Extended Warranties Suck In Your Money And Run

People purchase extended warranties are lots of consumer products including automobiles. Chances are you’re never got to get your money out of your investment. As a matter of fact, extended warranty is arn’t really even extended warranties at all. A more accurate name for them is a service contract. these contracts are usually sold as an add-on sale at the time of purchase. Through these service contracts, you end up paying a separate warranty company, an upfront fee to cover repairs that may show up in the future.

Most car dealers will do everything they can to sell you a service contract by telling you that they can cover some large repair bills that are covered by the standard warranty. of course the reason they do this is the service contracts are very profitable. In fact, sometimes 50 percent of the money goes straight into profits on the sale. The reason they can get away with this is that the coverage is usually not what you expect.

Most of these these contracts have exclusions like these:

Lack of Maintenance Records? Failure to retain and produce records that the vehicle was maintained in accordance with the manufacturer’s routine maintenance schedule. It is generally not enough to just maintain your vehicle. You must also be able to provide proof to the service contract administrator that the vehicle was maintained. No proof equals no coverage.

Consider wear and tear parts. Things like brake pads, shoes, hoses, even shock absorbers are considered items that normally wear out and are usually not covered. Anything they can be considered normal wear and tear is generally not part of the contract.

Breakage of a noncovered part. Damage caused by non-covered parts are not included in your contract coverage even if they do cover items that are under contract. For example hoses are not covered by the contract, so if a hose breaks and causes major engine damage it won’t be covered even if major engine failure IS covered.

“Investigative surgery” like you leave your contract is not going to cover “exploratory surgery” on your car to find out the problem is, unless the problem turns out to be covered. This sometimes means you’re going to pay part of the repair costs upfront before the garage even starts to investigate the problem.

Repair option restrictions. You may have a very difficult time getting your vehicle repaired due to restrictions in the contract as to where you can get the work done. Sometimes the contracts are very specific about who can do the work. On the other hand, some service contracts have gained a reputation of not paying so the service center won’t even honor the contract itself. In that case, they’ll ask you for the money upfront and leave you to try and get reimbursed from the contract company.

With all of the above hurdles, it is hard to imagine receiving any peace of mind if you actually need to use your service contract. Additionally, with the quality of today’s vehicles the odds of needing a major repair during the first six years of your car’s life are slim. The bottom line is to save your money. In most situations you will be farther ahead monetarily and have greater peace of mind by saving your money for a rainy day.