Know What Coverage is in Your Warranty Before You Leave the Car Dealership

Used car dealers sometimes offer warranties with the used cars they sell, but these used car warranties come with a price - a very hefty price. Used car warranties aren't always as wonderful as they first appear, and people don't often find out the truth about their used car warranty until they try to cash in on the warranty they paid so dearly for. Unsuspecting used car owners with used car warranties find out even the best used car warranty doesn't cover the most common repairs, and they find out they were grossly misled by the dealer.

Used car warranty companies don't make money when they must pay for car repairs submitted by customers, so used car warranty companies have many clauses and exclusions that keep them rolling in profits. If these used car warranty companies had to pay the car repairs of each and every customer, these warranty companies wouldn't make any money. Doesn't it make sense they would have numerous clauses and exclusions that would protect their profits? Of course it does! Used car warranties are worthless to the vast number of people who invest in them. A gold level warranty costs more than $1,000.00. Only a small percentage of people ever come out ahead of the initial cost of the warranty. Investing in a used car warranty is a crap shoot. Spend $1,300 on a warranty to cover certain car parts, and you'll only come out ahead if something major should go wrong.

Warranty or Contract?

Used car warranties have a clause that specifies the vehicle service agreement isn't even a warranty. The customer must sign this agreement that clearly states it's a contract between the purchaser and the dealer, and not a warranty. The contract also states the customer has reviewed and understands the coverages, limitations, terms, and conditions of the agreement. How many people take the time to carefully read the details of a contract while sitting in the office of a car dealer? Most people listen to the short explanation provided by the salesperson, and they trust what the salesperson is saying. Keep in mind, the used car salesperson is not only getting commission from the sale of the used car, the used car salesperson is getting commission from the sale of what the customer initially thinks is a warranty.

Levels of Vehicle Service Coverage

Many used car service agreements are available at various levels of coverage. The levels often include "basic," "silver," and "gold." The gold level of coverage is the most expensive, and it's the most comprehensive service agreement - if you're ever able to use it.

Basic Coverage

Basic coverage covers just that, the basics. In most cases, a basic vehicle service agreement covers the engine, transmission, and drive axle assembly. These are the most expensive components of a car, and basic coverage is often enough for the average individual. The numerous clauses and exclusions often prevent people from being reimbursed for smaller repairs anyway. Unfortunately, the used car salesperson won't likely offer this basic option. Used car salespeople usually go right for the gold.

Silver Coverage

This midrange level of used car coverage provides replacement parts covered with the basic option plus parts for the steering system, air-conditioning system, front and rear suspension system, brake system, cooling system, fuel system, and electrical system. This sounds great, but only parts are covered, not the labor required to repair the car. Labor is the biggest expense where car repairs are concerned. Car dealers make approximately $62 an hour for any repair, so even with this silver used car service agreement the customer will still have a hefty repair bill should a covered part need replacement.

Gold Coverage

This level of coverage is the most expensive level available, and it covers everything the basic and silver plans offer plus high tech components. These parts include power windows, seats, antennas, convertible tops, sun roofs, and power door locks. At first glance this looks great, but only the motors of these items are covered. If something else goes wrong with the part, the customer is out of luck. The cruise control, electronic instrument cluster, rear window defogger, keyless entry module, seals, gaskets, and several sensors are also covered. This again does not mean these parts are fully covered. Keyless entry remote controls are not covered, and neither is the back glass should the defogger fail to operate.

Exclusions

As stated before, these used car warranties, otherwise known as service agreements, are full of exclusions. The warranties are so full of exclusions that they are virtually worthless for anything but a major breakdown, and most people won't experience a qualifying major breakdown in the qualifying period of time. Even if a major breakdown occurs, the service agreement company will make it nearly impossible to collect. The service agreement has other specifications and criteria that have to be met in order to qualify for reimbursement, and the service agreement company will go over the facts with a fine tooth comb in order to avoid remitting payment.

If the used car was not properly serviced during the warranty or service agreement period, the service agreement company will not pay. If the customer goes past the recommended period of time or miles before having the oil changed, the service agreement company will not pay. One simple mistake excludes coverage for components that require ongoing service. The warranty or car service agreement that initially cost a small fortune becomes worthless. Even if the customer was very good at having the vehicle serviced on a regular basis, they must be prepared to show evidence of this service. One missing receipt could mean refusal of reimbursement. The used car service agreement company is counting on the customer making a mistake. They aren't in business to pay for car repairs. Used car service agreement companies are in business to make huge profits.

Read the fine print, and ask lots of questions before signing up for a used car warranty. You might discover the odds are not in your favor. Consider opening up a savings account and deposit $1,300 in that account to pay for car repairs. Chances are this will do you more good than investing in a used car warranty that doesn't really warrant anything.