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6/27/2008

Fort Worth, TX – – When purchasing a new car, consumers can usually expect a strong sales pitch to purchase an extended warranty in addition to the manufacturer's warranty that comes with the car. Retailers often make a bigger profit on the sale of an extended warranty than they do on the sale of the car itself. Be sure that you understand the coverage provided by the manufacturer's warranty before purchasing an extended warranty. Don't purchase the extended warranty as an afterthought of purchasing the product itself. Don't let salespeople scare you into buying an extended warranty with tales of failed air conditioners, transmissions, and engines. If the auto really is prone to breakdown, perhaps you should consider purchasing a different vehicle. Buying an auto with a record of reliability may be more effective than purchasing an extended warranty; there are a number of consumer magazines that can provide useful information on automobile reliability. Think about the type of car for which you are being asked to purchase an extended warranty. Changing prices and technological improvements should influence your decision to get an extended warranty. Factory warranties on some autos are also improving.

Consumers often think of extended warranties as a type of insurance, a view often encouraged by those selling the warranties. In most states, however, extended warranties do not come under the same regulation as insurance. In fact, extended “warranties” are not even warranties as defined by federal law. The car dealer may sell you the warranty, but typically it will be administered by an independent auto warranty company. If there is a problem, you will have to work it out with the warranty company, not the auto dealer. Advertising for extended warranties may stress the “comprehensive coverage” being offered, but consumers will need to read carefully the contract to see what sort of exclusions and limitations apply. Check with the BBB for a reliability report on the auto dealer offering the extended warranty and the company that will be administering it.