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…
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
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.
Here is a quick list of auto extended warranty buying suggestions you’ll want to investigate.
Learn the number one reason why auto warranty claims are denied.
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!