WARRANTY
Is an extended warranty really necessary?
As a general rule, I'm opposed to extended warranties. Most offer limited coverage and many do not cover the items that are most likely to break. Even if an item is covered, a dishonest warranty company will find reasons to delay or avoid paying claims. Some extended warranties have deductibles, while others limit your choice of repair shops. Besides, improvements in both build quality and materials technologies mean that today's cars are more reliable than ever.
Dealerships offer the convenience of rolling the price of the warranty into your car payment, many dealers offer third-party warranties that offer the best profits, not the best coverage. Most automakers offer factory-backed extended warranties which have the advantage of guaranteed acceptance at most of their dealerships. They also have added incentive to provide good customer service. However, these "factory-backed" warranties tend to be more expensive, and prices can vary from dealership to dealership.
Several third-party warranty companies sell directly online, but it's important to do your research as some companies are more reputable than others. Look for companies that offer low per-visit (as opposed to per-repair) deductibles, money-back guarantees, and that allow you to view the contract online before you purchase.
What is the Difference Between a Full Warranty and a Limited Warranty?
Just because a consumer product comes with a warranty (either written or 
implied) does not mean it absolutely will be fixed or replaced with no questions asked. There are several different kinds of guarantees for consumer products, some which only cover certain parts or defects, and some which expire after a limited time. Usually, the covered product will have an indication that it carries either a full warranty or a limited warranty.
The federal Magnuson-Moss Warranty Act regulates all consumer product warranties for items costing consumers more than fifteen dollars ($15.00), requiring that they be designated as either full or limited. Limited warranties are substantially more common. Understanding the difference between the two main warranty types will help you make better consumer choices.
See FindLaw's Product Warranties and Returns section for additional articles, including Consumer Warranty Basics.
Full Warranty
Any company offering a full warranty must repair or replace the product during the specified warranty period. Federal and some state laws mandate that if a company plans to fix the covered item, they must do within a reasonable amount of time and it must be reasonably convenient for the consumer to get the item to and from the place where it will be repaired. Typically, this is handled through the mail or a private parcel delivery service.
Additionally, full warranties do not often cover normal wear and tear.
A full warranty may be active for just a limited time after the item is purchased, perhaps 60 or 90 days, or it may cover the product "for life" (the same goes for limited warranties). But the actual scope of a lifetime warranty may mean the item is covered for its lifetime on the market (until it is discontinued) or it may last only for as long as the original buyer owns it, but it rarely comes without conditions.
Limited Warranty
As its name implies, a limited warranty is limited to just the specified parts, certain types of defects, or other conditions. But since it can mean virtually anything the retailer decides, it is important to fully understand the meaning of "limited" when buying such a product. Often, it covers just the parts and not the labor required to fully fix something. A limited warranty also may include the stipulation that the manufacturer and the consumer split the cost of repairs for a given period of time.
Typically, both limited and full warranties cost extra as an add-on. Sometimes, particularly with car dealerships, a range of warranty options are offered. For example, a new car that comes with a five-year warranty might offer the option to pay for a 10-year limited warranty.
Whether you are planning to buy a product with a full warranty or a limited warranty, understanding the fine print can help you make informed consumer decisions.
Used Cars: Warranty Protection
Auto Service Contracts 101
A service contract is a promise to perform (or pay for) certain repairs or services. Sometimes called an "extended warranty," a service contract is not a warranty as defined by federal law. A service contract may be arranged at any time and always costs extra; a warranty comes with a new car and is included in the purchase price. Used cars also may come with some type of warranty coverage.
Auto service contracts are sold by vehicle manufacturers, auto dealers, and independent providers. If you’re considering a service contract, shop around so you understand exactly what you’re buying.
Do I have to buy a service contract?
You are generally not required to buy an auto service contract when you buy a car. You also are generally not required to buy a service contract to get financing. If the dealer tells you that you have to buy a service contract to qualify for financing, contact the lender to find out if this is true. Some people have had trouble canceling their service contract after learning that the lender didn't require one.
Also beware of unscrupulous dealers who may try to include an auto service contract in your loan without your consent. If you see a charge for a service contract that you didn’t agree to, tell the dealer to take it out before you sign the loan agreement.
Does the service contract duplicate any warranty coverage?
Compare service contracts with the manufacturer's warranty. New cars come with a manufacturer's warranty, which usually offers coverage for at least three years or 36,000 miles, whichever comes first. A service contract likely will not provide benefits until the manufacturer’s warranty expires. Check over the documents to make sure this is true before you agree to buy a service contract.
What is the length of the service contract?
If the service contract lasts longer than you expect to own the car, ask if it can be transferred when you sell the car and whether there is a fee, or if a shorter contract is available. If you’re buying a “demonstrator” — a new car that hasn’t been owned, leased, or used as a rental, but has been driven by dealer staff — ask when the warranty coverage begins and ends. It may have begun when the dealer put the car into service.
Who backs the service contract?
Find out who performs or pays for repairs under the terms of the service contract. It may be the manufacturer, the dealer, or an independent company. Many service contracts are handled by companies called administrators, that authorize the payment of claims to any dealers under the contract. If you have a dispute over whether a claim should be paid, deal with the administrator. If the administrator goes out of business, the dealership still may be obligated to perform under the contract. The reverse also may be true: If the dealer goes out of business, the administrator may be required to fulfill the terms of the contract. Whether you have any legal remedies depends on your contract's terms and/or your state's laws.
Find out if the auto service contract is underwritten by an insurance company. It’s required in some states. If the contract is backed by an insurance company, contact your state insurance commission to ask about the solvency of the company and whether any complaints are on file.
Insurance regulations generally require companies to:
· maintain an adequate financial reserve to pay claims.
· base their contract fees on expected claims. Some service contract providers have been known to make huge profits because the cost of their contracts far exceeds the cost of repairs or services they provide.
· seek approval from the state insurance office for premiums or contract fees.
Check out the dealer and the administrator with your local or state consumer protection office or local automobile dealers association to see if any complaints are on file against the company. You also can search online for complaints.
If you decide to buy a service contract through a dealership — and the contract is backed by an administrator or a third party — make sure the dealer forwards your payment and you get written confirmation. Some people discovered too late that the dealer failed to forward their payment, leaving them with no coverage months after they signed a contract. Contact your local or state consumer protection office if you have reason to believe that your contract wasn't put into effect as agreed.
How much does it cost?
Usually, the price of the service contract is based on the car make, model, condition (new or used), coverage, and length of contract. The upfront cost can range from one to several thousand dollars. In addition, you may need to pay a deductible. Find out if the deductible is charged on a per visit or per repair basis. This can make a big difference. For example, assume you have a $100 deductible and your car needs three parts repaired. With the deductible per visit, you pay $100. If you have a deductible per repair, you pay $300.
Service contracts often limit how much they will pay for towing or related rental car expenses — meaning you have to cover the remaining cost. There also may be transfer or cancellation fees if you sell your car or end the contract early.
What’s covered?
Few service contracts cover all repairs. Common repairs for parts like brakes and clutches generally are not included in auto service contracts. The best advice: If an item isn't listed, assume it's not covered. Watch out for absolute exclusions that deny coverage for any reason. For example: If a covered part is damaged by a non-covered part, the claim may be denied. Or if the contract specifies that only "mechanical breakdowns" will be covered, problems caused by "normal wear and tear" may be excluded. If the engine has to be taken apart to diagnose a problem and during the process the mechanic discovers non-covered parts that need to be repaired or replaced, you may have to pay for the labor involved in the tear-down and re-assembling of the engine.
You may not have full protection even for parts that are covered in the contract. Some companies use a "depreciation factor" in calculating coverage: the company may pay only partial repair or replacement costs based on your car's mileage.
How are claims handled?
When your car needs to be repaired or serviced, you may be able to choose among several service dealers or authorized repair centers. Or, you may have to take it to the dealer you bought it from. That could be inconvenient if you bought the car from a dealership in another town. Find out if your car will be covered if it breaks down while you're using it on a trip or if you take it when you move out of town.
Some auto service contract companies and dealers offer service only in specific geographical areas. Find out if you need prior authorization from the contract provider for any repair work or towing services. Be sure to ask: how long it takes to get authorization, whether you can get authorization outside of normal business hours, and whether the company has a toll-free number for authorization. Test the toll-free number before you buy the contract to see if you can get through easily.
You may have to pay for covered repairs and then wait for the service company to reimburse you. If the auto service contract doesn't specify how long reimbursement usually takes, ask. Find out who settles claims in case you have a dispute with the service contract provider and need to use a dispute resolution program.
Are new or reconditioned parts authorized for use in covered repairs?
If this concerns you, you will want to know whether the authorized repair facility maintains an adequate stock of parts. Repair delays may occur if authorized parts are not readily available and must be ordered.
What are my responsibilities?
Under the service contract, you may have to follow all the manufacturer's recommendations for routine maintenance, like oil changes. If you don’t, it could void the contract. To prove you have maintained the car properly, keep detailed records, including receipts. Find out if the contract prohibits you from taking the car to an independent station for routine maintenance or performing the work yourself. The contract may specify that the dealer that sold you the car is the only authorized facility for servicing the car.
Be skeptical of mail and phone calls warning that the warranty on your car is about to expire. The companies behind the letters and calls may give the impression they represent your car dealer or manufacturer. With phrases like Motor Vehicle Notification, Final Warranty Notice or Notice of Interruption, they are trying to make the offer seem urgent — and to get you to call a toll-free number for more information. Investigate before you buy.
More than likely, these pitches are from unrelated businesses that want to sell you extended warranties — more accurately known as service contracts — that often sell for hundreds or thousands of dollars. If you respond to a call from a business pitching so-called extended warranties, you’re likely to hear high-pressure sales tactics, as well as demands for personal financial information and a down payment, before you get any details about the service contract. And if you buy a service contract, you may find that the company behind it won’t be in business long enough to fulfill its commitments.
Steer Clear of Auto Warranty Scams
If you get mail or phone calls about renewing your vehicle warranty, don’t take the information at face value. Your vehicle’s warranty may be far from expiring — or it may have expired already. If you have a question about your warranty, check your owner’s manual, call the dealer who sold you the car, or contact the vehicle manufacturer.
Be alert to fast talkers. Telemarketers pitching auto warranties often use high-pressure tactics to hide their true motive. Take your time. Most legitimate businesses will give you time and written information about an offer before asking you to commit to a purchase.
Never give out personal financial or other sensitive information like your bank account, credit card or Social Security numbers – even your driver’s license number or Vehicle Identification Number (VIN) – unless you know who you’re dealing with. Scam artists often ask for this information during an unsolicited sales pitch, and then use it to commit other frauds against you.
Be skeptical of any unsolicited sales calls and recorded messages. If your phone number is on the National Do Not Call Registry: You shouldn't get live or recorded sales pitches unless you have specifically agreed to accept such calls, bought something from the company within the last 18 months, or asked the company for information within the last three months. Read Robocalls to learn more. To report violations of the National Do Not Call Registry or to register a phone number, visit DoNotCall.gov or call 1-888-382-1222.
Used Cars: Warranty Protection
When shopping for a used car, look for the Buyer's Guide posted on the side window. The FTC requires the Guide on all used cars sold by dealers. It tells whether a service contract is available. It also indicates whether the vehicle is being sold with a warranty, with implied warranties only, or "as is."
Warranty. If the manufacturer's warranty is still in effect on the used car, you may have to pay a fee to get coverage, making it a service contract. However, if the dealer absorbs the cost of the manufacturer's fee, the coverage is considered a warranty.
Implied Warranties Only. There are two common types of implied warranties. Both are unspoken and unwritten, and based on the principle that the seller stands behind the product. Under a "warranty of merchantability," the seller promises the product will do what it is supposed to do. For example, a toaster will toast, or a car will run. If the car doesn't run, implied-warranties law says that the dealer must fix it (unless it was sold "as is") so that the buyer gets a working car. A "warranty of fitness for a particular purpose" applies when you buy a vehicle on a dealer's advice that it is suitable for a certain use, like hauling a trailer. Used cars usually are covered by implied warranties under state law.
As Is - No Warranty. If you buy a car "as is," you must pay for all repairs, even if the car breaks down on the way home from the dealership. However, if you buy a dealer-service contract within 90 days of buying the used car, state law "implied warranties" may give you additional rights.
Some states prohibit "as is" sales on most or all used cars. Other states require the use of specific words to disclaim implied warranties. In addition, some states have used car "lemon laws" under which a consumer can receive a refund or replacement if the vehicle is seriously defective. To find out about your state laws, check with your local or state consumer protection office or attorney general.
If you have a problem with an auto service contract, first try to resolve the dispute with the provider. If that doesn’t work, contact your state Attorney General, state insurance commission, or local consumer protection agency. You also may file a complaint with the Federal Trade Commission.
If you think you’ve been victimized by an auto warranty scam, file a complaint with the FTC. Although the FTC does not intervene in individual disputes, the information you provide may indicate a pattern of possible law violations requiring action by the Commission.
I
WARRANT GUIDE
Bumper-to-bumper: Often called a basic warranty or new-vehicle warranty, a bumper-to-bumper policy covers components like air conditioning, audio systems, vehicle sensors, fuel systems and major electrical components. Most policies exclude regular maintenance like fluid top offs and oil changes, but a few brands have separate free-maintenance provisions, and the number that offer them is slowly rising. Bumper-to-bumper warranties usually expire faster than powertrain warranties.
Power train: Don't be misled a 10-year or 100,000-mile powertrain warranty doesn't promise a decade of free repairs for your car. It typically covers just the engine and transmission, along with any other moving parts that lead to the wheels, like the driveshaft and constant velocity joints. Some automakers also bundle seat belts and airbags into their powertrain warranties. With a few exceptions, powertrain warranties don't cover regular maintenance like engine tuneups and tire rotations.
Extended-length: When you buy a new car, most dealerships will offer to sell you a supplemental contract that extends beyond the standard powertrain and bumper-to-bumper policies. Programs vary: An entry-level policy might carry a deductible and cover only the engine and transmission, while a deluxe package could drop the deductible and include all the trimmings of a full bumper-to-bumper warranty. Most programs are backed by automakers, though it's not uncommon for third parties to offer their own policies. Many policies can be purchased months or even years after you buy your car. Most of these policies can be transferred to future owners, which can increase your car's resale value.
Roadside assistance: Some automakers include roadside assistance with their bumper-to-bumper or powertrain warranties, while others have separate policies. These programs cover anything from flat-tire changes and locksmith services to jump-starts and towing. Few reimburse incidental costs like motel rooms (if you have to wait for repairs).
Tires: Like replacement tires, new-car tires are covered by their manufacturers. Depending on the type of tire, most warranties have a year or mileage limit, whichever comes first. Generally, tires are eligible for warranty replacement if the tread-wear indicators, which signal the final 1.6 millimeters of usable tread, become visible prematurely. That doesn't always mean a free set of tires; most tiremakers prorate the new-tire cost based on premature wear, meaning you'll only get reimbursed for the remainder of how long the tire should have lasted. Be sure to have your tires rotated regularly, as improper rotation, inflation or balancing can void your warranty. Unless a special policy has been purchased, basic tire warranties don't cover punctures or collision damage.
Rust perforation: Rust coverage covers body panels that have rusted through. Such policies generally last up to six years and have no mileage limits. They only cover complete perforation, which is a relatively rare occurrence with today's rustproofing. Most policies don't provide coverage for rust caused by rock chips, hail or acid rain.
Emissions: Since 1972, the government has required all cars to have emissions controls like oxygen sensors and catalytic converters. Two types of warranties exist: performance warranties and design and defect warranties. Performance warranties require automakers to repair or adjust emissions controls for at least two years or 24,000 miles if the car fails an emissions test. If emissions controls fail independent of a test, the design and defect warranty covers them for at least two years or 24,000 miles. Major components like catalytic converters and engine control modules are covered for performance and defects for eight years or 80,000 miles. On some items, California residents are eligible for additional coverage.
Factory accessories: Factory accessories include everything from a fancier audio system to an engine modification from a manufacturer's performance wing. Most automakers cover accessories for one to three years or the remainder of the bumper-to-bumper warranty, whichever is shorter. Be sure to check out all the specifics; modifying the accessories after they've been installed can void your coverage.
Batteries: If it's not covered in the bumper-to-bumper policy, a car's conventional 12-volt battery sometimes may get its own warranty. Battery warranties usually range from two to three years; they cover defective batteries on a prorated basis, so you'll be compensated only for the remaining battery life you lost. Battery warranties rarely cover maintenance or misuse.
Hybrid components: Components in the hybrid drivetrain include the high-voltage battery pack along with the hybrid assist motor and all the electrical connections in between. Such components may be expensive to repair or replace, so automakers offer generous warranties: In many cases it is about eight years and 80,000 to 100,000 miles, whichever comes first.
Seat belts and airbags: A lot of carmakers include seat belts and airbags with powertrain or bumper-to-bumper warranties. Others make separate provisions, and the warranties sometimes carry no expiration date. Seat belts are generally covered for operating usability only, so don't expect a replacement for discoloration or some other cosmetic defect.
Third-party components: Sometimes equipment made by other companies, like a DVD player or wireless headphones for backseat passengers, carries a dedicated warranty from its manufacturer. Pay attention to these: They are likely shorter than the bumper-to-bumper warranty for the car.
Contact DAG Account Manager for more information. 1 (844) 509-4752