Understanding Manufacture Original Warranty and Extended Service Agreements
"Hello, this is Keith. I am stuck in the middle of traffic and my car won't start! Can you please send someone to pick up my car and tow it to the nearest vehicle dealership?"
Imagine having to make that phone call. Just being in the situation of a car having a problem in the middle of the day, in the middle of traffic, in the middle of chaos. Frightening!
Having a service contract on your vehicle seems like the practical answer. Before you invest your hard earned dollars in a service contract, you need to look at the areas of need, and the foundation of claims that are offered by the company servicing your vehicle.
1) New vehicle original factory warranty. Do you even know how long the new vehicle warranty lasts and what is covered? Most makes and models carry their own factory warranty. With today's technology we are seeing most manufactures offer long lasting power-train warranties that go at least 5 years or 100,000 miles whichever comes first. Included in most original warranties are the standard three years 36,000 miles "bumper to bumper" coverage. So that is all you need right?
1A) 5 years-100,000 miles power-train warranty. That is it. Exactly what it says, "power train". Do not expect the finance manager to dive into explaining what this means. He/she will spend a lot of time telling you that power-train is the part of the car the basically is ran by power. It has nothing to do with the parts that make it move. Only the power positions of the car. Understanding this part of the warranty will tell you during this time period should something happen to the engine itself, that is not caused by a moving part, then you are covered. But, if a belt, hose, oil drain plug, etc. causes the problem, you are out of luck. You should hope that if this occurs, it happens in the first 3 years, or 36,000 miles!
1B) Bumper to bumper coverage. False. There is no such thing as bumper to bumper. The reason a car dealer uses this lingo is to make you think that if anything goes wrong with your car, anywhere on the car, that you are covered. Then when something does happen, and you bring it back ,only then will you find out that bumper to bumper meant, "certain" parts of the car. Things like belts, hoses, oil pans, gaskets, tail pipe, electric lines, air conditioning parts, are not covered. Be careful to believe this claim without investigation.
2) Different makes and models have their own coverage. Read the vehicle's manufacture warranty. It will tell you how long each category is covered, and what type of coverage you have in case of breakdown. Some companies offer rental cars for those customers that need to be out of service for more than two business days. Before buying your new car, insist that you be offered the rental car treatment should you be sidelined for an extended period of time. Most car dealerships will offer this service if you ask to be part of the deal. Rental car policies are not standard, and being without a vehicle even under warranty conditions can be a problem for most of us needing our vehicle for transportation.
3) Buying an extended service contract. You have choices. Most car dealerships will offer you their own service contract before they offer an extended service contract from the actual manufacture. Most of these contracts will have a deductible that you must pay out of pocket. Often times, these policies are cheaper than the manufacture and if you purchase the optional plan, cover what the manufacture covers. Many times when you are in the final stages of buying the car, this plan is never revealed to you as a different plan than the manufacture. The dealership services this plan mostly, and it is important that you know what you are buying their contract verses the manufacturer's plan. This service agreement is not accepted at every dealership! Something you will find out when you have to take it elsewhere for service. These plans will go in effect "after" the original manufacture warranty runs out. It is the peace of mind contract to help you in the event your car breaks down later, when you are out of miles or out of years in the original service agreement.
Be sure to ask questions about new car service contracts. They are tricky. Most dealerships will not even discuss this coverage to you, only offering up their extended service contract and the monthly payments. Shop around and get the best deal and the peace of mind should you choose you need the coverage.
