Have you ever wondered why auto dealerships try so hard to sell you an extended car warranty when you`re getting your new ride? Consider this: Extended car warranties carry a profit margin of $200-$300 per policy, depending on what they can get you to buy. Which brings us to the question: Are extended car warranties even worth buying? Yes and no, depending on your situation. It`s hard to decide whether or not you should get one if you`re not working with the right extended warranty company. Extended warranties are not created equal. For what it`s worth, you should not take a salesperson`s word for what is included in the policy.
But buying an extended warranty doesn`t always have to be a headache. You just need to involve the right people. We`ve rounded up all the factors you need to consider when choosing an extended warranty company below.
It Should Be Well Rated
What do you do when you need help picking out a new gadget, book, or hairstylist? Turn online for reviews, of course. All legit businesses provide a way for their customers to review their products or services.
But don`t peek just yet—which boxes should a reputable warranty company tick? First off, you should check for customer satisfaction ratings. Positive customer reviews help you determine how the company will treat you. Look out for online sample contacts as well so you can go through coverage details before signing any papers.
An extended warranty company should give you a reason to believe that they`re doing the right thing. If you don`t vet companies properly, you could end up wasting your money on a company with poor business practices or a spotty customer service record.
It Should Be Financially Stable
Before you settle for an extended warranty company, you need to check if it`s financially sound. Be nosey. Find out if it has enough money to cover your repairs when you file for a claim. Is it publicly listed? Is it audited by a trusted firm? It should be able to show you their recently audited accounts.
You should also check if it has any bank loans. Many companies borrowed more than they should have during the good economic times. And now that the economy has slowed down, banks are on their necks wanting their money back. You wouldn`t want to risk your money with a company that might go under due to excessive claims.
It Should Be VPA-certified
The Vehicle Protection Association (VPA) is an association that protects customers from purchasing extended car warranties from untrustworthy companies. All VPA-certified extended car warranty companies have undergone a third-party compliance review and have agreed to abide by the standards of conduct established by the insurance industry. The VPA also has a close relationship with the Better Business Bureau. While many reputable extended car warranty companies operate without a VPA certification, those with certification add an unspoken level of integrity to their credentials.
It Should Have Great Customer Service
The treasure chest of any company doesn`t lie in the products or services they offer but in their customer service experience. When choosing an extended warranty company, it`s best if you settle for one that provides 24/7 claims processing and prompt quote processing. Comb through all the customer reviews and perform a shopper analysis to understand how responsive and helpful your candidate company is.
It Should Pay the Repair Facility Directly
Whenever your car needs repairs, you submit a claim to your warranty company to get it fixed at a mechanic. Some companies will want you to pay upfront and file for reimbursement later, then drag their feet when it`s time to refund the money you`ve spent.
When shopping for an extended warranty company, it`s essential to determine if they pay the repair facility directly to save you the hassle of following up on claims. Most auto service contracts hold back on claims payment until you make a big stink—which involves re-submitting the claim.
Bottom Line
Finding the right extended car warranty is easier when you have what you want in mind. Not all warranties are created equal, and neither are the companies providing the plans. It`s a good idea to compare different plan providers to make sure that you choose the right company. Remember to always review the actual warranty contract before buying a warranty from any company to avoid scams.