Posted by Mike Smith :: March 24, 2008 @ 7:18 amA recent stream of automotive warranty extension mailings has led me to look further into the industry. What I’ve found has been eye-opening.
At first, receiving a reminder card about renewing my car’s warranty seemed strange. My car is still rather new and the warranty doesn’t expire for quite some time. It wasn’t until I read the fine print that I understood why I was getting the notice. My confusion came from the fact that the notice appeared to come from my car’s manufacturer, when in fact it was sent by a third party. It was filled with warnings and a sense of urgency, all of which were designed to make me act quickly.
As I received more and more of these offers, I was amazed at how deceptive they were. To the untrained eye, they really did seem to be important notifications from my manufacturer. Looking into it further, I found this article about the practice. In it, Herb Weisbaum notes that these products are not only deceptive, but also expensive and limited in coverage.
If you are worried about expensive car repairs after your original warranty expires, you can build up an emergency fund for this purpose. Lending Club can help in a number of ways. Obviously you could take out a P2P loan to cover any unexpected expense, but you can also use a loan to consolidate your debt to make it easier to build up an emergency fund.
If you do want to extend your warranty, the referenced article says that dealers tend to offer much better deals, which are negotiable, than the third parties that you’ve been hearing from. Even then, the article cites a consumer advocate who recommends that car owners skip extended warranties altogether because they are rarely worth the money. So there’s another reason for going the emergency fund route. Whichever way you decide to go, don’t fall for the pressure and deception of unsolicited third party mailings you may receive.
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