The first thing you need to consider if you’re thinking about purchasing an extended auto warranty isn’t the warranty itself, but the car you’re hoping to cover. There are some cars – including higher mileage and high performance cars – that won’t be covered by any reputable company. They are just too much of a risk and in no way profitable for anyone to cover. If you’re unsure if your car falls into that category, a local mechanic should be able to help you.
Next, you have to look at your needs. Say you have a low mileage car that’s currently under a manufacturer’s warranty. How much do you rely on your car? Is it vital to your business? Will substantial time in a repair shop be a real problem or a minor hassle? If it’s the former, an extended warranty will certainly be a sound investment; if not, look at the replacement costs versus the repair costs or the costs of buying an extended warranty.
Once you know you have a car that can be covered and you know what kind of coverage you need, you’ll be faced with the task of finding a company to provide the extended warranty coverage. And frankly, this is where it can get dicey. There are a lot of companies out there that are, quite frankly, crooks. Just check the records of state attorneys general and the Better Business Bureau – plenty of extended auto warranty companies are currently being investigated for various types of fraud.
Actually, that’s not a bad place to start – call up the BBB and ask about a company you’ve heard of or one that you’re thinking of dealing with. They’ll be upfront about who has what complaints and what kind of reputation.
But a reputation – good or bad – isn’t enough. How do you feel when you call them? There are warning signs you should be aware of, including high pressure sales tactics, repeatedly asking for credit card information to “hold this price,” or a refusal to send you a copy of the terms of a policy before you commit. The latter one is a big one. A reputable company will be glad to send you complete terms for comparisons before you buy. If a company won’t do this, don’t deal with them.
Once you have the policies in front of you, read through the terms of each policy. Is the language plain and easy to understand? Check out the claims procedures. Are they simple and straightforward? Is there a deductible you’ll have to pay and is it reasonable and fair? If the policy is written so that you can’t figure all this out easily and on your own, take your business elsewhere.
Finally, check with the local repair shops. Which companies have they done business with and had a good experience with before? Knowing how they treat customers at both ends of the process will give you a good idea about the overall business practices of the company.
And finally, as with all contracts, resist any high pressure sales and sign nothing until you fully understand of all the details, terms and procedures of the contract. No reputable company will ask for your money before you’re happy and contented – keep that in mind and you’re sure to get the best value for your money.
