Extended Warranties: When They Can Spell Doom

The Internet is rife with stories about cheating dealers and bankrupt extended warranty companies that go bust overnight and you are left with rubble! What can you do when faced with such a situation? Crib, complain or go search for another auto warranty company that would prove more reliable than your current dealer.

There are horror stories about people getting cheated out of their dimes by pouring out money for an extended warranty and to later find that their beautiful warranty coverage has neatly excluded the broken part!

What do you do when you and your new or used car are faced with this problem? Do nothing. There is usually nothing you can do. One just needs to be more careful when you go shopping for a car warranty and not after you buy it. Do a lot of research before you sign the papers and not after you finalize the deal.

Many times situations can end in an unfortunate, premature way and you need to have an extended warranty in place if you do not want to let this happen to you and your new car. The extended warranty is designed to protect you and the relationship with your car. This can help you make sure that your car doesn't degenerate from the prized possession to a cumbersome money pit. Actually, an extended auto warranty is an insurance policy on the vehicle that acts as a safeguard against expensive, unforeseen repairs.

Go search some websites like WarrantyDirect.com, Autobytel.com, Autoweb.com, CarSmart.com, eBay.com, Autos.yahoo.com and Edmunds.com for more information.

You may want to buy the extended warranty when you buy the car or you can buy it later. Many times the car dealers will make you feel like an idiot for not making use of their auto extended warranty and signing up for the car warranty pronto. But stay cool and don't sign anything that you don't need. Look through the following questions to make sure you are not getting into a bad deal.

1. Is the dealer a member of the Better Business Bureau and does he have a good standing?
2. Does he offer financing?
3. Can you choose the repair facility?
4. Does he pay the repair facility directly?
5. Does he include wear and tear?
6. Does he offer bumper-to-bumper coverage for vehicles out of manufacturer's warranty?
7. Is overheating covered?
8. Does he offer a per visit deductible?
9. Does he offer a zero deductible option?
10. Does he offer road hazard protection?
11. Is there a car rental reimbursement?
12. Is the warranty agreement renewable or transferable?
13. Does he handle the claims?
14. Does he offer high mileage plans?

After making sure that the dealer is not out to mug you, consider going for an extended warranty for a three-year term. Know that all car warranties are not created equal. Different manufacturers offer different coverage. Bumper-to-Bumper protection lasts a minimum of 12 months or 12,000 miles, but most manufacturers offer three-year or 36,000 mile auto warranties. By federal laws, emission systems must be covered for five-years or 50,000 miles. After the introduction of the Lemon Law by the DMV, one can even complain about the purchase, should you feel that you have been taken for a ride.