My Story: That Auto Warranty
by Debbie Benish
I have had so many others tell me of similar auto warranty nightmares that I wanted to share with my fellow Dollar Stretcher readers to "be very, very cautious."
This past summer I purchased a warranty agreement when I purchased a newer used vehicle. I admit that I felt a bit of trepidation about this decision, but the dealer was so convincing that is was a bargain. Besides, "You can always request a refund if you decide down the line that you don't want it," he said. So I paid $1000.00 for a 3 year contract.
While taking my vehicle in for an oil change I showed the warranty to the mechanic to see what he thought. He informed me that the clause "replacement parts will be of like kind including serviceable used parts" meant that without a doubt that used parts will be required to be used for any repairs or replacements. He also pointed out clauses stating that the customer (me) not the mechanic needed to personally call in the repair needed (good luck getting through to them) and that the warranty company (not me) would be picking out the repair shop to be used. The whole process could definitely leave you without transportation for a week or more.
Well, the used parts thing was enough for me to begin the process of canceling the agreement and receiving my refund.
The purchaser may cancel this agreement by notifying the Selling Dealer or the warranty corporation in writing. If the agreement purchaser cancels this agreement within sixty (60) days from the date of purchase, the refund will be 100% of the gross premiums paid, to the warranty corporation, less any claims paid on the agreement and a $50.00 administration fee. After sixty (60) days, the refund will be 90% of the pro-rated unearned premiums, based on the greater of days in force from the effective date, or the miles driven from miles shown on odometer as of agreement date, related to the term of this agreement and a $50 administration fee. In the even that the cost of this agreement is part of a retail sales contract, then the Lender of the said sales contract shall be sole payee of any refund.
First I called the warranty company, who said that I had to call the dealer that sold me the car. Then the dealer told me that I needed to call the warranty company. Finally after a few more phone calls (and weeks) it was decided that I needed to send written notice to the car dealer. I was told by the warranty company that I would receive my refund in about 2 weeks. Four weeks later nothing. I again called the dealer who said that he had sent all of the paperwork to the warranty company. After a few more calls of the warranty company saying they did not have the paperwork...they miraculously found it. (Right after I mentioned the Better Business Bureau.)
The refund that I was expecting was $850.00. The original $1000.00 minus the $50.00 "administration fee" minus 10% of the contract $100.00 (since this was the 62nd day and the refund amount decreased 10% after 60 days. I was also told that there was a $350.00 commission that went to the dealer that sold me the plan (also not listed on my contract) and that there was nothing that could be done about that. (We'll see what the Better Business Bureau or my attorney has to say.)
Two weeks later, still nothing. In the meantime I had contacted the Better Business Bureau (which I should have done before I ever purchased the thing) and found out that others have had a difficult time receiving their refund. This time I asked to speak to the manager (who was the father of the young man that I had talked to previously.) I was told that he was sure that my refund has been sent (did not arrive for 2 more weeks) but he would double check. When I checked to be sure that the amount refunded was $850.00 I was given a long story about "dealer fees" and "mileage" and "pro-ration." I was then informed that my refund of $850 would instead be $472.00
I paid $1000 for a plan which was never used. Not one dime. I had no contact with the company until the refund request. I had the plan for 62 days (2 days past the full refund time) and somehow in the 2 days past 60 $378 worth of warranty had been used.
I demanded that this "formula" used to decide that be sent to me 4 weeks ago. Still haven't heard a thing, but I have done a lot of paperwork for the Better Business Bureau.
Before signing any warranty agreement, please, please, please have a mechanic look it over and check with your Better Business Bureau. Don't rely on your dealer to be straightforward with you. He may be benefiting from the sale more than you know. The fact that there is a lot of small print on these agreements should make us all very cautious.
Debbie is a regular Dollar Stretcher reader and contributed this as part of the 'My Story' series. If you have a story that might be of interest to readers, please email it to email@example.com with "My Story" as the subject.
Share your thoughts about this article with the editor
Debt is preventing me from taking a vacation this year or the vacation I'd like to take this year! Tell us: Yes, debt is affecting my vacation plans! or No, we're going exactly where we want to go but we'd love to learn make our trip as inexpensive as possible!
More Money-Saving Tips for Your Home
- Should I use a HELOC for home remodeling and repairs
- Find the best mortgage rates in your area
- 3 ways to use a mortgage calculator
- Mortgage calculator: Calculate your payment and more
- Home equity calculator: HELOC vs. line of credit
- How much can additional payments save me on my mortgage?
- Who offers the most home insurance discounts?