Dealer-Issued Used Auto Warranties: Why Does Anyone Buy Them? - Part 2

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Used Auto Warranty Warning: Beware Dealer-Issued Extended Auto Warranty Coverage.

• Most often, the buyer simply never thought about an extended auto warranty before going to the dealership. When the salesperson explains how important extended auto warranty coverage is, the buyer just thanks him for the tip and buys it.

• The buyer doesn't realize how expensive the warranty is. Of course, car repairs can potentially be so expensive that even an overpriced dealer-issued warranty can pay for itself several times over. Meanwhile, next to a $15,000 car, even an overpriced $2500 dealer-issued warranty seems cheap. But if you're going to buy a warranty, why not buy a really good one?

• Many buyers mistake dealer-issued warranties for manufacturers' warranties. In some cases, the salesperson may even try to let you think the warranty will cover repairs at any of the dealerships affiliated with that manufacturer (say, any Chrysler or Mitsubishi dealership). Of course, such warranties do exist, but they're more common for new cars than used cars.

In short, if a used car dealer ever tries to sell you an extended auto warranty, make sure to ask flat out: will this warranty cover repairs done anywhere, or just this dealership? Double-check the warranty itself to make sure it has a third-party company's name on it, not the dealership's.

Better yet, why not just buy the extended warranty directly from the warranty company rather than pay the dealer hundreds of dollars of markup on it? That way, you can also research the warranty thoroughly, without pressure.

In fact, you should start investigating extended auto warranties even before you go to the dealership. You'll certainly like the salesperson's face when you tell him you know what the original warranty company charges for the warranty they're trying to sell you. You'll also know in advance how much total the car purchase really will cost you.

Don't wait. Start looking at extended auto warranties now, before the dealerships' salespeople ever have a chance to breathe down your neck.

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Used Auto Warranty Warning: Beware Dealer-Issued Extended Auto Warranty Coverage.

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