The consumer guide to uncovering the best value

in auto warranties and repairs.

Auto Warranty Scams ...

You Must Buy a Warranty to Qualify For Financing

The dealer will tell you the bank requires an extended warranty in order to get the loan. This is absolutely not true. The dealer is trying to bury a high priced, high profit warranty into the monthly payment. Tell the dealer to put it in writing on the loan agreement and they will more than likely back down, or better yet find another dealer.

Adding a Warranty to Your Vehicle Financing Will Only Cost $30 a Month

This is true. It will only cost $30 a month, but if you do the math a 60 month loan with interest will add $2,295 for an extended warranty that should only cost about $1,200.

The insider’s tip is there is no immediate need to purchase the warranty at the dealer. You will qualify for the exact same coverage at a much better price if you buy direct from a warranty company or broker. Additionally, many warranty companies and brokers offer zero percent financing.

Cancellation Skimming

Most warranties can be canceled and you will be refunded a pro-rated portion of the price you paid. Your refund is based on how may miles or months you owned the policy before cancelling, less any claims they have paid for during your coverage. Typically most warranty companies also charge an additional $25 to $50 cancellation fee.

Some warranty brokers skim a few hundred dollars from your refund in hopes that you don’t understand how the refund is calculated.

The refund calculation is rather simple. Divide the months you’ve owned the policy by the months of coverage purchased. Then divide the miles you’ve driven since you’ve owned the policy by the miles of coverage. Multiply the amount you paid by whichever is more then subtract any cancellation fee and that’s your refund. For example:

18 months owned / 48 months on policy = 0.375

24000 miles driven / 48000 miles on policy = 0.5

Multiply the amount you paid by the higher number then subtract any cancellation fee and that’s your refund. If you paid $1500 and the cancellation fee is $25 then your refund would be $1500 X 0.5 or $750 minus $25 for a total refund of $725. If you’ve had any claims then subtract the amount of the claims from your refund.

Also watch out for brokers that add an addtional cancellation fee onto the warranty company’s fee.

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