Lemon Law / Extended Car Warranties
Extended car warranties come in many varieties, and according to Call 4 Action reporter Meghan Jones, there are some you should skip.
Most people make the decision at the dealership. Should they get an extended warranty on their new car? If it's a used car, they know they should get one.
"Definitely the manufacturer, because it's backed up here," auto sales manager Victor Clive says. "Everything is taken care of from our dealership. We can call [the car company] and get information and feedback from them almost instantaneously."
Consumer law attorney Susanne Kimberland agrees that the manufacturer's warranty is typically the safest option.
"There are some problems, obviously, with private companies," Kimberland says. "You're really dependent upon the viability of that company and whether that company is going to be surviving in two, five or 10 years – however long you're going to be keeping your car under warranty."
If you choose an outside warranty company, it may go out of business. That means you'll be stuck with a vehicle that has no protection.
"That happens from time to time," says used auto sales manager, Pat Green. "At that point, typically, there's nothing we can do except maybe help them out from the service side."
There's no guarantee of receiving any money if you take the warranty company to court.
"Even if they appear to be a viable company, they may still be what's called 'judgment proof,' which means you can get your piece of paper saying that you won, but it may not be worth anything. You may not be able to collect on what that piece of paper says," states Kimberland.
The bottom line is that manufacturer warranties offer the most security.
"The brochures are pretty specific," says Green. "They tell you exactly what is covered."
Dealerships typically provide you with a detailed list of items covered by various extended warranties.
Read every word carefully, even the fine print.
"By the fine print, we mean every single word," notes Kimberland. "You may not have access to service and repairs that you think you do. What kind of deductible do you have? Some people assume there's no deductible, and a lot of them will have a deductible."
Steve Halvonick bought a certified, pre-owned 1999 BMW in February 2002. He wanted a car with a high resale value and a good extended warranty.
"I was going to be driving a lot, and BMW touted its used car warranty as being just as good as their new car warranty," he says. "The three-year warranty was built into my purchase price."
The alternator gave out one week after Christmas in 2004. The dealership from which Halvonick bought the car serviced it. He got a surprise when an employee called to say it was finished.
"I said, 'What charge?' I expected there might be some late charge," says Halvonick. "He said that would be $650, that my warranty had actually expired a week before I called."
Halvonick called BMW to complain. He learned that the warranty had indeed expired on Dec. 16, 2004, and the company calculated the warranty date six years from the original "in service" date in 1998. He didn't read all the fine print.
But Halvonick did read a consumer information warning that states BMW would register the sale of his vehicle and then activate their certified pre-owned protection plan. He calls this statement misleading and says he feels ripped off.
"I got two years and 10 months" instead of three years, says Halvonick.
BMW disputes Halvonick's claim. Company officials say that, as a general rule, he would have only paid for a two-year extended warranty and would have received the 10-month warranty with the car at no additional charge, but they acknowledge they do not specifically know what Halvonick paid for.
The key here is to know what you want before you look for an automobile.