Last post on May 05, 2013 at 1:31 PM
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#3137 of 3162 Re: Warranty Solutions, Worthless waste of money [58carguy]
Mar 01, 2013 (5:33 am)
Good story which demonstrates why most "experts" advise against an extended warranty, really an extended service contract as only the OEM can issue a warranty. Dealer Finance and Insurance people are well trained in how to persuade customers to purchase high profit items such as these.
As you indicated, people would be much better served if they simply put the additional monthly car payment which would result if they purchased an overpriced service contract for the dealer and into a bank account to be used if needed. Of course, if there are no repairs the buyer has the money rather than the dealer.
Also anyone interested in an extended service contract should indeed only buy one from the OEM. Also, those contracts which are sold at the time the vehicle is purchased are greatly overpriced. Usually, they can be found on line from a dealer at a much lower cost.
#3138 of 3162 84-months?
by steve_ HOST
Mar 05, 2013 (5:37 pm)
A reporter is looking for a new car buyer who is financing their car for 84 months or longer. If you have an 84-month or longer term, and you would like to share your story, please send your daytime contact to predmunds.com no later than Wednesday, 3/6/13 at 1 p.m. PT/4 p.m. ET.
#3139 of 3162 Re: 84-months? [steve_]
Mar 05, 2013 (6:24 pm)
"A reporter is looking for a new car buyer who is financing their car for 84 months or longer."
#3140 of 3162 Re: 84-months? [texases]
Mar 06, 2013 (6:43 am)
Financing for 84 months is not necessarily a bad thing. It depends on the interest rate. A person can always pay more each month effectively reducing the term. A lower required monthly payment coupled with paying off the loan ahead of time can be very helpful if a person has a short term cash flow issue.
#3141 of 3162 Re: 84-months? [ken117]
by kirstie_h HOST
Mar 06, 2013 (3:03 pm)
True, it can be a good solution as long as you honestly think your cash-flow issue is short-term, AND as long as you have the discipline to pay extra each month once the cash is available. Otherwise, the additional years of interest and lack of progress in paying off principal can be a real shocker, especially if the owner wishes to trade-in prior to paying off.
Last time I paid cash, but otherwise, I usually take out a 5-year loan with payments I know I can comfortably afford, even if I have a (not totally drastic) change in income. I then pay $50-100 extra each month. That plan fits my comfort level better than a shorter-term loan.
#3142 of 3162 2010 Saab 9-5 Aero
Mar 13, 2013 (12:56 pm)
I am looking at the following two choices for a vehicle service contract on my 2010 Saab that does not have a factory warranty due to Saabs bankruptcy.
My 2 options are:
1. Saab Secure Warranty backed by Allstate Dealer Services (administered by Pablo Creek)
2. Service Shield backed by Amtrust Financial (administered by Royal Administration Services)
Both of these plans that I am looking at are exclusionary (OEM-type) policies. # 2 is somewhat cheaper than # 1.
What are your thoughts?
#3143 of 3162 Re: I asked [akangl]
Mar 13, 2013 (3:39 pm)
I am just adding to your question; don't have an answer. I have a Nissan Altima that is about 30 months old with about 14,000 miles on it. I am wondering if I can get an extended warranty or not. I am still undecided about it. I notice most people say if you have a Honda or Toyota they are really reliable. What about an Altima?
#3144 of 3162 Re: 84-months? [kirstie_h]
Mar 14, 2013 (4:58 am)
One thing about an extended service contract is you pay the money and it is gone. On the other hand, without an extended service contract, you still have the money. Of course you may have to pay the money in the future if a covered event actually occurs but, with many of today's vehicles, you will more than likely not have to pay it.
An extended service contract is very expensive insurance. Extended service contracts are written to protect the provider and the small print is, as intended, difficult for most to understand.
What really bothers me about such contracts is the amount of profit a dealer makes. For example an extended service contract for which a buyer pays $2k might actually cost the dealer $800 or so. People should ask themselves if they really think paying a dealer over a thousand dollars is a good deal?
#3145 of 3162 Re: warranty apr [fordfocus574]
Mar 14, 2013 (5:10 am)
Actually, this might be illegal. Remember dealers do not provide financing. Lending institutions provide the financing. No lending institution requires a purchase of an extended warranty.
Lending institutions will provide the dealer with the interest rate for which a buyer qualifies and will also provide the maximum amount of the loan they will finance. Often times this amount is more than the price of the vehicle.
The less honest dealers will often inflate the interest rate or pad the loan by including costly add-ons to get as close as possible to the maximum amount the lending institution will finance.
Those less than honest dealers will receive a portion of any additional payment resulting from such a padded interest rate as additional profit. This appears to be what they did to you.
Clearly, in the worse case you qualified for a five percent interest rate. Since that is high in today's market my bet is this five percent was inflated by the dealer and you actually qualify for a lower rate.
At a minumum you might want to go to Capital One Auto Finance on line and apply for a loan to see what they will offer you. Since you have already bought, Capital One has refinancing options. As a benefit, if you refinance the dealer will lose the profit it thinks it made on your financing.
Personally I would have run from this dealer as fast as possible. There are far too many red flags.
#3146 of 3162 Re: 84-months? [texases]
Mar 16, 2013 (12:10 am)
If you can cut a good deal, sure. 84-months is just 7 years.