You often hear that purchasing an extended warranty for your automobile will increase the resale value of your vehicle. Is this another “sales pitch” from overzealous salespeople, or is there some truth behind this claim?
I believe there is substantial value transferred to the new owner. Here’s why;
If you sell your vehicle outright instead of trading in at the dealer, transferring your extended warranty to the new owner can make your vehicle more attractive and possibly worth more money. Given the opportunity to choose between two identical used cars, the vehicle that includes an automobile extended warranty will have more perceived value. Transferable extended warranties eliminate buyer’s fears of repair bills and may help sell your automobile faster and for a higher price.
The Real Value of an Auto Extended Warranty
So what is the value to you for transferring your extended auto warranty? How much will it add to the resale of your vehicle? It could be a sizeable sum, perhaps as much as half of what you originally paid for the service contract. Transferring your auto extended warranty may be the difference between selling your vehicle quickly or not. It could prevent you from losing the sale to another vehicle similar to yours but costing less money.
In addition to making the sale faster, you might receive a higher selling price because of the protection value offered. Prospective purchasers fear the unpleasant surprise of an immediate and expensive repair bill. Given the opportunity to choose between two similar used cars, your vehicle with a transferred automobile extended warranty will stand out above the rest.
You often hear that purchasing an extended warranty for your automobile will increase the resale value of your vehicle. Is this another sales pitch, or is there some truth behind this claim? I believe the claim to be true.
Get this free warranty transfer form filled out before selling your car. Show it to your prospective buyers. Now enjoy the benefits of selling a used car with a transferable auto extended warranty.
Be sure you know what situations to avoid when making a claim and collecting from your extended warranty company.
You know you’ll get the hard close from your dealership on the extended warranty, but how should you respond to their “take-no for an answer” attitude?
You’ve just purchased a used car warranty because you want to feel safe from unexpected auto repairs. You’ve read the car extended warranty reviews and searched for any hidden extended warranty service complaints and are reasonably sure the company you’ve chosen is the best plan available. So now, whatever could go wrong with your car would be a covered condition, right?
Get to know this tiny clause in used car warranty plans
Most denied claims are the result of “wear and tear” exclusions. And most extended service contract holders assume their warranty contract will pay for these claims, since their worn-out parts are listed as covered components. However if you purchased your car extended warranty without “wear and tear” coverage, you might be required to pay for worn-out parts. The best extended warranty contract language states: “We will reimburse you or a repair facility for the fair and usual cost to repair or replace any breakdown of said parts on your vehicle.” However, this language still does not mention compensation for parts not functioning due to normal use beyond factory tolerances.
When buying an auto extended warranty, see if the contract includes “wear and tear” coverage as a condition of your warranty terms.
Parts such as tie-rod ends, wheel bearings, CV joints, U-joints, suspension bushings, and even many engine parts are considered parts that will wear out over time. If these parts have worn down beyond the manufacturer’s tolerances and expected lifespan, and your agreement does not include “wear and tear” coverage, you will be responsible to pay for these repairs. “Wear and Tear” coverage pays for parts worn beyond factory tolerances that affect the proper drivability of the vehicle.
Make sure your “wear and tear” clause in your warranty contract states the following in clear language.
“Wear and tear” coverage should be openly described in your warranty fine print with wording similar to this: “It is the company’s responsibility to repair or replace any part that no longer meets the manufacturer’s specifications, whether it is broken or not.”
If you find this simple statement in your automobile warranties coverage conditions, you can be assured that you will not face the disappointment of a rejected claim if the failure is attributed to “wear and tear.” Some warranty plans offer “wear and tear” coverage only on vehicles with low odometer readings. If your vehicle has high mileage, you may not be eligible. Ask your representatives for details.
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The following is a list of non-covered conditions most auto extended warranty holders are not aware of. Contrary to what you’ve been told, not every claim on your “bumper-to-bumper” warranty will be covered. This list of non-covered conditions will make you aware of some potential pitfalls you may encounter;
Any breakdown caused by normal “wear and tear” is not covered, unless you purchase the “wear and tear” option which is offered by most extended warranty plans up to a certain mileage restriction. Under the definitions of most aftermarket used car warranties, covered breakdowns do not include parts that are worn beyond manufacturer’s tolerances. Wear and tear claims are happening more often but are usually seen on higher mileage vehicles.
2. Are you late on your oil changes?
Claims resulting from lack of proper fluid levels in your vehicle are not covered. One of the benefits to the modern quick lube experience is they will check and top-off all your fluids. While you are there, make sure the service technician checks the fluid levels of your engine, transmission, power steering, brakes, differential and windshield washer system. Keep and record their inspection and completion sheet.
3. Is your car a work vehicle too?
Claims will be denied resulting from “commercial-type” activities including towing for hire, construction, job site activities, hauling for hire, snow removal for hire and off road use. The “commercial” package may be purchased on most vehicle extended warranty companies’ list of options which will cover the above commercial usages. If you are purchasing a vehicle extended warranty and will be using your vehicle for these activities (even if on occasion), be sure to pay the extra surcharge of $2-300 dollars for the “commercial” option.
4. Failure to meet recommended maintenance
Any breakdown caused by the failure to maintain your vehicle under the manufacturer’s specifications will be denied. What first comes to mind is timely changing the oil and filter. But for the higher mileage vehicles, most vehicle extended warranty companies are looking for timing belt changes as per the manufacturer’s required time interval. Proper transmission fluid changes are also a requirement.
5. Your trailer is too heavy!
Any breakdown resulting from towing a boat, trailer or anything else that exceeds your vehicle’s recommended weight limits will be denied. Unless equipped with your manufacturers’ optional “trailer tow package”, most cars and light trucks are not capable of towing a trailer of any substantial weight. If your transmission is broken and you have a trailer hitch installed, the vehicle extended warranty inspector will check to see if your vehicle was equipped with the factory “trailer tow” package. If not, expect him to deny the claim due to improper towing capacity.
6. “It was broke when I bought it”
Any breakdown caused by a condition reasonably determined to have existed prior to the contract purchase date (pre-existing-condition) will be denied. If you buy your vehicle from a credible auto dealer, it should have been fully inspected for problems prior to sale. Some vehicles are sold with pre-existing mechanical or electrical problems. Most vehicle extended warranty companies know how to determine if your vehicle was not in good operating order when sold. Be aware of this.
Due the unpredictable nature of auto breakdowns and contrary to what you may have been told, not every claim on your “bumper-to-bumper” warranty will be covered. This list of non-covered conditions will make you aware of some potential pitfalls you may encounter.
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Are you having trouble selling your automobile? If you purchased an aftermarket used car warranty, you should be aware that you can transfer it to a new owner for a small fee, usually around $50. This can make a great difference in a potential buyer’s perception of the value of your vehicle. An extended warranty vehicle insures vehicle reliability and may secure a faster sales transaction for you. Transfer rules and guidelines should be clearly explained in your warranty contract. Become familiar with the terms and conditions of your car extended plan warranty contract.
Transferring an Extended Warranty on Vehicle Saved Me Thousands
I recently purchased a used 2004 Mercedes SL500 from an elderly gentleman. We transferred the used vehicle extended warranty to my name at the time of purchase, and boy, am I glad we did! Six months into my new ownership, the electronic air suspension failed, stranding my convertible and giving it the “Low Rider” look. Knowing beforehand the national extended auto warranty would cover the repair, I brought the car to the most expensive place I could find, our local Mercedes dealer! Imagine my relief when the service manager said the $3,500 repair cost would be covered by the extended warranty vehicle plan.
Transferring Your Extended Warranty Gives the New Owner “Peace of Mind”
If the existing extended warranty on car is transferable to the next owner, so is the peace of mind that comes with the protection plan. Given the opportunity to choose between two identical used cars, the automobile with breakdown protection has more perceived value.
The moral of the story: be sure to let prospective buyers know the good news that your auto repair warranty can be transferred into their name!