchase a two-year extended warranty that runs concurrently, half the cost is wasted, assuming both warranties have equal coverage.
"I purchased a Microsoft Xbox with a 2-year warranty at Best Buy. I was not told the warranty ran concurrently with the manufacture's warranty when I purchased it at the counter. Most additional warranties start after the manufacture's warranty. I think this practice is very deceptive," Jerry, of Palm Springs, California, told ConsumerAffairs.Com...
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