Aftermarket Warranties Rated And Explained - The Podcast

"SteveLehto" (stevelehto) 11/26/2015 at 09:00 • Filed to: None

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My first question to a disgruntled car buyer almost always is: “Did you get a warranty with it?” Some did, some didn’t (and some don’t know!) But when you shop for your next used car, here is what you need to know about those warranties you could buy.

We all know that the Lemon Laws - for the most part - only cover new cars. So buyers of used cars have to look elsewhere for help. Heaven help you if you bought a used car “as-is,” which !!!error: Indecipherable SUB-paragraph formatting!!! countless times. Of course, if you did that knowingly, it could work out for you.

But it seems to me that many people would be better served if they understood that there are sometimes warranties they could acquire or buy when they get themselves their used car. And those are in descending order: the remainder of the manufacturer’s warranty, a manufacturer’s extended service contract or warranty, a third-party warranty and so on.

Each has its nuances, and by nuances I mean pitfalls . Still, almost anything is better than buying as-is. So, here is the audio:

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And the video.

And the top pic is of a 1971 Hemi GTX at the Wellborn Musclecar Museum. The coolest factory hoodscoop ever . And that sentence is NOT subject to debate.

Follow me on Twitter: !!!error: Indecipherable SUB-paragraph formatting!!!

Hear my podcast on iTunes: !!!error: Indecipherable SUB-paragraph formatting!!!

Steve Lehto has been practicing law for 23 years, almost exclusively in consumer protection and !!!error: Indecipherable SUB-paragraph formatting!!! He wrote !!!error: Indecipherable SUB-paragraph formatting!!! and !!!error: Indecipherable SUB-paragraph formatting!!! .

This website may supply general information about the law but it is for informational purposes only. This does not create an attorney-client relationship and is not meant to constitute legal advice, so the good news is we’re not billing you by the hour for reading this. The bad news is that you shouldn’t act upon any of the information without consulting a qualified professional attorney who will, probably, bill you by the hour.

daender > SteveLehto 11/26/2015 at 09:15

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I want my friends to do this to their recently-acquired ‘72 Coronet LeMons race car. Would it give the 318 any additional power? Hell no. Does it look amazing? Hell yes.

daender > SteveLehto 11/26/2015 at 09:20

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Pops and I took our chances with two as-is used cars. An ‘83 El Camino and my ‘02 Miata. The Elky was cosmetically awesome but the seller (and thus, us) got tricked by the garage he took it to have the engine rebuilt (it wasn’t, as we later found out). The Miata was good until the rusty fuel tank messed up the fuel pump but otherwise it’s been a great car (thank heaven there’s a local shop that specializes in Miatas and Miata race cars).

daender > daender 11/26/2015 at 09:39

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That said, listening more to this podcast made me glad my family never had to deal with any of these poor-quality warranty headaches. We did have a CarMax extended warranty on mom’s Murrano and that paid for itself and then some when the CVT, engine mounts, A/C-system, and CV joint all went out during that warranted time frame. We’re taking our chances on fixing the Miata ourselves since it’s pretty easy to work on (except when the crankshaft keyway failed, we sent it to a shop to have it done right).

Thanks for recording this one, we’re looking around for a new/certified replacement for the Murrano and I’ll be keeping your words in my mind when I help the parents read the fine print!

Smallbear wants a modern Syclone, local Maple Leafs spammer > SteveLehto 11/26/2015 at 09:46

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I’ve been kicking myself for getting a third-party warranty when I bought my truck. Not because of a bad experience, but because I got suckered in in the first place. I mean, it’s got an LS motor and basically no features, what could go wrong? The only thing is the transmission, and when that inevitably goes I’d want to build it into something that isn’t a slushy turd anyway. The good news is it keeps me from blowing money on mods. The bad news is I could have used the money from the warranty to do most of the mods I want.

>:(

XJDano > SteveLehto 11/26/2015 at 10:49

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I’ll just say that my extended warranty worked out pretty well.

Dealer replacement costs, aftermarket upgrades. How much trouble would we have been in?

(This was around 2002)

doubleshotpower > SteveLehto 11/26/2015 at 11:27

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Agree on the awesome hood scoop. During my early high school years I used to read through many of the Chilton books we had in our school library. I fell in love with the dual scoop of the 1974 Firebird (optional hood).

About 20 years ago I came across a 1974 Formula 400 Firebird with that exact hood, plus the factory honeycomb wheels and Muncie M22 4-speed.

Yes, I bought it and built the motor into a screamer. What fun!

CaliD00d > SteveLehto 11/26/2015 at 11:27

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I met Jim, the then owner of the CA ‘71 Plum Crazy 4 spd Hemi GTX, back when he owned it. We are all are pretty sure that the Hot Wheels purple ‘71 Hemi GTX is based on his car, as it came out a few months after he sold it. There were a lot of grown ass men crying when he told us it was gone, as we were all eating ramen to try to save up money to buy it off him though we knew we could never compete with the “couple suitcases full of hundreds” he says he sold it for. The guy also had a full Super Stock Hemi in his living room he was building for his ‘70 Cuda and a set of NASCAR Hemi headers and a Petty bathtub intake. He was like a god to us college kids that hung out with him.

doubleshotpower > SteveLehto 11/26/2015 at 11:29

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That one aftermarket warranty keeps changing names every few years. Courtney Hanson does their commercials (the last two iterations of them). I'm guessing they do this due to the legal troubles they've had.

xxxxxxxxxxxxxxxxxx > SteveLehto 11/26/2015 at 11:42

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Great subject. As someone who has just switched from buying new cars to used cars this is of interest.

I never buy warranties because I assume the seller is making a profit on them and therefore the total cost, on average, is less than the premium over time.

But used cars might be different. Maybe. I look forward to listening to this on the drive home this weekend.

TaRule > SteveLehto 11/26/2015 at 12:03

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I got one of these back in 2000 that I didnt really want but the car salesman had given me the BS line of “Well to get that deal you need to purchase this warrantee…” line. I had been able to haggle a bunch of other things in my favor and decided that I would let this slide to get the car I wanted. (A used Honda Civic). I was skeptical and figured I would never need to call on it but a couple years later the main shaft bearing went on the transmission. I took the car to the local Honda dealer for repairs and showed them the warrantee. They worked with the warrantee company and the whole thing was covered without a penny coming out of my pocket. I was converted.

nramos33 > SteveLehto 11/26/2015 at 12:09

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I bought an 07 Miata a year ago and got a third left warranty through USAA via assurance. It was an expensive warranty, but it saved me $800 when I had issues with the transmission.

CaliD00d > CaliD00d 11/26/2015 at 12:33

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I’m trying hard not to go on a tirade about the Ford new car warranty, but I’ve talked about it here before so I’ll just say it isn’t worth the paper it is written on. I went from a lifetime Ford guy to buying only Toyota trucks for my business as a result, and will never buy another Ford nor let anyone I care about do it either.

On the other side, I had great experience with the extended warranty on my old Aprilia. The factory warranty was only 3 months (!) and that bike broke every single time I rode it until I just gave up and sold it to a guy as a track bike. I did give him a written list of all the issues I’d had, I don’t like to **** people. I got the same brand warranty on my new BMW bike, as Motorrad does not offer extended warranties in the US, but hopefully I don’t need to use it. RPM One, zero deductible, specifies it is dual purpose bike so dirt riding is ok, specifies the exclusions in the written contract for the warranty (mostly clutch, pads, it does cover lubricated parts as it specifies drive shaft and engine internals are covered). I wouldn’t have gotten it if I hadn’t had good experience with them on the Ape where it was only $100 for 2 years so I couldn’t pass it up. I think the dealer ate some of the cost because they know nobody would buy an Italian motorcycle with a 3 month warranty. As a side note, Aprilia lost the shock when it was shipped back to them for repairs and they had to give me a new one but they were back ordered for a month so the president of Aprilia NA sent me an apology letter with a wet signature. Who does that these days? Italians. Their bikes may not make it out of the dealer’s driveway, but they keep it classy all the way.

Whatmehoon? > SteveLehto 11/26/2015 at 13:26

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I just had a good extended warranty experience. 2 years ago I bought a used car and negotiated a 24X24k warranty. I paid for the 3rd year because why not. I recently received a check for $3100 from the dealer with the notation “due to invalid contract”. No other info was included. Dunno if a lawsuit was involved but I suspect so.

sammyjay > SteveLehto 11/26/2015 at 14:08

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Very happy with my GM Major Guard warranty. When (not if) the 4T65E-HD in my car finally gives up the ghost, BAM new transmission for $100. All OEM parts. That alone is worth the cost of the warranty. I also get 24/7 roadside assistance, rental car coverage for any repair that takes more than 6 hours, and they’ll put me up in a hotel if my car breaks down 100+ miles from home.

Moper’s aftermarket warranties are awesome too. Depending on what type you get, you can get pretty much anything non-wear and tear replaced under warranty + rental coverage.

As a service writer, I see some genuinely shitty extended warranties very frequently. Alpha is a massive pain in the ass to deal with and frequently leaves customers on the hook for stuff like bolts, fluids, and major systems. Ethos Group has some decent ones but they’re a bit of a hassle to deal with. BG warranties any system that gets their treatment before 36,000 mi up to $4000 and they just cut the dealer a check, which is great.

AMGtech - now with more recalls! > SteveLehto 11/26/2015 at 14:13

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Good bit of information and I completely agree with all of it. Though honestly I came here hoping for a list of the best third party warranties by name. Which I knew want going to happen because reasons, but I hoped anyway. Excellent podcast and I imagine it will be very helpful to people.

A general rule of thumb, the more expensive the car was new, the more useful one of these warranties well be to you. Most of these companies offer different levels of coverage as well, often three or four tiers. Never buy the lowest levels, no matter how much they will save you because they typically only cover five parts that would only cost you a few pennies to replace anyways and even then only at 9:01 pm on Friday the 13th and only then when all of the planets are aligned.

I have an aftermarket warranty on my wife’s R500 that was not cheap but, even with having to fight them over claims, has paid out over $2k already. Would not but from the same company again because they are a nightmare to deal with, but financially it is totally worth while (even after having to buy more aspirin to deal with all the headaches!).

Stiiles > SteveLehto 11/26/2015 at 14:24

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Excellent article. You covered all the points I hit when I was teaching adult continuing -Ed classes at a local university.

boxrocket > Smallbear wants a modern Syclone, local Maple Leafs spammer 11/26/2015 at 15:05

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There's a lot that can still go wrong. Body electrical, HVAC, suspension, etc. One of my customers just got 4 new ball joints in his K1500 Suburban and his $0 deductible covered all $1500 of it, including labor and alignment.

Smallbear wants a modern Syclone, local Maple Leafs spammer > boxrocket 11/26/2015 at 15:07

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Right, but in terms of massive and catastrophic failure. The truck is only just outside factory warranty. The odds are against anything happening until the 3rd pardy warranty is up too.

Sith Lord Sexy Pants > SteveLehto 11/26/2015 at 19:01

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I’ll see your air grabber, and raise you a set of V21 stripes.

Eezep > SteveLehto 11/27/2015 at 03:14

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I don’t doubt that a manufacturer’s knowledge base is a factor in easing approval, but I suspect the big differences are motivation and visibility. Your experience with a warranty provided by a manufacturer is part of what you will tell your friends and the Internet about how that manufacturer does business. It is in their interest to err on the side of keeping you happy because a few dollars they save on one transaction might cost them several new car sales. People are much less likely to pay attention to the name of the 3rd party warranty company during closing on a car, or remember forever that a friend told them Jerry’s Extended Warranty and Ammo Sales ripped them off. And if the world does manage to label them ripoff artists, they fold or change names, luxuries unavailable to manufacturers who need to foster trust to sell cars.

SchwarzeEwigkt > daender 11/27/2015 at 10:32

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It doesn't help with heat soak for the intake? You'd think it'd help a little, getting some cooler air in to replace the hot stuff.

SchwarzeEwigkt > Smallbear wants a modern Syclone, local Maple Leafs spammer 11/27/2015 at 10:35

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I bought a third party warranty for my wife’s Subaru that went for 4yrs or an added 60k. Used it three times. Totally paid for itself. Because head gaskets, which in turn, because Subaru EJ.

glemon > SteveLehto 11/27/2015 at 15:47

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Summary, three words, do your homework

SteveLehto > glemon 11/27/2015 at 16:37

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5: Do your homework; be careful.

I'm Abe Froman > SteveLehto 11/27/2015 at 18:24

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CarMax has a great aftermarket warranty. They use a third party so my assumption is one could purchase it from them directly.

Steve in Manhattan > SteveLehto 11/28/2015 at 14:06

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Got an extended warranty with my new ‘87 300D. Around $1,600 cost, I got within $150 of making the money back through claims - electric window motors, sunroof motor and cable, other crap I don’t remember.

ateamfan42 > SteveLehto 11/30/2015 at 13:04

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Thank you thank you thank you for discussing the TRUTH behind the rip-off third party warranties. I learned much of this the hard way.

Those “inspectors” you mentioned that “adjust” the warranty claims are the worst part. They can make up total lies, feed it to the warranty company, who can then just shrug their shoulders and tell you pound sand. The one I dealt with loved to claim parts failed to (uncovered) corrosion— even plastic parts that broke. And as you said, they take their sweet time to come out and even look at your broken car. Repair shops love when their precious space it taken up by cars they aren’t yet authorized to repair.

Another item you could have mentioned is that even if the warranty company agrees to finally cover a given repair (after all the deductable and “inspector” B.S.), many only pay “book” costs on labor and parts. They have their own magic secret book that states what parts cost and how much labor is involved, and those numbers never come close to reflecting reality. They don’t care if the part for your German car actually costs $500, their “book” says it costs $180, so that’s all they will cover. And that complicated repair that takes 34 hours to complete? Oh the “book” says that is a 3 hour job.

I will never buy one of these third party warranties again. Most of the time you are better off putting your money in a savings account and drawing on that if you need a repair.