Edmunds.com | Inside Line | Auto Observer Your Account | Help | Directory
You are here:
![[F]](http://a332.g.akamai.net/f/332/936/12h/www.edmunds.com/media/townhall/webxicons/site.gif){kind=small}
Forums
Smart Shopper Extended Warranties
2873 messages, Last post on Dec 02, 2009 at 2:13 PM
You are in the Smart Shopper Forum. Your Hosts are kirstie_h & tidester
Edmunds article: Third-Party Extended Warranty Scams
|
Replying to: sbmcat (Oct 27, 2007 10:50 pm)
|
|
|
Replying to: dwynne (Nov 29, 2007 4:20 pm) As far as the "factorey plans" you mention, I can't speak of. I don't know what a factorey is. But I was in the car business for 8 years and worked for 4 different manufacturers and they all have an increase. Now you are right about one thing; there is not a huge increase like that from day 1 to day 2. I am talking about someone who is going to purchase the warranty years later (as I mention above). I understand your need to sound like a pro, but you aren't. You are one of those typical consumers who think everyone is out to rip them off.
|
|
|
Replying to: jboxton (Nov 30, 2007 7:31 am) 
|
|
|
Replying to: joel0622 (Nov 30, 2007 8:01 am) |
|
|
Replying to: jboxton (Nov 30, 2007 7:42 am) You sign up yesterday and you start ripping on a long time poster who has provided a lot of unbiased and well-researched advice. If you cared to take the time and go back and read some of his posts, you'd know. But I guess no low is low enough when you don't have a valid argument, even making fun of a miskeyed word (E is right next to R on the keyboard), while at the same time you desperately need a punctuation refresher. |
|
Insulting other members is a good way to ensure that your posts disappear faster than the $ from RRG warranties.
|
|
|
Replying to: kirstie_h (Nov 30, 2007 10:45 am) Then why are they still there? |
|
|
As a consumer reporter for more than 20 years, I've regularly had to return to the subject of auto repairs for readers. It's one of those topics that one thinks they've managed to reach the bottom of the barrel until the next scam opens up proving this is truly a bottomless pit. I used to have to deal mostly with repair shop scams and other localized fraud cases (repair shop claims part "x" needs replacing when it doesn't, parts claimed replaced never were, etc.). But in the last ten years, national white collar fraud, scams, and highly questionable business practices have really been where all of the big money is being made. And after nearly a year of investigation, we've found that the aftermarket extended warranty marketplace is, by far, the biggest problem consumers are likely to encounter. And when it does happen, it frequently leaves consumers out more than $1,000. The independent extended warranty marketplace has gotten so bad this past year that we no longer recommend ANY extended warranty not backed by the auto manufacturer directly. We could not find a single extended warranty provider that we felt confident would stay solvent over the long haul. To survive in the competitive aftermarket extended warranty business, independents have had to recklessly discount their offers, which inevitably leads to a shortfall in funds available to pay claims or pay refunds under so-called "Guaranteed Price Refunds" which offer consumers a full refund for any vehicle service contract that was not utilized during the contract period. As part of our investigation, we purchased extended warranty agreements from dealers and online brokers from a variety of companies, nearly all of which have since gone bankrupt. We found a wide variety of tricks and traps used by extended warranty adjusters to limit their claim exposure, and discovered Enron-like accounting practices revolving around shell companies, structured "underwriters" which had financial interests in the companies they supposedly backed, and offshore bank accounts which kept warranty company owners protected when the inevitable bankruptcy filings were made. {end of part 1)
|
|
|
Replying to: dampier (Dec 09, 2007 6:07 pm) The Hard Sell Consumers fighting for the lowest possible price at many dealerships these days often seem to let down their guard after a price is agreed on and the buyer is led into the finance office to finalize the deal. Even if you wore down the sales staff and managed an excellent deal, the finance office opens the door for additional profit for the dealership by selling the extras, from fabric protection to undercoatings, and extended warranties of course. Many dealers offer two types of extended warranty coverage - one provided by the car manufacturer and at least one independent warranty provider. Often, the independent provider plan is promoted at the expense of the manufacturer-provided extended warranty because the dealer can point to coverage often not included in the manufacturer's own plan, as well as the often much-lower cost for the independent plan. What often goes unsaid is the fact the dealer stands to earn a considerable commission from the independent plan provider. Many dealerships opted to sell buyers plans sold by companies like Automotive Professionals, Inc. (API) of Illinois. In business for well over a decade, API delivered relatively hassle-free extended coverage plans to dealerships around the United States. API offered generous benefits to consumers, usually more than those offered under manufacturer-backed warranties, as well as a guarantee that if a consumer did not use the vehicle service contract, the full purchase price would be refunded at the end of the contract term. For years, the business plan worked well enough to remain profitable. But as new aftermarket independent warranty companies began selling service contracts online, often at prices even lower than those charged by API, and with the increasing reliability of vehicles in the American marketplace, more and more consumers began shopping elsewhere, or simply getting the benefit of a 100% refund for a service contract they never needed to use. Either by being undercut by online competitors like 1Source or Warranty Gold or by consumers who didn't allow API to capture the value of an underutilized service contract, the pressure was on. Online Competition Arrives By the late 1990s, a variety of extended auto warranty plans were being marketed online and talked up by "independent" review websites which claimed consumers would do far better taking their business to a lower priced online vendor, cutting out the "dealer middleman markup" or by enjoying contract benefits more generous than traditional extended warranty companies provided, and for longer terms. Consumers were promised that companies were backed by third-party "underwriters" who would cover claims should the primary company ever close its doors, and glowing reviews from websites seemed to engender trust on the part of people doing research in good faith. Unfortunately, claims made by extended warranty companies are only as good as their underwriters would actually back. And in case after case, that proved to be not very much. (end of part 2)
|
|
You are here:
Forums
Smart Shopper Extended Warranties
New? Join Now!
Forum Tools
Search Forums
Browse by Vehicle
Browse by Board
Browse by Topic
Today's Chats
