My buddy called me one day and told me he found a bargain on a Ford pick up with a 6.0 diesel in it. I told him to stay away the engine was junk. He bought the truck because they gave him a warranty on the engine for an extra $2000. The first time it broke and he took it to the shop his claim was denied because when he bought it it had an aftermarket lift kit. So he went back to the dealer and complained that they sold him a junk warranty. They apologized and said they didn't know about that, they gave him his money back for the warranty. The problem was he was stuck with the truck with a junk motor. I have always believed the dealership was lying and knew the warranty was useless but used that as a way to get him to buy the truck. After all they didn't buy the truck back he was stuck with that, they only gave him his money back on the warranty.
I am shocked that a dealership didnt know something or that they may have deceived your friend. Dealerships are well known to be trusted, helpful, and always look out for the consumer! Probably why the offered the warranty...
As a certified master mechanic, when dealing with one of these warranty company claims adjusters, I do not let them take pictures of any part not related to the failed part in question. Many will try to take extraneous pictures all around the car, as if they were to declare the customer negligent on maintenance. This is not what they said they were checking out, so I don't let that happen. I also expect to be paid by the insurance company for my time showing the problem to the adjuster. They can get their own garage if they don't like it. Insuring a limited life product like a car is a stupid move not worthy of my respect. That's like insuring a house on an eroding cliff. They deserve to lose money on it due to a lack of common sense involved making that decision, then trying to wriggle out of the contract later on. I was firmly in favor of not bailing out car companies, who messed up all by themselves, btw. Make a crappy product, lose customers, lose profits, lose business. More computers than a space shuttle, for fuck's sake. Confucius say: better to press clothes than press luck.
Car companies don't always mess up by themselves. GM was selling great cars and had 52% of the market. All other car companies in the world divided up the remaining 47+%. Govt. told GM they would be broken up as a 'monopoly' like they did to AT&T unless GM started making crappy cars and drove 1/3 or more of buyers away. Govt. also imposes emissions standards, safety standards, and MPG limits on automakers. And the unions demand that autoworkers shouldn't have to work very often or very hard and should get 3% raise and other new benefits every year..
@@BuzzLOLOL All of them pressed their luck. Screw them all. Ford uses the most catalytic converters of any manufacturer, and yet still have trouble passing emissions. 5 catalytic converters on one vehicle is ridiculous, and proof that the engineering department has much to learn. The misfire recognition on Ford trucks is the worst ever. All others flag a misfire code within 10 seconds. Ford, 10 miles, if you are lucky. There was a reason for 52%. Good products and satisfied customers. I will not praise GM too much, since they killed the railcars with lobbyists. You are referring to built-in obsolescence. As a mechanic, I will always rail against it. A vast inconceivable waste of material. When mufflers outlast the engines, there is something very illogical going on. When the EPA won't let you add catalytic converters to your older car to pass today's emissions, that is illogical. They instead demand you meet the emission standard of yesteryear, not today. Ridiculous. Don't tell me built in obsolescence is good for the economy, because it never was good for the end user's economy.....just someone else's. Coincidental youtube handle, btw. heh.
When purchasing a 2020 forester last year, the sales manager tried to sell their extended warranty. It was 1400, when we said no it became 1200, then 1000, then 800, then 600. We still didn't get it.
@@POOKIE5592 Car was Subaru certified pre-owned. Still had 2 year factory bumper 2 bumper. Plus the Subaru certified pre-owned also comes with 10 year / 100k power train warranty from subaru. They were trying to sell us the dealer warranty.
One thing if you really wanted this is to find out the warranty company and coverage (platinum, etc.) and call other dealers to see what they'd charge.
A manufacturer warranty encourages the manufacturer to deliver only quality products. Third party maintenance contracts serve no purpose other than to enrich insurance companies. If you want to make insurance companies richer, then go right ahead and buy those "warranties." Personally, I prefer to donate to the Institute for Justice.
They avoid being insurance companies because they would then have to follow laws that apply to insurance companies and fall under the jurisdiction of state insurance commissioners.
This is exactly correct. I managed the warranty systems for a company that made carpets. Because the carpets were warrantied for five years, they tested the bejeezus out of them for months before they put them on the market. They had automated machines that stomped on the carpets. They brought cats and dogs in to pee on them. The hung them out in the sun all day. They soaked them in water. They poured wine, beer, ketchup, mayonnaise, and mustard on them to make sure it would wash out. Before those carpets went on the market, they had the hell beat out of them. Whenever a warranty claim was filed, they had inspectors go out and look at it . When the claim was verified they installed a new carpet at company expense. My job was to take the serial number on the carpet, backtrack it through the production process, which may have been up to five years ago, and see if I could determine if anything went wrong with that production batch, and hopefully suggest improvements to keep it from happening again. Because the warranty system instigated a process of continuous improvements, the quality of the carpets got better and better over time.
Those service contracts (AKA third party warrantees) do not enrich insurance companies. They are not insurance and they are not issued by insurance companies. The only people they make rich are the third party service contract companies
@@scottr2706 Distinguish them if you wish. They carefully assess the rate that client claims will accrue and demand premiums sufficiently more than that amount as to assure profit without needing to build anything -- just like insurance companies do. You are equally advised to invest heavily on Blackjack in Vegas.
Many years ago I had a sixty nine cattyville convertible. Mechanic said it needed a fly wheel or several hundred dollars. Just being out of the military I did not have that much money. The mechanic told me he could get a Chevy. Fly wheel , and it would be almost half . I did it work fine. Found out that could be done sometimes because they're the same g m company. Good luck out there.
When I bought my most recent car, the finance manager had already figured and drawn up a monthly bill $65 extra than I expected, for a 60 month loan, to pay for their warranty service. I told him to keep his warranty and he gave me a look like I'd just kicked his puppy. Had to sign a bunch of papers saying "DECLINE". It was definitely a hard-sell that I'm sure they get 80% of their customers with, and I certainly didn't appreciate it.
Holy crap that would be an expensive warranty, you could easily eat an engine replacement for that money lol. And they financed it over 60 months and I bet it only covered like 24 lol
@@nodsib I told the guy "it's an LS motor, those things are practically bulletproof and I'll be voiding the warranty anyways" He started talking about power windows and whatnot, stopped him again with the ol "If I didn't think all that was good, I wouldn't be buying the car"
@@selfdo it was exactly the car I was looking for and the only one for sale within 300 miles (actually traveled 100 miles to get it). But yeah if it had just been a regular car purchase I would have bailed.
I once had one of those warranties. It did not cover my drive belt tensioner when I had to replace it. It did not cover an air conditioning switch, either. By the time I had to replace the transaxle, the warranty had expired, so I ended up getting nothing out of it. I had decided never to buy one of those warranties again before I saw this video, and the video solidifies my opinion.
@@Mpg-gh5fq. I tried to file a claim, power window motor ……they said one piece in the motor wasn’t broken, a piece that was built in , didNOT come seperately and couldn’t be taken off ….. pep boys went along with the nonsense. Called company and got a sob story on how the company was about to go bankrupt and she might loose her job ……when I was young…..ah the ignorance of youth.
@@byteme9718 I'm more than capable of reading the terms and conditions myself. They did not offer an exhaustive list of every single part in the car and whether or not the part was covered. That is often the case with warranties -- the language is deliberately vague to the point that it's practically meaningless.
We got bit by this a few years ago. Bought a used F-250 from a GM dealership. A couple years later the rear leaf spring U-bolt broke. Took it to a suspension shop. They called the warranty company and they had no record of us being a customer. I just thought the dealership was incompetent. But this explains what was really going on.
I once bought a Honda service contract with a new car and I was pretty happy. When I went back to purchase another car I was told that they didn’t sell the Honda plan anymore and only sold a third party plan that required me to pull coupons out of a book. I walked away as it was an obvious bad deal.
@@monkeyoperator1360 Im a service advisor at a Honda Dealership, and cabin filters at my dealership cost $59.99 installed. I highly doubt your claim here, it has to be a scam by that particular service department(which I highly doubt also), I think you are lying, or have stretched this story just to make a comment here
20 years ago, I was snookered into getting a 3rd party warranty. Seemed like a fantastic deal until I tried to use it. I found out it had a large deductible AND and a fairly low cap- meaning it would be nearly impossible to even get my moneys worth. Live and learn
Honestly the best thing you can do is set aside the money you would spend to buy one of these third party warranties in a separate account or get a card from whatever mechanic shop you go to that has 0% interest over a certain time. I mostly use that separate account when I take my car in for maintenance, oil change & such.
Depends on the car. Works out just fine for Toyotas, Hondas or GMs but if they’re high end and especially European I’d rather battle it out over a claim vs hope I have enough money to repair a major mechanical malfunction. The one headlight on my mom’s BMW is $5000 to replace meanwhile it would be 1/4 on a normal vehicle.
I guess I did ok on one of these. I bought a used 2005 Ford Explorer, 4.0 V6, 5R55 automatic transmission, XLT 4x4, 135,000 miles. The used car dealer pushed a 3 year 36,000 mile warranty for $3400 to get a lower percentage on the financing. I bit...long story short...the warranty paid for a full transmission rebuild, fuel tank guage sending unit, and one CV shaft. I got a littlemore out than I paid for it. I consider myself lucky after hearing this episode.
They still lied to you. They can’t drop the interest rate because you have a warranty. They inflated that rate before the warranty was ever discussed. Always get a full breakdown of how the numbers work before you sign anything including the finance breakdown. If you don’t get you to buy the warranty for $1400, no problem! They’ve got it already set at a higher interest rate so they will get it over the course of your finance term!
These "warranty" "companies" are always hounding my elderly father to buy their products. I would never trust them to pay out but what really angers me is how they try and make it look like he already has some type of warranty and it is expiring. Preying on people is just so wrong, especially our elderly. One would think as a society we would be able to come up with a way to stop these things. Thank you Steve for another great video.
@@Rock-Bottem1982 Ohhh, it's different? I was also thinking of the robocallers who push extended warranties. It's a running joke around here, but I was horrified to find my mom signed up for one after a solicitor called her. She seems happy with her "product", though I'd like to see the written contract.
@@Rock-Bottem1982 Auto warranty sold by the dealer or auto warranty sold be telemarketing or auto warranty sold be direct mail - same company, different lines of attack. The video does primarily cover the dealer's shady dealings; however, these warranties are often shady deals themselves. My point was, regardless of whom the predator is , dealer or warranty co., predatory tactics just need to be stopped.
I think that Steve did also have a really good point about 2nd hand warranties - if you do get one be sure the dealer processes it right away - contact the warranty company to be sure it gets done. I would think there might be "some" of these 2nd party companies that are legit in their dealings and having a warranty on a product as risky as an vehicle could really make a person feel more comfortable owning it. As always, and something I didn't use to do before Steve, is read the contract entirely before signing! For that I am grateful.
I worked at a high volume GM dealership many moons ago. My job was to verify the veracity and coordinate warranty repair claims that we submitted to GM for reimbursement. GM was very generous about paying claims that were a little (and sometimes a lot) over time or mileage originally stipulated. If a car or truck was over mileage or time, but we thought it was within reason, we could (and did regularly) ask for, and receive exceptions as a goodwill gesture to maintain customer satisfaction. However, GM was very strict about what sorts of parts and labor they would pay for to correct a customer complaint. As example, I customer would complain about growling noise coming from the driveline. If our mechanic diagnosed the problem as a bad transmission and replaced the transmission only to discover that the growling noise was coming from the differential. The differential would be repaired as needed but there was absolutely no way that GM would pay for a transmission AND a differential to correct one complaint unless we could prove to them that BOTH components had failed simultaneously and that it was GMs responsibility. Transmissions and differentials plus associated labor are very expensive and the likelihood of both failing simultaneously is extremely rare. If the car or truck had been in a bad accident, sure both could be damaged, but that's not GMs responsibility. The zone office would send out a rep to investigate what really happened. It was almost always a misdiagnosis, and the extra expenses involved was not GMs responsibility, and they would not pay. The dealership would generally have to eat the cost of the unneeded repair. There are published job codes and labor costs for nearly every possible repair for every vehicle. If the job code didn't match the complaint, like if a customer complained about a windshield leak and we submitted a claim for a transmission it would be denied. If we submitted a claim for a failed water pump, it could include coolant and labor, but if the belt(s) and hoses were included, we had to justify that their failure was directly caused by the water pump leak, and they almost never were. Sorry for the long story, and keep in mind that I think GM was incredibly generous over what they would pay for, but they were not in the business of paying for unnecessary parts and labor. I suspect that some of the aftermarket warranty providers had/have similar policies in place and would deny claims from a shop misdiagnosis, and that too may be the cause of extended warranty claim denial. A poorly diagnosed problem from an unethical shop is not the responsibility of the warranty company, but the shop may very well tell you that the warranty company is the problem in order to keep from admitting a mistake and absorbing the associated costs.
GM quality, especially transmissions, are much worse since their 2005 bankruptcy as the accountants took over the company. I buy Toyota or Honda, best quality on the market.
An RV dealer sold my sister an extended warranty on her rig. She needed to file a claim a couple years later, at which point she learned the dealer had never remitted payment to the warranty company for the contract. A lot of stalling and finger pointing ensued. She asked for my help, so I drafted a letter to the dealer with a cc to the state’s Attorney General stating the facts and asking that the matter be resolved. She got very fast service after that; we assume the dealer absolutely did not want to be investigated by the state.
RV warranties. Got got a brand new RV and when I got it home one speaker was bad. I called and they said I needed to drop the RV off for 3 weeks, (which would turn to 6 weeks) for a lousy speaker. The gas and time just to drive to and from the dealer 2 times (80 miles away) I could buy the same speakers for $40 a set. I had to pull teeth to get them to just order the new speaker and I'll bring the bad one back. Lucky I had business close by because it wasn't even worth the gas and time to go do that
A similar thing happened to my father when he bought a Ford extended warranty. The selling dealer never filed the paperwork, and Ford said my father had no extended warranty. Luckily he insisted on paying for the warranty in full with a separate check so that he could prove he bought it.
I worked for a used truck dealer that did everything Steve just described. I found out after my wife started working in the office and she was taking care of billing and all that stuff and she quit after 2 months cuz she didn't want to get caught up in all the BS.
STORY TIME!!! lol See I bought a used truck at a dealer that had an oil pressure issue right after I bought it with cash. No warranty. Called up the sales guy and he was cool said bring it in and we will figure it out. Turns out the bearings were shot causing the pressure issue. He asked what i wanted to do then offered another similar truck on the lot as a trade(good start a Ô_Ô) and I'm like that truck was EXACTLY what I was looking for(legit was).... he turns around and says give me a bit ill call ya back. The call back a day later is "I found an engine that looks solid out of a junk yard(I actually use the same yard myself ironically for parts) and we are going to throw it in to get you on your way no charge." What's even more interesting is when I picked it up they also put a new radiator in, also no charge, because as he put it "it had a pin hole leak and it was already out anyway" Õ_Õ.... I have bought 2 cars from this dealer and will buy future ones because of this. Not all dealers/ salesmen are the devil lol
I know a used car dealer that does that kinda thing often. he says every time he fixes a car that he’s not actually obligated to, that customer will tell everyone he knows. One of the biggest used car dealers in our area .
@@lethargicmotorsport2025 That's amazing these days!! But he's right!! I knew some guys like that, but it was a few decades ago!! What state is he in?
I remember sitting in the finance manager's office reading the finance contract (mostly for prepayment penalties) and he said I was the first one to actually do that, which shocked the hell out of me!
They tried to hit me with a prepayment penalty when I sold a house but I had Pres. Carter's Truth in Lending Statement which didn't show one, so I didn't have to pay.
They got me. About 10 years ago I was sold one with a used car. Supposed to cover all engine and transmission. It had a head gasket leak but the "warranty" had a head gasket exclusion.
I know of someone who bought a new car. When it came to the first oil change he decided he wanted to save a little of the cost and go to a private service place to have the oil changed. The service person did not properly tighten the oil filter. He also did not do the recommended inspections. The filter loosened up and the oil started to leak out. The engine seized. When the car was towed back to the dealer they told him the engine was not covered because an authorized dealer did not change the oil and filter. They told him the reason for the failure. He was told to have the car towed back to the place that did the oil change. They refused to pay. They told the guy to go after the manufacture of the filter. The manufacture sent him back to the garage that did the work. He had to sue the garage that changed the oil. He never got back all the costs. He lost a lot with this one!
This video is one of the reasons I retired at age 29 from ever working at a car dealership ever again. I was making fantastic money to. Gave it all up. The Greed was eating me alive. We bought Service Contacts for $225 and sold at minimum $1200. Sometimes up to $2500. The more the car was sold under invoice the higher the interest rate and Service Contract cost. When ever as car dealer is willing to sell a car under invoice. Even showing you that invoice. Watch out for those Add-ons. They usually add $1000 to make over up for it. Like the guy that walks up and demands 10% off parts cause he is such a good customer. So they/we go into system. Mark up the price 3x instead of 2x then to show how nice we are Discount it 12%. Perception of a Discount. I never looked back and learned how Not to behave.
Had a salesperson at a dealer slip up once and straight up tell me the bigger the discount they offered on the new vehicle, the less they would give me on my trade. LOL!
Great! Now, I'm gonna have to call up my girlfriend's son. About a year ago, he had bought a used truck from a dealership, despite me warning him they seemed shadier than normal. He needed a truck for work in construction, and at the end of negotiations they hand him the contract for the payment plan, which he forwards to his mother and me (a very eager mathematician). I come to find the monthly payment doesn't line up with the principal, interest rate, and length of either payment plan option. I found the principal amount that does line up was $2400 more than what they'd reported on the paperwork. Effectively trying to steal $2400 from him plus interest even after the negotiations. When I told him this, he took that info to the salesman, who claimed it was an extended warranty to cover anything that happens to the truck. I advised him to no longer trust that salesman, but he bought the truck anyway, extended warranty and all. I'm guessing this dealership might also be in the habit of filing these forms late and out of sequence, as well.
He can always cancel the Warranty and they have to refund it. It will go to the loan company and reduce the principle but he can go to the loan company and tell them what happened and a reputable lender will charge 100% of the Warranty back to the dealer reducing his principle even more. Warranty plus tax.
I started out my sales career selling @ an indy used car lot, where the incentives to include these warranties were phenomenal. Keep in mind We handled both the sale+ F&I aspects of the transaction so I could negotiable away the "front end" profits and kill it on the "back end" since most lenders will finance 100% retail cost of an extended warranty... Unfortunately, the proprietor of the dealership did what most do... Rather than pay the warranty company, He'd pocket the money and roll the dice on whether the auto needed future service.
@Space Ghost I think Our wires got crossed. Automart in Maine was never in a movie (despite the Hollywood esque characters I worked with). It was a local enterprise of approx. 8 locations that sold high mileage luxury cars at "wholesale prices". I left for GM after 5yrs learning the biz from it's most dirty players
Still probably a good racket on his end. Essentially he was the insurance company. As reliable as cars are, he probably made out well. I'm assuming he actually paid out for a handful of repairs here and there.
Steve, this is a phenomenal video. I have purchased a couple of these warranties and now I feel like an absolute fool. I never actually needed to use one, but I will not even consider one in the future. Thanks so much for your great work.
A local funeral home was selling burial insurance, but just sticking the paper in a drawer. When he was found out, he did some time. Now he is working for an automobile dealership.
Yeah no kidding. When my Dad passed away in hospice, I immediately called the funeral home connected to his prepaid cremation. I gave the information on the contract and the funeral director immediately dismissed the notion that we had a contract. So I looked in Dads file folder and noticed that the woman who sold the contract had sent my folks a Christmas card. I called the funeral director back and said do you know Ms. So and So? He changed his tune very quickly. I think these contracts are sold with expectation that 15 - 20 years later no one will remember they existed and they can just tell the family to pound sand.
Going throught this right now with my 2017 Kia Soul with 56k miles on it. Bought the car used, Certified Pre Owend with a 10year 1000k mile CPO warranty. Engine blew almost 4 years to the date of purchase. Found out that the dealership never filed my CPO warranty. I called the warranty company and they had no record of my car. I called the dealership and more than 4 years after purchase they finally filed the CPO warranty. Now the dealership tells me they've filed claims every which way amd they have all been denied. I called the CPO warranty company to ask why my claim was denied and the dealrship never filed a claim. Its all a scam. I have hired a lawyer for the $6500 in repairs as well as lost wages, car payments made while they jerk me around, laweyer fees and inconvenience.
Last time I went to buy a car they offered me the extended warranty at $135 a month on top of my car payment. When I politely told them to piss off, his counter-offer was $17 a month. It took everything I had not to laugh in his face at the ridiculousness of the two offers and if we were able to find a car anywhere else I would have walked out of that dealership.
Had a similar experience. I was told that I didn’t qualify for a 0% financing offer. 4% was the best that they can do. I tell the finance salesman that the 0% was the only reason I was interested, no thanks. Start walking out and he offers me 2%, then 1%. I told him to keep the car. They called me the next day and miraculously I qualified for the 0%. They were going to effectively raise the price of the car $5,400.
@@mrlt1151 this! I bought my truck in 2020 and they wouldn't budge. 3k over MSRP on a used truck. I came in with my OWN financing already. I sat down, drove the truck, got to the papers we sign on the prices and they want you to whip it on there like it's a napkin with no words. It was close to closing, they wouldn't budge on the price. I said I'm already pre approved with financing, this things a year old and used. I'm not going upside down in this. Still wouldn't budge. I pulled 5,000 cash out of my envelope and set it on the table. They wouldn't budge off the price. I pulled out another 5,000 envelope and they offered to take off all the admin fees AND drop off $1000. Mind you this was a Ford truck AT a Chevy dealership. The best they wanted to do was maybe drop $1500 off the top. (They wanted 46k and the truck was 44k msrp brand new.) I got up and walked out. Said this was a waste of time. Nobody paid MSRP for this truck when it was new, covid didn't even exist when this truck sold, it probably sold for 38-39k new. 5 days later that dealer called me up and left a message saying the store owner wants to make a deal on the pickup. Unfortunately I bought it lol I got what I wanted. 36k out the door. They got 10k cash upfront and my bank took the note. I think the finance manager wanted to push it since it was close to closing and see if I was impatient and weak at deal making. They definitely blinked first.
@@Seasniffer69 They are likely paying more for the truck these days. I had 2 cars for a while and decided to sell my Camaro recently. Went to Carmax to get an idea on a price and they offered me $2,500 more than I paid used in February of 2020. I decided to take it. They then offered me 10k less than I paid new for my 2017 truck. I was flabbergasted. I almost let them have it too. They turned around and advertised the Camaro for more than its sticker price new. Car had 17k miles but had been in a MAJOR $20k in damage accident. Repaired well, drove fine. It dropped off their site in days.
@@mrlt1151 it was actually repod off the air base in San Antonio and sold at auction where the Chevy dealership bought it and had it shipped here. CarMax is a little diff though on their prices because they're warranty is actually top notch, or it used to be anyways. Always told myself if I'm buying a used luxury car I'm going there.
@@mrlt1151 Thanks for your story. I bought a used pickup at a Chevy dealership and the finance manager quoted me a rate of 6%. I said no, too high. He told me those were the bank's terms and I could take it and leave it so I got up and started walking out of the office. He called me back in and got on the phone with the bank. Said he couldn't close a deal because the interest rate was too high. After about 4 or 5 minutes on the phone he was able to get interest rate down two points. So I bought the pickup. I want to feel bad for people who sign on interest rates at 10, 12 or even 15%. But the truth is, they did it to themselves. Sad.
A while back I brought new Dodge Ram with extended bumper to bumper FACTORY warranty to 100k. At 98k took car to independent shop so they can look it over and make a list of things that potentially needed to be fixed. Like seals that were starting to leak etc. Service writer looked at it and said that they probably won’t cover most items on the list since non of the items are actually broken parts but they did submit it to warranty. I was amazed when they called me back to say that all the concerns were approved for repairs and the warranty will pick up almost 6k worth after 100 dollar deductible. Still have this truck, almost 300k miles on it now.
Buying used cars is like navigating a minefield of scams, from warranties to lease agreements which aren't needed at all, to outrageously undervaluing trade ins, to cash payment levies, poor quality paint protection... the list goes on ad nauseum. I was glad I was there to help my sister buy her car otherwise they would have had her by the short and curlies. Love the videos BTW, I live in the UK so I like to hear how Michigan does things!
Undervaluing trade-ins happens a lot. I traded my 2006 Jetta in a couple years ago with 150,000 miles. I looked on the website of that salesman a couple days later and saw it being sold for $2600. They would only give me $500 on the trade and made it $700. The car had no visible rust or other defects. No chips or cracks in the windows, everything still fully functional no tears in the interior to at all. I have changed the transmission fluid a couple times and it has shifted good the whole time I had it. It was never in an accident and was always garage kept and thus in good condition for a car its age.
Third-party auto warranties have always been snake oil. Dealers love selling them because of huge profit margins compared to $5 fabric protection and pinstripes.
Im a service advisor at a Honda Dealer, the different extended warranties we sell are amazing, they arnt "snake oil". Now, I have dealt with a lot of shitty aftermarket warranty companies that "by here pay here" dealers sell, and yes, those are terrible warranty companies. Moral of the story, not ALL extended warranties are bad
I bought a warranty when I bought my wife’s car for something like $2000. We had a $8000 issue that was covered by the warranty, and we are extremely happy we did. My father had a similar story. My father IN LAW worked at a dealer and always bought them. When he didn’t use them, he called and got a refund. They’re definitely interesting concepts.
My selling dealer in FL, included an extended warranty when I bought my Odyssey. 11 years later the vehicle quit moving, while on vacation. The dealer in TN, replaced the tranny, under the warranty. Upon my return to FL, three days later, it quit again. Turns out it wasn’t a tranny at all, but a front axle.
I'm a retired auto broker. There is absolutely no such thing as a "bumper to bumper" warranty. No one is paying for things like brakes, brake pads, light bulbs, normal wear and tear, oil changes, clutches, tires, tire rotations and the list goes on. If someone tells you all of that is covered they are lying to your face. There are dealerships that offer free oil changes for life from them so they can sell you things you don't need later or over charge for work, they always get their money back or they wouldn't be in business. As an example A client of mine was offered under carriage protection for $1,200. I was able to get it done for him for $90, product plus labor. Use your head and don't let them take you for a ride.
BMW offers it on new vehicles, where for the first 3 years you only pay for fuel, top up oil and tyres, the rest, aside from accident damage, is covered. Of course you are paying this in the price, and they are amortising it over a 5 year period, so after year three, when you get out of the warranty and motorplan, you either pay at BMW dealer price for service, or will buy the 2 year top up plan, which is only a little cheaper. They know they have you for those 3 years, paying interst on the services before you need them, and they also know the vehicle will not fail before then from history, and any accident damage they will bill you for. Scrape the belly pan, new one, at your cost, dent from a trolley noted and then your excess for insurance will have this charged under "betterment" if you claim.
i have the free oil for life and plan to use it, iv all ready got 5 oil changes out of them 5 more and i break even. if they recommend other stuff ill just say ill do that somewhere else later...
I bought an extended warranty (service contract) I got through my credit union on a 2007 Ranger with 3.0L engine (the junk engine). I made about 4 claims total on that contract and made money on it. The repairs I was able to get exceeded what I paid for the contract by about 3x. Of course, the last one took a mechanic friend of mine going through the vehicle very carefully and making every repair he possible could. That took about 3 weeks because the valve covers were not available. (Ford put plastic valve covers on those Rangers and they failed by 2017. The new covers were aluminum.) The next time I went to my credit union they switched companies to one that covers nothing and refuses to pay anyway. The credit union has become member unfriendly in the extreme like Wells Fargo (from whom they acquired many employees). The extended warranty from the dealer for my 2016 Honda is nearly useless and the dealer will not tell me what is covered.
Yup. Learned my lesson the hard way on some of those Service contracts. Dealership refused warranty. I told them finance told me it was covered. So next day I went in, picked out a car, acted like I was going to buy it. Set my phone down in the finance office recording the lies. When I was told it was bumper to bumper I got up, went to the service manager and played it for him. A little threat of going to the news too but I got my car fixed.
@@ostrich67 yup, I work for a LARGE used car dealer and I've seen it all. Multiple 15-18 Toyotas with dead infotainment systems, BMW's of all years leaking oil from everywhere, 13-18 ford escapes and focuses with transmissions failing, Mercedes with air suspension failures. Lincoln mkzs with ac distributor motors blowing. The list goes on. Best to do tons of research, and learn how to do all very basic maintenance yourself, so the car doesnt experience much neglect and won't develop further problems as a result
Exactly. I only buy Toyota, Honda and Mazda. I went through many cars ( upgrade or change) but never had to fix anything other than oil change, brake pad and tires.
Bingo! When you buy a warranty, you are saying "I bet $100s that this vehicle will break down during the warranty period." Well why would you buy a vehicle you don't trust?
Confessions of a former car salesman: there's very few people who really should ever consider buying an extended warranty. Its a massive profit center to the dealer, and the potential breakeven on how much you pay for it versus reasonable repair costs on most vehicles makes it cartoonishly terrible insurance. Just tell them no until they stop asking.
Like any insurance, if yoou can finance it yourself, you will save money. Throw whatever the dealer wanted to sell you the extended warranty for in a savings account and don't touch it. You'll make out better in the end.
@@vpconcepts9838 Carmax paid $32k in claims on an Audi of mine. they would have paid more but the limit of the policy is capped at the purchase price of the vehicle.
I would like to add, if a dealership adds a warranty into your final price and you don't catch it before paying, you can still cancel it through the warranty company and get a refund.
I had one of these third party extended coverage plans that was purchased with my car for what seemed like a reasonable amount. The dealer promised it was almost identical to the manufactures warranty. If it had been as he claimed, it would have been a reasonable price for insurance on a vehicle I was planning on keeping for a long while. When I had a claim for a non-operable window it was denied as the contract only covered things that wouldn't actually break. In this case it was the rods for the window were covered but not the plastics connectors that were designed to fail first rather than break the glass. Letters to the state insurance board and the Attorney General consumer fraud group, with a CC to the company, resulted in a call from the warranty company suggesting the dealer might make an goodwill allowance and fix my car at their own expense. I never bought one again. But have used the letter campaign to get relief from deceptive practices a few other times.
@@hhholsteiners I think it was the letters I wrote alone rather than any action by the state that made the difference. It probably was just less of a hassle to buy me off than defend their contract. Writing the AG tends to indicate the customer need to be taken seriously. After the repair, I wrote letters to the insurance board and AG stating my problem has been resolved.
I bought an extended warranty for a new Ford only one time and it was the best decision since the car started falling apart after 36,000 miles and the factory warranty expired. The experience wasn't without drama. The warranty company tried to deny claims and a lot of time was spent on twisting their arm to pay a claim. Ever since then I have declined the extended warranty because it's a scam. I'd still be ahead if I had to take a hit on a major repair because I literally saved thousands of dollars over the last 30 years by not buying the warranty.
@@hhholsteiners 1996 Ford Probe. I paid $800 for the warranty. They paid out over $8,000 in repairs. 3 ECUs, 2 catalytic converters, window regulator, transmission throw out bearing, engine sensors, etc. The warranty company went insolvent and the new company took over and tried to tell me they don't cover anything electrical. Not according to my extended service contact that I had to wave in there face.
There's a used car dealer in my state that offers extended warranties and I've gotten them three times. All have been honored by the manufacturer dealer (Toyota, VW, Hyundai) with no questions asked. I've gotten a seat warmer, AC compressor, dash buttons, steering wheel buttons, emergency brake position sensor, ECU. Unfortunately they wouldn't replace a cup holder part in my Toyota, but otherwise I'm happy. I'm the type of person to push warranties to the limit.
In the early part of my career in electronics I took an entry level job as a Color TV service Tech. One of my assignments was selling extended warranties on new TV sets. Personally I did not believe in warranty service deals, once I saw how differently demand service customers were treated VS contract covered customers. Our shop was covered by a Union Contract and selling was not part of our job. I have always believed if the product is any good it won’t need any service for several years. When it does need service the work will be minimal and affordable. My own personal work is covered that way today.
I bought my car from a dealer and it included a short warranty for used cars. I was a few miles and a few days outside of warranty and they totally took care of me! This dealer had a great reputation for taking care of people. I'm so glad my friend recommended them to me.
We purchased a new 2019 Ford Escape and wanted a extended warranty. When we got in finance office it was a after market warranty. We was told the Ford warranty cost 3 times more. I started calling around and found out I could get the Ford ESP plan for less than what we paid . So I went back to dealer and talked to to dealer finance manager. After I explained what I was told he didn't have a problem with refunding the cost of the warranty. But could not match the cost of the price I received from other dealers for the Ford factory warranty. I waited till are factory warranty was about to expire and we was going to keep the car then purchased the Ford ESP plan 7 yr 100k mile $1400 . Also the dealership tried to add on $500 for a security system that was never talked about. That got removed before we signed any papers. Actually we should have tore up the papers and walked out.
The factory 7 year starts when you bought it. So you really only get 4 years after the first 3 years. You can by that warranty from Ford by just calling them. It would have been cheaper when you bought the new vehicle at that time rather than waiting for the orginal warranty is about the expire. You need one on that stupid Ford factor automatic ford clutch. Which most dealer can't fix right anyway. You need so many tools to set that up and paitence most techs can't fix it right with the time they pay for that job.
@@arthurrodesiler3109 The "ESCAPE" never had the "dual clutch" transmission! The 2012-2018 "FOCUS" had the DCT. Regardless, the hydraulic automatic used in the ESCAPE was still problematic! You should have STAYED AWAY from ANY Escape!
I repair vehicles and I stopped dealing with those warranty companies due to the ridiculous requests the impose on the repair facilities to try to get out of paying the claims. One screwed me over and that's when I said, "No More!". If anyone has warranties, I send them to the dealership so they can argue with them. I don't have the time nor energy. Thanks Steve!
I am watching this now. It's appalling the things the factory and external warranty systems are doing to customers and the techs involved in this. I used to be a factory trained tech for a big 3 company. The warranty companies almost automatically decline the repair. Leaving the customer without a vehicle, the techs with dead vehicles in stalls taking up space. The techs have to jump through hoops to deal with adjusters etc. I personally lost a couple of jobs due to refusal of service to warranty procedures. It's a complete mess, industry wide! I heard you mention the infamous dry clutch junk. The labor times have been slashed for the techs almost 10 fold. I no longer work on vehicles due to the corporate mess involved. Look into the lack of techs, industry wide. It's not due to 19, but bad practices by the industry. Btw I enjoy the knowledge I've gained from your videos.
I got an extended warranty on my vehicle (2010 camry) back in 2014 and have been very happy with it. Around 75k miles all 4 struts were leaking, replaced no issue. Around 185k both CV boots were torn and throwing grease. One they replaced just the boot, but the other the dealer thought it was better to replace the whole axle. A few other small repairs too, but i more than made my money back on it. But, I keep my cars longer than most people because its the only way you get your money's worth out of them. A daily driver is never going to go up in value, but eventually it does more or less bottom out so long as it runs decent. Especially a Toyota, Honda, etc.
I bought a warranty on a used car years ago and it covered axels (and a lot of other things). The axels failed and I called the warranty company. They sent and inspector out and he said the cause was that the boots ruptured and leaked out the lube. The axels were covered but not the boots where not, so they paid nothing. Never, ever pay money to a third party warranty company. The know what parts of a car fail and why. Their contracts do not cover the why. They are despicable crooks.
Bought a brand new Mazda, bought the extended warranty, but the freeze plug came out and destroyed the head, they refused to honor the warranty, saying, it was a cooling system related problem, and therefore not covered under the warranty. Really regretted that we didn’t buy the Toyota instead of the Mazda.
I've been burned by one of these warranty companies. A month after purchase I needed a brake job, the caliper seized, fried the pads and warped the rotor. Took it to a shop, they called me the next day and let me know the warranty covers the caliper and labor but not the pads n rotors that were damaged by the failed caliper, all I had to pay was the $50 deductible and $250 for the pads n rotors. I did the brake job myself, the caliper was only $35, pads were $20, the rotors were $60 each.
Lol... A simple clause that exempts so much... "All fluids and parts that contain carbon or corundum are a maintenance item and therefore are not covered." The dealer will say it means they don't cover oil changes because oils are hydrocarbons. But all steel and plastics contain carbon and all aluminum exposed to air automatically creates a passivation layer of aluminum oxide (corundum), functionally exempting the almost entire vehicle.
I bought a car from CarMax in Fl in 2014, still have the car thanks to their extended warranty. I don't know if it was in house or not, but it paid for itself, it was an extra 3K or something, but, I had several repairs for various issues, a cam shaft issue, a wheel bearing, a few other things, and finally, the transmission, and 8K$ repair, no out-of-pocket costs.
Yea Doug got a Range Rover. No way would I ever buy a Range Rover without a warranty. Old boss got a rover, I asked if he knew where to get it repaired. And it took everything I had not to laugh in his face, later I heard he had a lot of trouble with it…
I worked for a computer repair store, and we tried working with some of the third-party warranty companies. It did not take long to discover they were not people we could work with.
Years ago, a friend worked as a salesman at Sears, selling electronic equipment, stereos, etc. There was a lot of pressure (from getting fired...) to sell the same type of service contracts along with the merchandise they sold. He didn't work there very long as that attitude bothered him.
Steve, I was a master technician that went into the warranty field to be a claims rep for mechanical claims. I spent about 3-4 years behind the curtain and can answer any burning questions you may have about how things are done. From claims, denials, exclusions, etc. I can give a decent amount of info if you'd like to create a video series on this subject.
@@dorothyhoard5247 Believe it or not, they will pay as long as it's a covered failure. Some have crazy exclusions, but they'll all pay out if it falls within their guidelines. To say they never pay is not true.
When I bought a used Chrysler from Glendale years ago, the saleman tried very hard to convince me to buy an aftermarket warranty (whose headquarters were offshore) instead of a Chrysler extended service plan. Instead, I purchased a Chryseler factory zero deductible maximimum care warranty and subsequently used it to replace a transmission, water pump and other items. Although it was more expensive than the warranty Glendale tried to sell me, the warranty paid for itelf many times over. Ironically, the dealer later posted notices that they would not honor those aftermarket warranties--that they had tried to sell me--anymore. I am glad I stuck to a manufacturer's warranty.
As an automotive service tech of 23yrs and an independent show owner for seven I tell my customers when inquiring about purchase of an extended warranty. I strongly advise them to start a extra savings account with the money they would spend on the warranty!! As a general rule if they have done so they have the funds available for there repairs and then some. It’s work fantastic for the few that have done so
most warranty companies review claims rates of each of their dealers and will drop dealers that have too high of a claims rate, so only submitting applications that have claims will cause the warranty companies to drop that dealer immediately.
I had a warranty on my 07 F150 with the company you talked about in your previous video. I had the transmission go out, and was eventually able to get it covered. They wouldn't pick up the phone, wouldn't get in touch, and wouldn't answer the shops calls. It took just over a month to get the claim paid and the truck running. They paid in the end, but definitely left some hoops to jump through
If you read the contract for all these extended warranties that you pay extra for, you'll often find a clause (which I call a "get out of jail free" clause) that puts all of the control with them. Something like "claims are accepted at the sole discretion of company management; all decisions by management are final" but usually less clearly worded. In other words, you probably didn't actually read the contract and it includes a legal agreement between you and the company that lets the company blanket deny all claims and leaves you with zero recourse. Take it to court and you'll be arguing with your signed agreement. You can argue contract of adhesion, and maybe you'll win that way, but that's a hard path compared to "they agreed to pay for this in the contract and here's my evidence."
The best warranty is NO extended warranty. Life has its risks, just do your homework prior to a car purchase and disregard all of the transactional hub bub from salesmen...focus on THE CAR and its track record. Most of our new vehicles today are not made with the quality they used to. Maybe consider keeping what you have and just accept the repair bills that come up as a car payment. Lots of folks today are keeping what they have to avoid the costs of todays vehicles and the electrical nightmares they will have in short time, recalls, computer issues, gadget issues and so forth.
Agreed. I will run my '07 Accord until the average monthly repair cost is higher than a car payment. Seriously, boring though it may be, it's long since paid for and the ownership cost per mile is tiny. (Well, it was until the cost of fuel went up to 21 cents a mile.) I'd love a stripped-down Ford F-150, but not going to shell out $40k and wait a year for it. Seriously., in some rural areas you can buy a fixer-upper home for that. Still thinking I should have bitten the bullet and gotten the repairs done on my '07 Subaru Forester- loved that little beast- but the whole rear driveline was shot from the transmission back. I didn't want to dip that far into our savings right then.
This was similar to the gimmick that was used to sell fabric/leather protectors in the furniture industry, when I sold furniture. The WhateverGuard warranty was often fantastic, promising to replace our entire living room set, for example, if you got a stain on your loveseat that wouldn't come out, and a replacement for just that piece wasn't available, and I saw them do just that on a few occasions. The thing was that most people expected the actual product to work at preventing stains, which it sometimes did. When it didn't, customers almost never filed a claim. They just got mad about the bad protectant, and forgot about it. In most cases, the fabric protectant was actually a pretty good deal, IF you intended to use the warranty. If not, you'd be much better off buying a can of fabric protector spray at the hardware store.
The fabric protectant depended upon which warehouseman applied it, and with the level of diligence. Some chose to skimp on the product. You are right though, I would buy Scotchguard at Home Depot and do it myself.
It's really quite simple, anything a dealership salesperson tells you is a lie. Anything any commission salesperson tells you is a lie (and even most non-commission salespeople because of performance expectations). So, in a nutshell, don't believe anyone who is trying to sell you something and do your due diligence and find out what they are lying about. If not, then it's all on you.
Thanks Steve Lehto…You are performing a valuable service explaining these complex issues. Seems like corruption is blatent and rampant, everybody is scheming, scamming and faking everything these days.
Going back to 1986, I bought a new car. Back then the dealers for this type of car were not offering extended warranty with a service contract. They referred me to a warranty provider. Back then I paid $350 for an extended 4 year warranty with service. I was never able to collect. Every time I tried to make a claim they made it very difficult. I had to go for an estimate first. I had to give them the estimate copy. In the meantime the vehicle may not be usable or have some issue that was annoying. There were times where I had to leave the car at the dealer and lease a car to drive. I had to sometimes wait for a week or more till they responded back. Every time I gave them the estimate they had some kind of excuse why this particular repair is not covered. During the second year I gave up. I ended up paying the repairs myself. I found out from some other people this warranty insurance company never pays out. I lost my money! After this bad experience I never ever bought another car from that manufacture and especially that dealer.
Good video. If people took the time to read these contracts and took some time to understand them, they would not purchase them. Most people don't read them, and think they have this bumper to bumper warranty, and all that has to happen when a problem comes up is a shop calls in a claim and it's all going to be free, less the deductible. That is almost never what actually ends up happening.
Great video! I can only imagine you are not a very popular guy with the warranty and financing folks...but that is their problem! Please continue to distribute excellent content such as this.
When i was much younger man, as a delivery person using my own vehicle... the I company I worked for tried to sell me this kind of auto repair insurance... and in side my head i thought to myself. The insurance is only $4000 bucks!!! I can save that money and use it to fix my own car if it breaks down.
A friend of my daughter was (retired now) a claims rep for a well-known insurance company and she was directed to find a reason to charge the claims person at least 25% of the amount of the claims. The claims reps could be disciplined for not complying with the directive.
Here’s a thought: the dealer is sort of self insuring. They can fix the cars; a big enough dealer can spread the costs of repair when owners claim under the service contract. Why do they feel motivated to rip off the third party company, and the consumer?
@@nicholasvinen Why did Ford refuse to fix the Pinto exploding fuel tank issue, when it would cost $11 per vehicle? It would cut into the bottom line too much. That is real. Look it up
Just like this, in the 80's my friends mom owned an insurance business, way before the internet. They kept their whole family's insurance papers in a drawer with no dates on the policy. They only bought a policy and mailed it when there was an incident. I paid him $200 to get the same deal, it worked for a few years, up until the state required proof of insurance at inspection time. Saved me thousands!
Great information about what goes on between the dealerships and the "warranty" companies. One of the ways people get duped into buying these extended service plans is that the word, "warranty" is used, though seemingly not as much now. People would automatically assume it's like an extension of the initial factory warranty that they get with the new car, where if something goes wrong it's almost automatically fixed and covered. But in fact these extended plans work like health insurance, with bean counters determining if something is covered and if so, how much. Your coverage under this extended "warranty" may not be 100 percent or even a significant percentage of the cost, even if they say they will cover the job with no caveats such as claiming user lack of maintenance or any of the other things they come up with to deny coverage. One such warranty that I knew of required a $2,000 up front payment to purchase the "warranty". Well, the car owner had a problem come up that the mechanic said would be an 10 hour job and a $1,000 cost. Well, while the "warranty" company didn't deny coverage, the bean counters said that the job was only a 2-hour job, despite said bean counters probably not knowing the slightest about how a car even works! So, after the $100 deductible was subtracted, the company only paid $100! The car owner still had to shell out $900 for that repair job! So after this job, he was out $2,900! ($2000 for the "warranty", and $900 for the repair!) If he hadn't purchased the "warranty", he would only be out $1,000! I calculated that the owner would have to have 14, (yes, 14!), $1,000 repair jobs in order to even break even with the cost of the extended "warranty"! And this assumes the company would pay each time! My advice as it's always been, is to NEVER BUY an extended "warranty" for any car, new or used! And it doesn't matter if the "warranty" is being offered by the dealership or directly from the third party. Instead, take that money you would have paid for the "warranty" with and put it into a separate account to be used for repairs. That way, you know the repair will be covered and the only one who decides that is the person you see when you look in the mirror! Thanks Steve for sending us all the great info!
When I bought the used vehicle I have now, the finance guy was really pushing the extended warranty, so much so that I almost walked out on the sale. His initial price was $2800, and he went all the way down to $1200, after me constantly saying I didn’t want one. He probably wasn’t happy that I was paying cash in full for the vehicle also. No money made off of me for him.🙂
If you think you outsmarted them by paying cash, then you might want to double check your numbers because dealers will often get their money back on a different portion of the sale
This is so painful to listen to because I have made this mistake when I the car I was driving had a rod knock I was desperate to get something to drive and I got robbed blind by express auto and gate way financial was told I had to buy the warranty to get financing in the end paid $6000 for a warranty on a $3000 minivan and 3 weeks later when the block sealer they pored into the radiator gave way and the head gasket started leaking again the warranty did not cover it. Turns out in Michigan it is illegal to force up-sale but of course it is Legal for the salesman to lie to me claiming it was
Yes it’s illegal in every state. Its a federal law. It’s called Tying. You can’t tie one product, the car to a warranty. Had you sued you would have won Treble damages. Seriously.
I've been putting aside $100 per month in a separate account for over a couple of years now for any new car or truck that I may buy in the future. (We buy our vehicles new and drive them until they're nearly dead.) By the time I get around to buying a new vehicle again and the factory warranty runs out I'll have a nice sum of money to take care of any major problems, if they occur. I can't wait to tell the salesman that I already have a "warranty": it covers the vehicle from bumper to bumper; no one can deny my "claim" for any reason; I can take my vehicle ANYWHERE I choose for repair; it will last for as long as I own my vehicle with no time or mileage limits; and whatever portion is not used, will serve as a warranty on the next vehicle I purchase . . . . . . as well as paying me interest.
That sounds like the plan that I have been using for a number of years now. It is amazing how much you can accumulate by making regular payments to an account. If you employer will send deductions to an account for you, you will never miss the money going into that account.
I've bought a dozen new cars in my life and never bought the extended warranties. I've never had a major failure on any of the vehicles and saved the equivalent of the cost of a new car. I've found that people that claim they buy an extended warranty because they can't afford to service their cars are stupid. Stupid people are poor because they waste money on things like extended warranties and lottery tickets.
As a service manager in the auto repair business for 35 years, I can say in that amount of time I only saw maybe one or two extended warranties that were worth the paper they were written on.
I'm a tech for a gm dealership and when I bought my new truck I bought my dealerships 1st extended warranty and it's the best I've seen. I got the bumper to bumper and it's come in handy alot. Well worth the money
An equally useless warranty is the road hazard warranty on tires. If the nail in the tire is in the side wall or within 1 inch of the side wall it can’t be repaired, if it can be patched, your speed rated tire that you need or required on your fast road car or sports car is not longer speed rated and are now dangerous if you drive too fast or for too long. If the tire has to be replaced they will measure the tread depth left on the tire to subtract it from a new tire so your new tire might be $20 less than the tire had you just bought without the warranty. You are far better off paying the $20 flat repair if needed or full price for replacement tire.
Yeah. I had some tires with a 50,000 mile warranty that wore out at 30,000 miles. The Goodyear dealer honored the warranty by pro-rating them and giving me new ones for $500. Those wore out after 36,000 miles so this time I replaced them myself by buying online and having them installed locally for under $500 total. Even the manufacturers treadwear warranties are a joke.
@@riverraisin1 Discount tire used to be lifetime warranty on their warranty, now it's 3 years. Many manufacturers maintain their ratings with a patch... I always got the warranty when it was lifetime and even if 1 tire gets replaced, I've made out. Discount while still doing free patch repairs has really tightened the their belts lately.....so I've been shopping the membership stores and haven't bought the warranty lately. "BFGoodrich Maintained 3 repairs, minimum 90° apart Continental*Maintained Repairs cannot overlap. DunlopMaintained**Repairs cannot overlap1 repair, H and above General*MaintainedRepairs cannot overlap GoodyearMaintained**Repairs cannot overlap1 repair, H and above LaufennMaintainedRepairs cannot overlap MichelinMaintained 3 repairs, minimum 90° apart NexenMaintained Repairs cannot overlap RIKENMaintained3 repairs, minimum 90° Toyo H and AboveReduced to H. Voided if more than one repair. UniroyalMaintained3 repairs, minimum 90° apart"
When I bought my 4Runner new I laughed because the dealer both pushed the reliability of Toyota while at the same time pushed the need for an extended warranty. I want to say it was over $2k for the extended warranty, which was a Toyota factory warranty extension through 100k miles; a friend of mine owns a car dealership and has sold me warranties in the past at cost which for the top level warranties was always around $600 for a $0 deductible 100k mile warranty. I chose to not buy either and instead go with my auto insurer who offered mechanical breakdown coverage through 75k miles with a $250 deductible and was quite cheap with it adding just a few bucks on my 6 month insurance premium; I believe I spent around $240 in that premium over the 6 years it was in effect for. I never had a claim outside of my factory warranty period and have only had to pay maybe $400 for things that have broken since I have owned it, outside of normal maintainable expenses like oil, tires, and brakes; even with that I think the mechanical breakdown was a nice piece of mind. I had a previous warranty on a previous vehicle which I used a lot and which saves me as I had bought a lemon but as I bought it used it wasn’t covered under the lemon law; I had over a dozen fuel pumps, 3 transmission, and 2 computers put into the vehicle over the 7 years of extended warranty and definitely think I got my money’s worth. Warranties can be hit or miss but the fact that you’re overcharges so much is the real BS, I’m great full to have had a friend that was a dealer and sold me warranties at cost, despite never buying a vehicle from him. I totally agree with you about getting an independent inspection before buying used and have actually been saved a couple times by doing that with one even finding an odometer role back.
In 1995 I bought an 89 S-10 with 50K miles. The shop that inspected it told the guy, if I didn't buy it, to bring it back and they would. I still have it.
My wife and I got stung by a "bumper to bumper" warranty on a new car. A rubber stopper, a part of the lift gate, fell off and got lost. We brought the car to the dealership and they took care of it - but charged us $50. I got the service manager, our salesperson, and the dealership owner to come see the vehicle. I pointed out the front bumper, then the rear bumper, then that the part in question was, in fact, between the bumpers and refreshed their memories that they sold us on the warranty with the pitch that "it's bumper to bumper; if you can think of it, and it's between the bumpers, it's covered!" They refused to do anything. I questioned "Then, I guess you lied to us during the sale?" Some stammering and back-pedaling told me the answer was yes, they lied. We left the dealership $50 poorer, and promised them that they will never see our business again and that we would actively discourage anyone we know from doing business there, either.
A mechanic I know refuses to deal with most of these third party warranty companies because they try to dictate what they will pay for a certain repair and require the use of aftermarket cheaper parts and discounted labor.
In the latest YAA video they state their warranty has paid out 105% of the warranty purchase amount. So that means they are losing money from their warranty reserve amount.
Okay, but Steve cautions never to buy warranties from a third party. And if they are losing money, then they must be the warranty which should be sufficient alarms.
In 2006 I went to a SF Ford dealership and bought a new Focus Hatch-Back. I bought an extended warranty Thinking it was Ford as the warranty company., 4 years passes & I hear a knocking when I accelerated & slowed engine speed. The mileage was approaching 100,000 miles...the end of the coverage.I took the car to a closer Ford Dealer and they checked it out..in a few days I called..Whats the story..I asked. Apparently the engine noise was "Piston Slap" . Thats when I learned the Warranty company was not Ford. The dealer got permission from the company to Install a "Short Block" which came from Ford..the dealership Charged me $100.00 for the repairs As stated in the warranty, It took three weeks to complete the work. I drove a new Ford Focus @ $30.00 a week rental. The Focus ran great after that as I drove it another two years. Until 2012 when I sold it to my neighbor, & bought a 2012 Focus.. My neighbor's daughter drives the 06 now . The warranty cost $3,000.00 I think it was worth it. I drove the 2012 for 7 years close to 300,000 miles. I now drive a 2018 Focus Hatchback Titanium. That was the only extended warranty I ever bought.
The only extended warranty I’ve purchased was directly from Honda Finance for my ‘15 Honda Odyssey. I used it about 3 times to have the AC fixed on the Odyssey. Had no problems with the work being covered.
Авто/Мото
I’ll never have a complaint with a third party warranty service. I’ll never have a third party warranty.
My buddy called me one day and told me he found a bargain on a Ford pick up with a 6.0 diesel in it. I told him to stay away the engine was junk. He bought the truck because they gave him a warranty on the engine for an extra $2000. The first time it broke and he took it to the shop his claim was denied because when he bought it it had an aftermarket lift kit. So he went back to the dealer and complained that they sold him a junk warranty. They apologized and said they didn't know about that, they gave him his money back for the warranty. The problem was he was stuck with the truck with a junk motor. I have always believed the dealership was lying and knew the warranty was useless but used that as a way to get him to buy the truck. After all they didn't buy the truck back he was stuck with that, they only gave him his money back on the warranty.
For $2000 or so he could have acquired a replacement engine from a salvage yard and had it installed.
"Whoever coined the phrase 'let the buyer beware' was probably bleeding from the a****e."
-George Carlin
The early 6.0 had tons of problems. There good trucks if you know enough about them keep them serviced before they become a problem.
I am shocked that a dealership didnt know something or that they may have deceived your friend. Dealerships are well known to be trusted, helpful, and always look out for the consumer! Probably why the offered the warranty...
The six point NO strikes again!
As a certified master mechanic, when dealing with one of these warranty company claims adjusters, I do not let them take pictures of any part not related to the failed part in question. Many will try to take extraneous pictures all around the car, as if they were to declare the customer negligent on maintenance. This is not what they said they were checking out, so I don't let that happen. I also expect to be paid by the insurance company for my time showing the problem to the adjuster. They can get their own garage if they don't like it.
Insuring a limited life product like a car is a stupid move not worthy of my respect. That's like insuring a house on an eroding cliff. They deserve to lose money on it due to a lack of common sense involved making that decision, then trying to wriggle out of the contract later on.
I was firmly in favor of not bailing out car companies, who messed up all by themselves, btw. Make a crappy product, lose customers, lose profits, lose business. More computers than a space shuttle, for fuck's sake. Confucius say: better to press clothes than press luck.
Confucius was a well versed man
Car companies don't always mess up by themselves. GM was selling great cars and had 52% of the market. All other car companies in the world divided up the remaining 47+%. Govt. told GM they would be broken up as a 'monopoly' like they did to AT&T unless GM started making crappy cars and drove 1/3 or more of buyers away. Govt. also imposes emissions standards, safety standards, and MPG limits on automakers. And the unions demand that autoworkers shouldn't have to work very often or very hard and should get 3% raise and other new benefits every year..
@@BuzzLOLOL All of them pressed their luck. Screw them all. Ford uses the most catalytic converters of any manufacturer, and yet still have trouble passing emissions. 5 catalytic converters on one vehicle is ridiculous, and proof that the engineering department has much to learn. The misfire recognition on Ford trucks is the worst ever. All others flag a misfire code within 10 seconds. Ford, 10 miles, if you are lucky.
There was a reason for 52%. Good products and satisfied customers. I will not praise GM too much, since they killed the railcars with lobbyists. You are referring to built-in obsolescence. As a mechanic, I will always rail against it. A vast inconceivable waste of material. When mufflers outlast the engines, there is something very illogical going on. When the EPA won't let you add catalytic converters to your older car to pass today's emissions, that is illogical. They instead demand you meet the emission standard of yesteryear, not today. Ridiculous. Don't tell me built in obsolescence is good for the economy, because it never was good for the end user's economy.....just someone else's.
Coincidental youtube handle, btw. heh.
@@vilefly - No emissions testing here, so don't know about any of that...
These warranty companies, car & home, make tons of money because repairs seldom exceed what the warranty costs. It's easy money.
When purchasing a 2020 forester last year, the sales manager tried to sell their extended warranty. It was 1400, when we said no it became 1200, then 1000, then 800, then 600. We still didn't get it.
I probably would buy the warranty for $600.
@@POOKIE5592 Car was Subaru certified pre-owned. Still had 2 year factory bumper 2 bumper. Plus the Subaru certified pre-owned also comes with 10 year / 100k power train warranty from subaru. They were trying to sell us the dealer warranty.
@@ryantheodore7919 For $600 probably worth it considering the headgasket you'll need in 5 years.
One thing if you really wanted this is to find out the warranty company and coverage (platinum, etc.) and call other dealers to see what they'd charge.
@@HermannTheGreat headgasket is a commonly excluded item in the fine print on these contracts.
A manufacturer warranty encourages the manufacturer to deliver only quality products. Third party maintenance contracts serve no purpose other than to enrich insurance companies. If you want to make insurance companies richer, then go right ahead and buy those "warranties." Personally, I prefer to donate to the Institute for Justice.
They avoid being insurance companies because they would then have to follow laws that apply to insurance companies and fall under the jurisdiction of state insurance commissioners.
This is exactly correct. I managed the warranty systems for a company that made carpets. Because the carpets were warrantied for five years, they tested the bejeezus out of them for months before they put them on the market. They had automated machines that stomped on the carpets. They brought cats and dogs in to pee on them. The hung them out in the sun all day. They soaked them in water. They poured wine, beer, ketchup, mayonnaise, and mustard on them to make sure it would wash out. Before those carpets went on the market, they had the hell beat out of them. Whenever a warranty claim was filed, they had inspectors go out and look at it . When the claim was verified they installed a new carpet at company expense. My job was to take the serial number on the carpet, backtrack it through the production process, which may have been up to five years ago, and see if I could determine if anything went wrong with that production batch, and hopefully suggest improvements to keep it from happening again. Because the warranty system instigated a process of continuous improvements, the quality of the carpets got better and better over time.
Those service contracts (AKA third party warrantees) do not enrich insurance companies. They are not insurance and they are not issued by insurance companies. The only people they make rich are the third party service contract companies
@@scottr2706 Distinguish them if you wish. They carefully assess the rate that client claims will accrue and demand premiums sufficiently more than that amount as to assure profit without needing to build anything -- just like insurance companies do. You are equally advised to invest heavily on Blackjack in Vegas.
Many years ago I had a sixty nine cattyville convertible. Mechanic said it needed a fly wheel or several hundred dollars. Just being out of the military I did not have that much money. The mechanic told me he could get a Chevy. Fly wheel , and it would be almost half . I did it work fine. Found out that could be done sometimes because they're the same g m company. Good luck out there.
Everyone who purchased a "service contract" or "extended warranty"needs to watch this! Thank you Steve!
also those external car warranty companies like Car Shield. Hoo boy!
When I bought my most recent car, the finance manager had already figured and drawn up a monthly bill $65 extra than I expected, for a 60 month loan, to pay for their warranty service. I told him to keep his warranty and he gave me a look like I'd just kicked his puppy. Had to sign a bunch of papers saying "DECLINE". It was definitely a hard-sell that I'm sure they get 80% of their customers with, and I certainly didn't appreciate it.
You may not have kicked that guy's ACTUAL puppy, but I reckon that was his monthly "whore" allowance you deprived him of !
Holy crap that would be an expensive warranty, you could easily eat an engine replacement for that money lol. And they financed it over 60 months and I bet it only covered like 24 lol
@@nodsib I told the guy "it's an LS motor, those things are practically bulletproof and I'll be voiding the warranty anyways" He started talking about power windows and whatnot, stopped him again with the ol "If I didn't think all that was good, I wouldn't be buying the car"
I'd have got up and WALKED. A honest dealership doesn't have to coerce "add ons" like that, especially with trickery when the deal is closed.
@@selfdo it was exactly the car I was looking for and the only one for sale within 300 miles (actually traveled 100 miles to get it). But yeah if it had just been a regular car purchase I would have bailed.
I once had one of those warranties. It did not cover my drive belt tensioner when I had to replace it. It did not cover an air conditioning switch, either. By the time I had to replace the transaxle, the warranty had expired, so I ended up getting nothing out of it. I had decided never to buy one of those warranties again before I saw this video, and the video solidifies my opinion.
Did you get a phone call offering the warranty?
@@anime_cyko No. They offered it to me at the dealership while we were going through the paperwork to purchase and finance the car.
@@Mpg-gh5fq. I tried to file a claim, power window motor ……they said one piece in the motor wasn’t broken, a piece that was built in , didNOT come seperately and couldn’t be taken off ….. pep boys went along with the nonsense. Called company and got a sob story on how the company was about to go bankrupt and she might loose her job ……when I was young…..ah the ignorance of youth.
@@Mpg-gh5fq Perhaps next time you buy insurance take a grown up along to help you read the terms and conditions.
@@byteme9718 I'm more than capable of reading the terms and conditions myself. They did not offer an exhaustive list of every single part in the car and whether or not the part was covered. That is often the case with warranties -- the language is deliberately vague to the point that it's practically meaningless.
We got bit by this a few years ago. Bought a used F-250 from a GM dealership. A couple years later the rear leaf spring U-bolt broke. Took it to a suspension shop. They called the warranty company and they had no record of us being a customer. I just thought the dealership was incompetent. But this explains what was really going on.
Two things can be true at the same time. They really are incompetent, and also corrupt! What a fantastic combo for a car dealer 😏
Same can happen with CPO. Beware.
I once bought a Honda service contract with a new car and I was pretty happy. When I went back to purchase another car I was told that they didn’t sell the Honda plan anymore and only sold a third party plan that required me to pull coupons out of a book. I walked away as it was an obvious bad deal.
The honda dealer by me did that only through honda dealer contract and it values a 30$ cabin air filter at 300$
@@monkeyoperator1360 A cabin air filter costs less than $30 at a parts store and they are easy to replace yourself. Don't need a mechanic to do that.
@@mikemortensen4973 i know, which is why i thought it was hilarious that they listed it as a 300$ value
@@monkeyoperator1360 Im a service advisor at a Honda Dealership, and cabin filters at my dealership cost $59.99 installed. I highly doubt your claim here, it has to be a scam by that particular service department(which I highly doubt also), I think you are lying, or have stretched this story just to make a comment here
@@Rock-Bottem1982 i have the proof somewhere, in my TBs of storage or on the warranty paperwork they gave me
20 years ago, I was snookered into getting a 3rd party warranty. Seemed like a fantastic deal until I tried to use it. I found out it had a large deductible AND and a fairly low cap- meaning it would be nearly impossible to even get my moneys worth. Live and learn
Honestly the best thing you can do is set aside the money you would spend to buy one of these third party warranties in a separate account or get a card from whatever mechanic shop you go to that has 0% interest over a certain time. I mostly use that separate account when I take my car in for maintenance, oil change & such.
Depends on the car. Works out just fine for Toyotas, Hondas or GMs but if they’re high end and especially European I’d rather battle it out over a claim vs hope I have enough money to repair a major mechanical malfunction. The one headlight on my mom’s BMW is $5000 to replace meanwhile it would be 1/4 on a normal vehicle.
I guess I did ok on one of these. I bought a used 2005 Ford Explorer, 4.0 V6, 5R55 automatic transmission, XLT 4x4, 135,000 miles. The used car dealer pushed a 3 year 36,000 mile warranty for $3400 to get a lower percentage on the financing. I bit...long story short...the warranty paid for a full transmission rebuild, fuel tank guage sending unit, and one CV shaft. I got a littlemore out than I paid for it. I consider myself lucky after hearing this episode.
Good work!
They still lied to you. They can’t drop the interest rate because you have a warranty. They inflated that rate before the warranty was ever discussed. Always get a full breakdown of how the numbers work before you sign anything including the finance breakdown. If you don’t get you to buy the warranty for $1400, no problem! They’ve got it already set at a higher interest rate so they will get it over the course of your finance term!
What was the name of the company?
These "warranty" "companies" are always hounding my elderly father to buy their products. I would never trust them to pay out but what really angers me is how they try and make it look like he already has some type of warranty and it is expiring. Preying on people is just so wrong, especially our elderly. One would think as a society we would be able to come up with a way to stop these things. Thank you Steve for another great video.
You're thinking of something totally different over what Steve is actually talking about in this video
@@Rock-Bottem1982 But with similar hazards.
@@Rock-Bottem1982 Ohhh, it's different? I was also thinking of the robocallers who push extended warranties. It's a running joke around here, but I was horrified to find my mom signed up for one after a solicitor called her. She seems happy with her "product", though I'd like to see the written contract.
@@Rock-Bottem1982 Auto warranty sold by the dealer or auto warranty sold be telemarketing or auto warranty sold be direct mail - same company, different lines of attack. The video does primarily cover the dealer's shady dealings; however, these warranties are often shady deals themselves. My point was, regardless of whom the predator is , dealer or warranty co., predatory tactics just need to be stopped.
I think that Steve did also have a really good point about 2nd hand warranties - if you do get one be sure the dealer processes it right away - contact the warranty company to be sure it gets done. I would think there might be "some" of these 2nd party companies that are legit in their dealings and having a warranty on a product as risky as an vehicle could really make a person feel more comfortable owning it. As always, and something I didn't use to do before Steve, is read the contract entirely before signing! For that I am grateful.
I worked at a high volume GM dealership many moons ago. My job was to verify the veracity and coordinate warranty repair claims that we submitted to GM for reimbursement. GM was very generous about paying claims that were a little (and sometimes a lot) over time or mileage originally stipulated. If a car or truck was over mileage or time, but we thought it was within reason, we could (and did regularly) ask for, and receive exceptions as a goodwill gesture to maintain customer satisfaction. However, GM was very strict about what sorts of parts and labor they would pay for to correct a customer complaint. As example, I customer would complain about growling noise coming from the driveline. If our mechanic diagnosed the problem as a bad transmission and replaced the transmission only to discover that the growling noise was coming from the differential. The differential would be repaired as needed but there was absolutely no way that GM would pay for a transmission AND a differential to correct one complaint unless we could prove to them that BOTH components had failed simultaneously and that it was GMs responsibility. Transmissions and differentials plus associated labor are very expensive and the likelihood of both failing simultaneously is extremely rare. If the car or truck had been in a bad accident, sure both could be damaged, but that's not GMs responsibility. The zone office would send out a rep to investigate what really happened. It was almost always a misdiagnosis, and the extra expenses involved was not GMs responsibility, and they would not pay. The dealership would generally have to eat the cost of the unneeded repair. There are published job codes and labor costs for nearly every possible repair for every vehicle. If the job code didn't match the complaint, like if a customer complained about a windshield leak and we submitted a claim for a transmission it would be denied. If we submitted a claim for a failed water pump, it could include coolant and labor, but if the belt(s) and hoses were included, we had to justify that their failure was directly caused by the water pump leak, and they almost never were. Sorry for the long story, and keep in mind that I think GM was incredibly generous over what they would pay for, but they were not in the business of paying for unnecessary parts and labor. I suspect that some of the aftermarket warranty providers had/have similar policies in place and would deny claims from a shop misdiagnosis, and that too may be the cause of extended warranty claim denial. A poorly diagnosed problem from an unethical shop is not the responsibility of the warranty company, but the shop may very well tell you that the warranty company is the problem in order to keep from admitting a mistake and absorbing the associated costs.
GM quality, especially transmissions, are much worse since their 2005 bankruptcy as the accountants took over the company. I buy Toyota or Honda, best quality on the market.
nice insight
An RV dealer sold my sister an extended warranty on her rig. She needed to file a claim a couple years later, at which point she learned the dealer had never remitted payment to the warranty company for the contract. A lot of stalling and finger pointing ensued. She asked for my help, so I drafted a letter to the dealer with a cc to the state’s Attorney General stating the facts and asking that the matter be resolved. She got very fast service after that; we assume the dealer absolutely did not want to be investigated by the state.
RV warranties. Got got a brand new RV and when I got it home one speaker was bad. I called and they said I needed to drop the RV off for 3 weeks, (which would turn to 6 weeks) for a lousy speaker. The gas and time just to drive to and from the dealer 2 times (80 miles away) I could buy the same speakers for $40 a set. I had to pull teeth to get them to just order the new speaker and I'll bring the bad one back. Lucky I had business close by because it wasn't even worth the gas and time to go do that
A similar thing happened to my father when he bought a Ford extended warranty. The selling dealer never filed the paperwork, and Ford said my father had no extended warranty. Luckily he insisted on paying for the warranty in full with a separate check so that he could prove he bought it.
I worked for a used truck dealer that did everything Steve just described. I found out after my wife started working in the office and she was taking care of billing and all that stuff and she quit after 2 months cuz she didn't want to get caught up in all the BS.
STORY TIME!!! lol
See I bought a used truck at a dealer that had an oil pressure issue right after I bought it with cash. No warranty.
Called up the sales guy and he was cool said bring it in and we will figure it out. Turns out the bearings were shot causing the pressure issue. He asked what i wanted to do then offered another similar truck on the lot as a trade(good start a Ô_Ô) and I'm like that truck was EXACTLY what I was looking for(legit was).... he turns around and says give me a bit ill call ya back.
The call back a day later is "I found an engine that looks solid out of a junk yard(I actually use the same yard myself ironically for parts) and we are going to throw it in to get you on your way no charge." What's even more interesting is when I picked it up they also put a new radiator in, also no charge, because as he put it "it had a pin hole leak and it was already out anyway" Õ_Õ.... I have bought 2 cars from this dealer and will buy future ones because of this. Not all dealers/ salesmen are the devil lol
Thats great !
You found him. The only one in existence.
@@1sinister80 😂😁😂
I know a used car dealer that does that kinda thing often. he says every time he fixes a car that he’s not actually obligated to, that customer will tell everyone he knows.
One of the biggest used car dealers in our area .
@@lethargicmotorsport2025 That's amazing these days!! But he's right!! I knew some guys like that, but it was a few decades ago!! What state is he in?
I remember sitting in the finance manager's office reading the finance contract (mostly for prepayment penalties) and he said I was the first one to actually do that, which shocked the hell out of me!
They tried to hit me with a prepayment penalty when I sold a house but I had Pres. Carter's Truth in Lending Statement which didn't show one, so I didn't have to pay.
They got me. About 10 years ago I was sold one with a used car. Supposed to cover all engine and transmission. It had a head gasket leak but the "warranty" had a head gasket exclusion.
🤔🙄🤯
I know of someone who bought a new car. When it came to the first oil change he decided he wanted to save a little of the cost and go to a private service place to have the oil changed. The service person did not properly tighten the oil filter. He also did not do the recommended inspections. The filter loosened up and the oil started to leak out. The engine seized. When the car was towed back to the dealer they told him the engine was not covered because an authorized dealer did not change the oil and filter. They told him the reason for the failure. He was told to have the car towed back to the place that did the oil change. They refused to pay. They told the guy to go after the manufacture of the filter. The manufacture sent him back to the garage that did the work. He had to sue the garage that changed the oil. He never got back all the costs. He lost a lot with this one!
This video is one of the reasons I retired at age 29 from ever working at a car dealership ever again.
I was making fantastic money to. Gave it all up. The Greed was eating me alive.
We bought Service Contacts for $225 and sold at minimum $1200. Sometimes up to $2500. The more the car was sold under invoice the higher the interest rate and Service Contract cost.
When ever as car dealer is willing to sell a car under invoice. Even showing you that invoice. Watch out for those Add-ons. They usually add $1000 to make over up for it.
Like the guy that walks up and demands 10% off parts cause he is such a good customer. So they/we go into system. Mark up the price 3x instead of 2x then to show how nice we are Discount it 12%. Perception of a Discount.
I never looked back and learned how Not to behave.
Had a salesperson at a dealer slip up once and straight up tell me the bigger the discount they offered on the new vehicle, the less they would give me on my trade. LOL!
Great! Now, I'm gonna have to call up my girlfriend's son.
About a year ago, he had bought a used truck from a dealership, despite me warning him they seemed shadier than normal. He needed a truck for work in construction, and at the end of negotiations they hand him the contract for the payment plan, which he forwards to his mother and me (a very eager mathematician). I come to find the monthly payment doesn't line up with the principal, interest rate, and length of either payment plan option. I found the principal amount that does line up was $2400 more than what they'd reported on the paperwork. Effectively trying to steal $2400 from him plus interest even after the negotiations. When I told him this, he took that info to the salesman, who claimed it was an extended warranty to cover anything that happens to the truck. I advised him to no longer trust that salesman, but he bought the truck anyway, extended warranty and all. I'm guessing this dealership might also be in the habit of filing these forms late and out of sequence, as well.
You might try filing in small claims court for $2400, since you were NOT given any warranty back then, so its bogus. Just tell the judge your story.
He can always cancel the Warranty and they have to refund it. It will go to the loan company and reduce the principle but he can go to the loan company and tell them what happened and a reputable lender will charge 100% of the Warranty back to the dealer reducing his principle even more. Warranty plus tax.
I started out my sales career selling @ an indy used car lot, where the incentives to include these warranties were phenomenal. Keep in mind We handled both the sale+ F&I aspects of the transaction so I could negotiable away the "front end" profits and kill it on the "back end" since most lenders will finance 100% retail cost of an extended warranty... Unfortunately, the proprietor of the dealership did what most do... Rather than pay the warranty company, He'd pocket the money and roll the dice on whether the auto needed future service.
@Space Ghost no it's now defunct. It was called AUTOMART in Portland Maine
@Space Ghost I think Our wires got crossed. Automart in Maine was never in a movie (despite the Hollywood esque characters I worked with).
It was a local enterprise of approx. 8 locations that sold high mileage luxury cars at "wholesale prices". I left for GM after 5yrs learning the biz from it's most dirty players
@Space Ghost I think he meant "indy" as in independent, not Indianapolis.
Still probably a good racket on his end. Essentially he was the insurance company. As reliable as cars are, he probably made out well. I'm assuming he actually paid out for a handful of repairs here and there.
Steve, this is a phenomenal video. I have purchased a couple of these warranties and now I feel like an absolute fool. I never actually needed to use one, but I will not even consider one in the future. Thanks so much for your great work.
A local funeral home was selling burial insurance, but just sticking the paper in a drawer. When he was found out, he did some time. Now he is working for an automobile dealership.
Expect to see campaign signs with his name on them any day now.
Yeah no kidding. When my Dad passed away in hospice, I immediately called the funeral home connected to his prepaid cremation. I gave the information on the contract and the funeral director immediately dismissed the notion that we had a contract. So I looked in Dads file folder and noticed that the woman who sold the contract had sent my folks a Christmas card. I called the funeral director back and said do you know Ms. So and So? He changed his tune very quickly. I think these contracts are sold with expectation that 15 - 20 years later no one will remember they existed and they can just tell the family to pound sand.
Going throught this right now with my 2017 Kia Soul with 56k miles on it. Bought the car used, Certified Pre Owend with a 10year 1000k mile CPO warranty. Engine blew almost 4 years to the date of purchase. Found out that the dealership never filed my CPO warranty. I called the warranty company and they had no record of my car. I called the dealership and more than 4 years after purchase they finally filed the CPO warranty. Now the dealership tells me they've filed claims every which way amd they have all been denied. I called the CPO warranty company to ask why my claim was denied and the dealrship never filed a claim. Its all a scam. I have hired a lawyer for the $6500 in repairs as well as lost wages, car payments made while they jerk me around, laweyer fees and inconvenience.
Last time I went to buy a car they offered me the extended warranty at $135 a month on top of my car payment. When I politely told them to piss off, his counter-offer was $17 a month. It took everything I had not to laugh in his face at the ridiculousness of the two offers and if we were able to find a car anywhere else I would have walked out of that dealership.
Had a similar experience. I was told that I didn’t qualify for a 0% financing offer. 4% was the best that they can do. I tell the finance salesman that the 0% was the only reason I was interested, no thanks. Start walking out and he offers me 2%, then 1%. I told him to keep the car. They called me the next day and miraculously I qualified for the 0%. They were going to effectively raise the price of the car $5,400.
@@mrlt1151 this! I bought my truck in 2020 and they wouldn't budge. 3k over MSRP on a used truck. I came in with my OWN financing already. I sat down, drove the truck, got to the papers we sign on the prices and they want you to whip it on there like it's a napkin with no words.
It was close to closing, they wouldn't budge on the price. I said I'm already pre approved with financing, this things a year old and used. I'm not going upside down in this.
Still wouldn't budge. I pulled 5,000 cash out of my envelope and set it on the table.
They wouldn't budge off the price. I pulled out another 5,000 envelope and they offered to take off all the admin fees AND drop off $1000.
Mind you this was a Ford truck AT a Chevy dealership. The best they wanted to do was maybe drop $1500 off the top. (They wanted 46k and the truck was 44k msrp brand new.)
I got up and walked out. Said this was a waste of time. Nobody paid MSRP for this truck when it was new, covid didn't even exist when this truck sold, it probably sold for 38-39k new.
5 days later that dealer called me up and left a message saying the store owner wants to make a deal on the pickup.
Unfortunately I bought it lol I got what I wanted. 36k out the door. They got 10k cash upfront and my bank took the note.
I think the finance manager wanted to push it since it was close to closing and see if I was impatient and weak at deal making. They definitely blinked first.
@@Seasniffer69 They are likely paying more for the truck these days. I had 2 cars for a while and decided to sell my Camaro recently. Went to Carmax to get an idea on a price and they offered me $2,500 more than I paid used in February of 2020. I decided to take it. They then offered me 10k less than I paid new for my 2017 truck. I was flabbergasted. I almost let them have it too. They turned around and advertised the Camaro for more than its sticker price new. Car had 17k miles but had been in a MAJOR $20k in damage accident. Repaired well, drove fine. It dropped off their site in days.
@@mrlt1151 it was actually repod off the air base in San Antonio and sold at auction where the Chevy dealership bought it and had it shipped here.
CarMax is a little diff though on their prices because they're warranty is actually top notch, or it used to be anyways.
Always told myself if I'm buying a used luxury car I'm going there.
@@mrlt1151 Thanks for your story. I bought a used pickup at a Chevy dealership and the finance manager quoted me a rate of 6%. I said no, too high. He told me those were the bank's terms and I could take it and leave it so I got up and started walking out of the office. He called me back in and got on the phone with the bank. Said he couldn't close a deal because the interest rate was too high. After about 4 or 5 minutes on the phone he was able to get interest rate down two points. So I bought the pickup. I want to feel bad for people who sign on interest rates at 10, 12 or even 15%. But the truth is, they did it to themselves. Sad.
A while back I brought new Dodge Ram with extended bumper to bumper FACTORY warranty to 100k. At 98k took car to independent shop so they can look it over and make a list of things that potentially needed to be fixed. Like seals that were starting to leak etc. Service writer looked at it and said that they probably won’t cover most items on the list since non of the items are actually broken
parts but they did submit it to warranty. I was amazed when they called me back to say that all the concerns were approved for repairs and the warranty will pick up almost 6k worth after 100 dollar deductible. Still have this truck, almost 300k miles on it now.
Buying used cars is like navigating a minefield of scams, from warranties to lease agreements which aren't needed at all, to outrageously undervaluing trade ins, to cash payment levies, poor quality paint protection... the list goes on ad nauseum. I was glad I was there to help my sister buy her car otherwise they would have had her by the short and curlies. Love the videos BTW, I live in the UK so I like to hear how Michigan does things!
Undervaluing trade-ins happens a lot. I traded my 2006 Jetta in a couple years ago with 150,000 miles. I looked on the website of that salesman a couple days later and saw it being sold for $2600. They would only give me $500 on the trade and made it $700. The car had no visible rust or other defects. No chips or cracks in the windows, everything still fully functional no tears in the interior to at all. I have changed the transmission fluid a couple times and it has shifted good the whole time I had it. It was never in an accident and was always garage kept and thus in good condition for a car its age.
Do yourself a favor and only look at Toyota or Honda when buying a used car. You’ll pay more but will thank yourself in the long run.
Third-party auto warranties have always been snake oil. Dealers love selling them because of huge profit margins compared to $5 fabric protection and pinstripes.
You're gonna want that TruCoat
Im a service advisor at a Honda Dealer, the different extended warranties we sell are amazing, they arnt "snake oil". Now, I have dealt with a lot of shitty aftermarket warranty companies that "by here pay here" dealers sell, and yes, those are terrible warranty companies. Moral of the story, not ALL extended warranties are bad
@@Rock-Bottem1982 So which ones are good?
I bought a warranty when I bought my wife’s car for something like $2000. We had a $8000 issue that was covered by the warranty, and we are extremely happy we did. My father had a similar story. My father IN LAW worked at a dealer and always bought them. When he didn’t use them, he called and got a refund. They’re definitely interesting concepts.
I had a great experience multiple times with a company I used on my current truck.
My selling dealer in FL, included an extended warranty when I bought my Odyssey. 11 years later the vehicle quit moving, while on vacation. The dealer in TN, replaced the tranny, under the warranty. Upon my return to FL, three days later, it quit again. Turns out it wasn’t a tranny at all, but a front axle.
I'm a retired auto broker. There is absolutely no such thing as a "bumper to bumper" warranty. No one is paying for things like brakes, brake pads, light bulbs, normal wear and tear, oil changes, clutches, tires, tire rotations and the list goes on. If someone tells you all of that is covered they are lying to your face. There are dealerships that offer free oil changes for life from them so they can sell you things you don't need later or over charge for work, they always get their money back or they wouldn't be in business. As an example A client of mine was offered under carriage protection for $1,200. I was able to get it done for him for $90, product plus labor. Use your head and don't let them take you for a ride.
BMW offers it on new vehicles, where for the first 3 years you only pay for fuel, top up oil and tyres, the rest, aside from accident damage, is covered. Of course you are paying this in the price, and they are amortising it over a 5 year period, so after year three, when you get out of the warranty and motorplan, you either pay at BMW dealer price for service, or will buy the 2 year top up plan, which is only a little cheaper. They know they have you for those 3 years, paying interst on the services before you need them, and they also know the vehicle will not fail before then from history, and any accident damage they will bill you for. Scrape the belly pan, new one, at your cost, dent from a trolley noted and then your excess for insurance will have this charged under "betterment" if you claim.
That isn't what bumper to bumper means obviously. If a customer thinks wear items are included they're just idiots. Does it include gasoline too?
@@knurlgnar24 No, basically you pay for all services for the first 3 years up front, and they cover all warranty work if needed.
i have the free oil for life and plan to use it, iv all ready got 5 oil changes out of them 5 more and i break even. if they recommend other stuff ill just say ill do that somewhere else later...
I've always been told up front that wear and tear items are not included in the extended warranty.
I bought an extended warranty (service contract) I got through my credit union on a 2007 Ranger with 3.0L engine (the junk engine). I made about 4 claims total on that contract and made money on it. The repairs I was able to get exceeded what I paid for the contract by about 3x. Of course, the last one took a mechanic friend of mine going through the vehicle very carefully and making every repair he possible could. That took about 3 weeks because the valve covers were not available. (Ford put plastic valve covers on those Rangers and they failed by 2017. The new covers were aluminum.) The next time I went to my credit union they switched companies to one that covers nothing and refuses to pay anyway. The credit union has become member unfriendly in the extreme like Wells Fargo (from whom they acquired many employees). The extended warranty from the dealer for my 2016 Honda is nearly useless and the dealer will not tell me what is covered.
Yup. Learned my lesson the hard way on some of those Service contracts. Dealership refused warranty. I told them finance told me it was covered. So next day I went in, picked out a car, acted like I was going to buy it. Set my phone down in the finance office recording the lies. When I was told it was bumper to bumper I got up, went to the service manager and played it for him. A little threat of going to the news too but I got my car fixed.
Brilliant!!
@Space Ghost nope. 1 party consent. Kansas
@Space Ghost Even in most two party consent States, just leave the door open - that often negates the expectation of privacy.
That was totally illegal and you could have been prosecuted in court with an assured victory by the dealership. Glad it worked for you though.
@@knurlgnar24 How was it illegal? Where I live only one party involved in a conversation needs to be aware it is being recorded.
Better yet: 1) Don't buy third party warranties; 2) Don't buy cars that are so unreliable that you think the warranty will "save you".
Whats that company I see on TV selling extended warranties? BBB rating is F.
What car is that? They're all terrible.
@@ostrich67 yup, I work for a LARGE used car dealer and I've seen it all. Multiple 15-18 Toyotas with dead infotainment systems, BMW's of all years leaking oil from everywhere, 13-18 ford escapes and focuses with transmissions failing, Mercedes with air suspension failures. Lincoln mkzs with ac distributor motors blowing. The list goes on.
Best to do tons of research, and learn how to do all very basic maintenance yourself, so the car doesnt experience much neglect and won't develop further problems as a result
Exactly. I only buy Toyota, Honda and Mazda. I went through many cars ( upgrade or change) but never had to fix anything other than oil change, brake pad and tires.
Bingo! When you buy a warranty, you are saying "I bet $100s that this vehicle will break down during the warranty period."
Well why would you buy a vehicle you don't trust?
We had 2 guys running one of those here in Missouri. Just drained money out for their extravagant lifestyles. Worked for a while.
Confessions of a former car salesman: there's very few people who really should ever consider buying an extended warranty. Its a massive profit center to the dealer, and the potential breakeven on how much you pay for it versus reasonable repair costs on most vehicles makes it cartoonishly terrible insurance. Just tell them no until they stop asking.
Like any insurance, if yoou can finance it yourself, you will save money. Throw whatever the dealer wanted to sell you the extended warranty for in a savings account and don't touch it. You'll make out better in the end.
Everyone of my extended warranty's paid off, all 5 of them. Of course Jag, Porsche, Audi, BMW, Mercedes...it's no wonder! 🤣👌💯💸
@@vpconcepts9838 Carmax paid $32k in claims on an Audi of mine. they would have paid more but the limit of the policy is capped at the purchase price of the vehicle.
@@vpconcepts9838 Yep, on shit cars then you need them, pointless on a Toyota or Honda.
@@Jackhammer909
Yeah, my brother negotiated a decent price on a warranty for his Audi. Had 2 engines replaced...
I would like to add, if a dealership adds a warranty into your final price and you don't catch it before paying, you can still cancel it through the warranty company and get a refund.
I had one of these third party extended coverage plans that was purchased with my car for what seemed like a reasonable amount. The dealer promised it was almost identical to the manufactures warranty. If it had been as he claimed, it would have been a reasonable price for insurance on a vehicle I was planning on keeping for a long while.
When I had a claim for a non-operable window it was denied as the contract only covered things that wouldn't actually break. In this case it was the rods for the window were covered but not the plastics connectors that were designed to fail first rather than break the glass. Letters to the state insurance board and the Attorney General consumer fraud group, with a CC to the company, resulted in a call from the warranty company suggesting the dealer might make an goodwill allowance and fix my car at their own expense.
I never bought one again. But have used the letter campaign to get relief from deceptive practices a few other times.
Which state? Some are better than others ;).
@@hhholsteiners I think it was the letters I wrote alone rather than any action by the state that made the difference. It probably was just less of a hassle to buy me off than defend their contract.
Writing the AG tends to indicate the customer need to be taken seriously.
After the repair, I wrote letters to the insurance board and AG stating my problem has been resolved.
I bought an extended warranty for a new Ford only one time and it was the best decision since the car started falling apart after 36,000 miles and the factory warranty expired. The experience wasn't without drama. The warranty company tried to deny claims and a lot of time was spent on twisting their arm to pay a claim. Ever since then I have declined the extended warranty because it's a scam. I'd still be ahead if I had to take a hit on a major repair because I literally saved thousands of dollars over the last 30 years by not buying the warranty.
2003 f350?
@@hhholsteiners 1996 Ford Probe. I paid $800 for the warranty. They paid out over $8,000 in repairs. 3 ECUs, 2 catalytic converters, window regulator, transmission throw out bearing, engine sensors, etc. The warranty company went insolvent and the new company took over and tried to tell me they don't cover anything electrical. Not according to my extended service contact that I had to wave in there face.
Lesson here, don't buy a Ford.
@@VikingVic76 depends on the year make model
There's a used car dealer in my state that offers extended warranties and I've gotten them three times. All have been honored by the manufacturer dealer (Toyota, VW, Hyundai) with no questions asked. I've gotten a seat warmer, AC compressor, dash buttons, steering wheel buttons, emergency brake position sensor, ECU. Unfortunately they wouldn't replace a cup holder part in my Toyota, but otherwise I'm happy. I'm the type of person to push warranties to the limit.
I'm about to co-sign on VW for my daughter. Everyone says I should get the service contract especially for a VW
In the early part of my career in electronics I took an entry level job as a Color TV service Tech. One of my assignments was selling extended warranties on new TV sets. Personally I did not believe in warranty service deals, once I saw how differently demand service customers were treated VS contract covered customers. Our shop was covered by a Union Contract and selling was not part of our job. I have always believed if the product is any good it won’t need any service for several years. When it does need service the work will be minimal and affordable. My own personal work is covered that way today.
I bought my car from a dealer and it included a short warranty for used cars. I was a few miles and a few days outside of warranty and they totally took care of me! This dealer had a great reputation for taking care of people. I'm so glad my friend recommended them to me.
We purchased a new 2019 Ford Escape and wanted a extended warranty.
When we got in finance office it was a after market warranty. We was told the Ford warranty cost 3 times more.
I started calling around and found out I could get the Ford ESP plan for less than what we paid . So I went back to dealer and talked to to dealer finance manager.
After I explained what I was told he didn't have a problem with refunding the cost of the warranty. But could not match the cost of the price I received from other dealers for the Ford factory warranty.
I waited till are factory warranty was about to expire and we was going to keep the car then purchased the Ford ESP plan 7 yr 100k mile $1400 .
Also the dealership tried to add on $500 for a security system that was never talked about. That got removed before we signed any papers. Actually we should have tore up the papers and walked out.
The factory 7 year starts when you bought it. So you really only get 4 years after the first 3 years. You can by that warranty from Ford by just calling them. It would have been cheaper when you bought the new vehicle at that time rather than waiting for the orginal warranty is about the expire. You need one on that stupid Ford factor automatic ford clutch. Which most dealer can't fix right anyway. You need so many tools to set that up and paitence most techs can't fix it right with the time they pay for that job.
@@arthurrodesiler3109 The "ESCAPE" never had the "dual clutch" transmission! The 2012-2018 "FOCUS" had the DCT. Regardless, the hydraulic automatic used in the ESCAPE was still problematic! You should have STAYED AWAY from ANY Escape!
I repair vehicles and I stopped dealing with those warranty companies due to the ridiculous requests the impose on the repair facilities to try to get out of paying the claims. One screwed me over and that's when I said, "No More!". If anyone has warranties, I send them to the dealership so they can argue with them. I don't have the time nor energy. Thanks Steve!
I am watching this now. It's appalling the things the factory and external warranty systems are doing to customers and the techs involved in this. I used to be a factory trained tech for a big 3 company. The warranty companies almost automatically decline the repair. Leaving the customer without a vehicle, the techs with dead vehicles in stalls taking up space. The techs have to jump through hoops to deal with adjusters etc. I personally lost a couple of jobs due to refusal of service to warranty procedures. It's a complete mess, industry wide! I heard you mention the infamous dry clutch junk. The labor times have been slashed for the techs almost 10 fold. I no longer work on vehicles due to the corporate mess involved. Look into the lack of techs, industry wide. It's not due to 19, but bad practices by the industry.
Btw I enjoy the knowledge I've gained from your videos.
I got an extended warranty on my vehicle (2010 camry) back in 2014 and have been very happy with it. Around 75k miles all 4 struts were leaking, replaced no issue. Around 185k both CV boots were torn and throwing grease. One they replaced just the boot, but the other the dealer thought it was better to replace the whole axle. A few other small repairs too, but i more than made my money back on it. But, I keep my cars longer than most people because its the only way you get your money's worth out of them. A daily driver is never going to go up in value, but eventually it does more or less bottom out so long as it runs decent. Especially a Toyota, Honda, etc.
I bought a warranty on a used car years ago and it covered axels (and a lot of other things). The axels failed and I called the warranty company. They sent and inspector out and he said the cause was that the boots ruptured and leaked out the lube. The axels were covered but not the boots where not, so they paid nothing. Never, ever pay money to a third party warranty company. The know what parts of a car fail and why. Their contracts do not cover the why. They are despicable crooks.
Bought a brand new Mazda, bought the extended warranty, but the freeze plug came out and destroyed the head, they refused to honor the warranty, saying, it was a cooling system related problem, and therefore not covered under the warranty. Really regretted that we didn’t buy the Toyota instead of the Mazda.
I never NEVER buy extended warranties on ANYTHING. They are a ripoff, and I'm likely to forget that I bought the blasted thing.
"Paying for repairs you may never need". I forget who said that
I've been burned by one of these warranty companies. A month after purchase I needed a brake job, the caliper seized, fried the pads and warped the rotor. Took it to a shop, they called me the next day and let me know the warranty covers the caliper and labor but not the pads n rotors that were damaged by the failed caliper, all I had to pay was the $50 deductible and $250 for the pads n rotors. I did the brake job myself, the caliper was only $35, pads were $20, the rotors were $60 each.
Warranties can only be issued by the vehicle manufacturer. Everything else are called third party service agreements.
Lol... A simple clause that exempts so much... "All fluids and parts that contain carbon or corundum are a maintenance item and therefore are not covered." The dealer will say it means they don't cover oil changes because oils are hydrocarbons. But all steel and plastics contain carbon and all aluminum exposed to air automatically creates a passivation layer of aluminum oxide (corundum), functionally exempting the almost entire vehicle.
"any parts of the car made from atoms are not covered"
I bought a car from CarMax in Fl in 2014, still have the car thanks to their extended warranty. I don't know if it was in house or not, but it paid for itself, it was an extra 3K or something, but, I had several repairs for various issues, a cam shaft issue, a wheel bearing, a few other things, and finally, the transmission, and 8K$ repair, no out-of-pocket costs.
Sounds like you pulled a Doug DeMuro.
Yea Doug got a Range Rover. No way would I ever buy a Range Rover without a warranty. Old boss got a rover, I asked if he knew where to get it repaired. And it took everything I had not to laugh in his face, later I heard he had a lot of trouble with it…
Bought Two expensive cars to repair from CarMax. No problems with warranty and paid for itself on the first car. We will see on the second.
I worked for a computer repair store, and we tried working with some of the third-party warranty companies. It did not take long to discover they were not people we could work with.
Thank you very much. We are starting the search for a vehicle ,so this is good information.
Years ago, a friend worked as a salesman at Sears, selling electronic equipment, stereos, etc. There was a lot of pressure (from getting fired...) to sell the same type of service contracts along with the merchandise they sold. He didn't work there very long as that attitude bothered him.
One of the many things to sunk the titanic that was sears.
Steve, I was a master technician that went into the warranty field to be a claims rep for mechanical claims. I spent about 3-4 years behind the curtain and can answer any burning questions you may have about how things are done. From claims, denials, exclusions, etc. I can give a decent amount of info if you'd like to create a video series on this subject.
Start your own RUclips channel. You can help alot of people.
It's very simple. They never pay.
@@dorothyhoard5247 Believe it or not, they will pay as long as it's a covered failure. Some have crazy exclusions, but they'll all pay out if it falls within their guidelines. To say they never pay is not true.
When I bought a used Chrysler from Glendale years ago, the saleman tried very hard to convince me to buy an aftermarket warranty (whose headquarters were offshore) instead of a Chrysler extended service plan. Instead, I purchased a Chryseler factory zero deductible maximimum care warranty and subsequently used it to replace a transmission, water pump and other items. Although it was more expensive than the warranty Glendale tried to sell me, the warranty paid for itelf many times over. Ironically, the dealer later posted notices that they would not honor those aftermarket warranties--that they had tried to sell me--anymore. I am glad I stuck to a manufacturer's warranty.
As an automotive service tech of 23yrs and an independent show owner for seven I tell my customers when inquiring about purchase of an extended warranty. I strongly advise them to start a extra savings account with the money they would spend on the warranty!! As a general rule if they have done so they have the funds available for there repairs and then some. It’s work fantastic for the few that have done so
most warranty companies review claims rates of each of their dealers and will drop dealers that have too high of a claims rate, so only submitting applications that have claims will cause the warranty companies to drop that dealer immediately.
I've had good luck with them, had a couple thru dealers many years ago.
I had a warranty on my 07 F150 with the company you talked about in your previous video. I had the transmission go out, and was eventually able to get it covered. They wouldn't pick up the phone, wouldn't get in touch, and wouldn't answer the shops calls. It took just over a month to get the claim paid and the truck running. They paid in the end, but definitely left some hoops to jump through
Thank you for all your information. I learn lots from you. God bless you. Keep the good work. Good luck with anything you do.
If you read the contract for all these extended warranties that you pay extra for, you'll often find a clause (which I call a "get out of jail free" clause) that puts all of the control with them. Something like "claims are accepted at the sole discretion of company management; all decisions by management are final" but usually less clearly worded. In other words, you probably didn't actually read the contract and it includes a legal agreement between you and the company that lets the company blanket deny all claims and leaves you with zero recourse. Take it to court and you'll be arguing with your signed agreement. You can argue contract of adhesion, and maybe you'll win that way, but that's a hard path compared to "they agreed to pay for this in the contract and here's my evidence."
the thing is you can't take it to court since they have also buried an arbitration agreement in there.
Florida law says those service contract are regulated as far as pricing. One state over dealer can get as much as the buyer will pay.
The best warranty is NO extended warranty. Life has its risks, just do your homework prior to a car purchase and disregard all of the transactional hub bub from salesmen...focus on THE CAR and its track record. Most of our new vehicles today are not made with the quality they used to. Maybe consider keeping what you have and just accept the repair bills that come up as a car payment. Lots of folks today are keeping what they have to avoid the costs of todays vehicles and the electrical nightmares they will have in short time, recalls, computer issues, gadget issues and so forth.
Agreed. I will run my '07 Accord until the average monthly repair cost is higher than a car payment. Seriously, boring though it may be, it's long since paid for and the ownership cost per mile is tiny. (Well, it was until the cost of fuel went up to 21 cents a mile.) I'd love a stripped-down Ford F-150, but not going to shell out $40k and wait a year for it. Seriously., in some rural areas you can buy a fixer-upper home for that. Still thinking I should have bitten the bullet and gotten the repairs done on my '07 Subaru Forester- loved that little beast- but the whole rear driveline was shot from the transmission back. I didn't want to dip that far into our savings right then.
Just watched 3 videos exposing these scams...good for you ! You are also a "car specialist" so, great !
This was similar to the gimmick that was used to sell fabric/leather protectors in the furniture industry, when I sold furniture. The WhateverGuard warranty was often fantastic, promising to replace our entire living room set, for example, if you got a stain on your loveseat that wouldn't come out, and a replacement for just that piece wasn't available, and I saw them do just that on a few occasions. The thing was that most people expected the actual product to work at preventing stains, which it sometimes did. When it didn't, customers almost never filed a claim. They just got mad about the bad protectant, and forgot about it. In most cases, the fabric protectant was actually a pretty good deal, IF you intended to use the warranty. If not, you'd be much better off buying a can of fabric protector spray at the hardware store.
It's called "slippage"..... might be an honest deal..... but you need 50% to not make a claim to make money
The fabric protectant depended upon which warehouseman applied it, and with the level of diligence. Some chose to skimp on the product. You are right though, I would buy Scotchguard at Home Depot and do it myself.
It's really quite simple, anything a dealership salesperson tells you is a lie. Anything any commission salesperson tells you is a lie (and even most non-commission salespeople because of performance expectations). So, in a nutshell, don't believe anyone who is trying to sell you something and do your due diligence and find out what they are lying about. If not, then it's all on you.
Sad state of affairs.
Thanks Steve Lehto…You are performing a valuable service explaining these complex issues. Seems like corruption is blatent and rampant, everybody is scheming, scamming and faking everything these days.
Going back to 1986, I bought a new car. Back then the dealers for this type of car were not offering extended warranty with a service contract. They referred me to a warranty provider. Back then I paid $350 for an extended 4 year warranty with service. I was never able to collect. Every time I tried to make a claim they made it very difficult. I had to go for an estimate first. I had to give them the estimate copy. In the meantime the vehicle may not be usable or have some issue that was annoying. There were times where I had to leave the car at the dealer and lease a car to drive. I had to sometimes wait for a week or more till they responded back. Every time I gave them the estimate they had some kind of excuse why this particular repair is not covered. During the second year I gave up. I ended up paying the repairs myself. I found out from some other people this warranty insurance company never pays out. I lost my money! After this bad experience I never ever bought another car from that manufacture and especially that dealer.
Probably was a
POS FORD!!!!
Good video. If people took the time to read these contracts and took some time to understand them, they would not purchase them.
Most people don't read them, and think they have this bumper to bumper warranty, and all that has to happen when a problem comes up is a shop calls in a claim and it's all going to be free, less the deductible.
That is almost never what actually ends up happening.
Great video! I can only imagine you are not a very popular guy with the warranty and financing folks...but that is their problem! Please continue to distribute excellent content such as this.
I’ve worked for close to 40 years in DOD acquisition. We had a general counsel that used to say, “if it ain’t in the contract, then it ain’t”
When i was much younger man, as a delivery person using my own vehicle... the I company I worked for tried to sell me this kind of auto repair insurance... and in side my head i thought to myself. The insurance is only $4000 bucks!!! I can save that money and use it to fix my own car if it breaks down.
A friend of my daughter was (retired now) a claims rep for a well-known insurance company and she was directed to find a reason to charge the claims person at least 25% of the amount of the claims. The claims reps could be disciplined for not complying with the directive.
What exactly do you mean by "claims person?"
claims person = person with an insurance claim.
@@jackkreighbaum783 :: Oh, no wonder it didn't make sense.
Here’s a thought: the dealer is sort of self insuring. They can fix the cars; a big enough dealer can spread the costs of repair when owners claim under the service contract. Why do they feel motivated to rip off the third party company, and the consumer?
They're doing god's work by limiting the income of less intelligent people, making them less likely to spread their idiocy through reproduction.
Greed.
@@nicholasvinen Why did Ford refuse to fix the Pinto exploding fuel tank issue, when it would cost $11 per vehicle? It would cut into the bottom line too much. That is real. Look it up
Just like this, in the 80's my friends mom owned an insurance business, way before the internet. They kept their whole family's insurance papers in a drawer with no dates on the policy. They only bought a policy and mailed it when there was an incident. I paid him $200 to get the same deal, it worked for a few years, up until the state required proof of insurance at inspection time. Saved me thousands!
Great information about what goes on between the dealerships and the "warranty" companies.
One of the ways people get duped into buying these extended service plans is that the word, "warranty" is used, though seemingly not as much now. People would automatically assume it's like an extension of the initial factory warranty that they get with the new car, where if something goes wrong it's almost automatically fixed and covered.
But in fact these extended plans work like health insurance, with bean counters determining if something is covered and if so, how much. Your coverage under this extended "warranty" may not be 100 percent or even a significant percentage of the cost, even if they say they will cover the job with no caveats such as claiming user lack of maintenance or any of the other things they come up with to deny coverage.
One such warranty that I knew of required a $2,000 up front payment to purchase the "warranty". Well, the car owner had a problem come up that the mechanic said would be an 10 hour job and a $1,000 cost.
Well, while the "warranty" company didn't deny coverage, the bean counters said that the job was only a 2-hour job, despite said bean counters probably not knowing the slightest about how a car even works!
So, after the $100 deductible was subtracted, the company only paid $100! The car owner still had to shell out $900 for that repair job! So after this job, he was out $2,900! ($2000 for the "warranty", and $900 for the repair!)
If he hadn't purchased the "warranty", he would only be out $1,000!
I calculated that the owner would have to have 14, (yes, 14!), $1,000 repair jobs in order to even break even with the cost of the extended "warranty"! And this assumes the company would pay each time!
My advice as it's always been, is to NEVER BUY an extended "warranty" for any car, new or used! And it doesn't matter if the "warranty" is being offered by the dealership or directly from the third party.
Instead, take that money you would have paid for the "warranty" with and put it into a separate account to be used for repairs. That way, you know the repair will be covered and the only one who decides that is the person you see when you look in the mirror!
Thanks Steve for sending us all the great info!
When ever I call fam/frns if I get the machine I whisper (I been trying to get ahold of you about extending your car warranty)😁
When I bought the used vehicle I have now, the finance guy was really pushing the extended warranty, so much so that I almost walked out on the sale. His initial price was $2800, and he went all the way down to $1200, after me constantly saying I didn’t want one. He probably wasn’t happy that I was paying cash in full for the vehicle also. No money made off of me for him.🙂
If you think you outsmarted them by paying cash, then you might want to double check your numbers because dealers will often get their money back on a different portion of the sale
An excellent explanation about the pitfalls of 3rd Party Warranties. Good job as usual Steve.
This is so painful to listen to because I have made this mistake when I the car I was driving had a rod knock I was desperate to get something to drive and I got robbed blind by express auto and gate way financial was told I had to buy the warranty to get financing in the end paid $6000 for a warranty on a $3000 minivan and 3 weeks later when the block sealer they pored into the radiator gave way and the head gasket started leaking again the warranty did not cover it. Turns out in Michigan it is illegal to force up-sale but of course it is Legal for the salesman to lie to me claiming it was
Yes it’s illegal in every state. Its a federal law. It’s called Tying. You can’t tie one product, the car to a warranty. Had you sued you would have won Treble damages. Seriously.
I've been putting aside $100 per month in a separate account for over a couple of years now for any new car or truck that I may buy in the future. (We buy our vehicles new and drive them until they're nearly dead.) By the time I get around to buying a new vehicle again and the factory warranty runs out I'll have a nice sum of money to take care of any major problems, if they occur. I can't wait to tell the salesman that I already have a "warranty": it covers the vehicle from bumper to bumper; no one can deny my "claim" for any reason; I can take my vehicle ANYWHERE I choose for repair; it will last for as long as I own my vehicle with no time or mileage limits; and whatever portion is not used, will serve as a warranty on the next vehicle I purchase . . . . . . as well as paying me interest.
That sounds like the plan that I have been using for a number of years now. It is amazing how much you can accumulate by making regular payments to an account. If you employer will send deductions to an account for you, you will never miss the money going into that account.
I've bought a dozen new cars in my life and never bought the extended warranties. I've never had a major failure on any of the vehicles and saved the equivalent of the cost of a new car. I've found that people that claim they buy an extended warranty because they can't afford to service their cars are stupid. Stupid people are poor because they waste money on things like extended warranties and lottery tickets.
As a service manager in the auto repair business for 35 years, I can say in that amount of time I only saw maybe one or two extended warranties that were worth the paper they were written on.
🤯
I'm a tech for a gm dealership and when I bought my new truck I bought my dealerships 1st extended warranty and it's the best I've seen. I got the bumper to bumper and it's come in handy alot. Well worth the money
An equally useless warranty is the road hazard warranty on tires. If the nail in the tire is in the side wall or within 1 inch of the side wall it can’t be repaired, if it can be patched, your speed rated tire that you need or required on your fast road car or sports car is not longer speed rated and are now dangerous if you drive too fast or for too long. If the tire has to be replaced they will measure the tread depth left on the tire to subtract it from a new tire so your new tire might be $20 less than the tire had you just bought without the warranty. You are far better off paying the $20 flat repair if needed or full price for replacement tire.
Yeah. I had some tires with a 50,000 mile warranty that wore out at 30,000 miles. The Goodyear dealer honored the warranty by pro-rating them and giving me new ones for $500. Those wore out after 36,000 miles so this time I replaced them myself by buying online and having them installed locally for under $500 total.
Even the manufacturers treadwear warranties are a joke.
@@riverraisin1
Discount tire used to be lifetime warranty on their warranty, now it's 3 years.
Many manufacturers maintain their ratings with a patch...
I always got the warranty when it was lifetime and even if 1 tire gets replaced, I've made out.
Discount while still doing free patch repairs has really tightened the their belts lately.....so I've been shopping the membership stores and haven't bought the warranty lately.
"BFGoodrich Maintained 3 repairs, minimum 90° apart
Continental*Maintained Repairs cannot overlap.
DunlopMaintained**Repairs cannot overlap1 repair, H and above
General*MaintainedRepairs cannot overlap
GoodyearMaintained**Repairs cannot overlap1 repair, H and above
LaufennMaintainedRepairs cannot overlap
MichelinMaintained 3 repairs, minimum 90° apart
NexenMaintained Repairs cannot overlap
RIKENMaintained3 repairs, minimum 90°
Toyo H and AboveReduced to H. Voided if more than one repair.
UniroyalMaintained3 repairs, minimum 90° apart"
When I bought my 4Runner new I laughed because the dealer both pushed the reliability of Toyota while at the same time pushed the need for an extended warranty. I want to say it was over $2k for the extended warranty, which was a Toyota factory warranty extension through 100k miles; a friend of mine owns a car dealership and has sold me warranties in the past at cost which for the top level warranties was always around $600 for a $0 deductible 100k mile warranty. I chose to not buy either and instead go with my auto insurer who offered mechanical breakdown coverage through 75k miles with a $250 deductible and was quite cheap with it adding just a few bucks on my 6 month insurance premium; I believe I spent around $240 in that premium over the 6 years it was in effect for. I never had a claim outside of my factory warranty period and have only had to pay maybe $400 for things that have broken since I have owned it, outside of normal maintainable expenses like oil, tires, and brakes; even with that I think the mechanical breakdown was a nice piece of mind.
I had a previous warranty on a previous vehicle which I used a lot and which saves me as I had bought a lemon but as I bought it used it wasn’t covered under the lemon law; I had over a dozen fuel pumps, 3 transmission, and 2 computers put into the vehicle over the 7 years of extended warranty and definitely think I got my money’s worth. Warranties can be hit or miss but the fact that you’re overcharges so much is the real BS, I’m great full to have had a friend that was a dealer and sold me warranties at cost, despite never buying a vehicle from him.
I totally agree with you about getting an independent inspection before buying used and have actually been saved a couple times by doing that with one even finding an odometer role back.
In 1995 I bought an 89 S-10 with 50K miles. The shop that inspected it told the guy, if I didn't buy it, to bring it back and they would. I still have it.
My wife and I got stung by a "bumper to bumper" warranty on a new car. A rubber stopper, a part of the lift gate, fell off and got lost. We brought the car to the dealership and they took care of it - but charged us $50. I got the service manager, our salesperson, and the dealership owner to come see the vehicle. I pointed out the front bumper, then the rear bumper, then that the part in question was, in fact, between the bumpers and refreshed their memories that they sold us on the warranty with the pitch that "it's bumper to bumper; if you can think of it, and it's between the bumpers, it's covered!" They refused to do anything. I questioned "Then, I guess you lied to us during the sale?" Some stammering and back-pedaling told me the answer was yes, they lied. We left the dealership $50 poorer, and promised them that they will never see our business again and that we would actively discourage anyone we know from doing business there, either.
I thought I knew a bunch. Thank you for this insight!
A mechanic I know refuses to deal with most of these third party warranty companies because they try to dictate what they will pay for a certain repair and require the use of aftermarket cheaper parts and discounted labor.
THIS !!!
Also supply the parts too
"YAA" sells auto warranties on their channel. Somebody needs to check them out.
In the latest YAA video they state their warranty has paid out 105% of the warranty purchase amount. So that means they are losing money from their warranty reserve amount.
Okay, but Steve cautions never to buy warranties from a third party. And if they are losing money, then they must be the warranty which should be sufficient alarms.
In 2006 I went to a SF Ford dealership and bought a new Focus Hatch-Back. I bought an extended warranty Thinking it was Ford as the warranty company., 4 years passes & I hear a knocking when I accelerated & slowed engine speed. The mileage was approaching 100,000 miles...the end of the coverage.I took the car to a closer Ford Dealer and they checked it out..in a few days I called..Whats the story..I asked. Apparently the engine noise was "Piston Slap" . Thats when I learned the Warranty company was not Ford. The dealer got permission from the company to Install a "Short Block" which came from Ford..the dealership Charged me $100.00 for the repairs As stated in the warranty, It took three weeks to complete the work. I drove a new Ford Focus @ $30.00 a week rental. The Focus ran great after that as I drove it another two years. Until 2012 when I sold it to my neighbor, & bought a 2012 Focus.. My neighbor's daughter drives the 06 now . The warranty cost $3,000.00 I think it was worth it. I drove the 2012 for 7 years close to 300,000 miles. I now drive a 2018 Focus Hatchback Titanium. That was the only extended warranty I ever bought.
The only extended warranty I’ve purchased was directly from Honda Finance for my ‘15 Honda Odyssey. I used it about 3 times to have the AC fixed on the Odyssey. Had no problems with the work being covered.
Ben wondering how he's gonna get that Texas plate attached to Turbine, so inspecting it closely atop of Mic above windshield