Tips for purchasing extended auto warranties
You'll no doubt be offered the option to purchased an extended auto warranty if you're in the market for a new car. The Service Contract Industry Council and the Federal Trade Commission offer the following tips when shopping for an extended vehicle service contract:
• Be wary of mail and phone solicitations from third-party companies to renew your original factory warranty. Avoid high pressure tactics used by some telemarketers; take your time and ask for details in writing.
• Shop around for the best price. Don’t be afraid to negotiate, and make sure you understand what’s covered in the contract.
• Research the company before you sign. Verify registration, financial backing and complaints (if applicable) with your state’s Department of Insurance. Currently, 37 states require extended warranty companies to register and provide proof of financial backing by either the manufacturer, dealership or an independent party. The state DOI typically tracks complaints about these companies.
• Don’t provide personal information such as your bank account, driver’s license number, credit card number or Vehicle Identification Number to third-party companies before thoroughly vetting them.
• Confirm payment for a third-party warranty. If you purchase a contract through a dealership that’s backed by a third party, ask for confirmation of your forwarded payment in writing.
• Ask about the cancellation policy. Most contracts can be canceled in 30 or 60 days for a full refund. If you decide to cancel after that, ask for a prorated refund for the unused portion of your contract, but be prepared to pay a fee of $25 to $50, depending on your state’s regulations.