People Come First At Our Consumer Rights Law Firm


On Behalf of | Jan 13, 2011 | Consumer Protection

It is not uncommon for a potential used or new car buyer to ask whether purchasing an extended warranty is a good idea. It is important to understand the details of what you are purchasing when it comes to an extended warranty.

Most extended warranties specifically state that they do not cover a pre-existing condition of the vehicle. This is similar to purchasing medical insurance; if your car has a pre-existing problem when you purchased it, then an extended warranty will not cover the repair bill when you take it into the shop. Asking questions and digging for information about the vehicle you are about to purchase from the sales person will help you determine if purchasing the extended warranty is a smart investment. Ask what, if any, mechanical problems the vehicle has had before. Ask what kind of inspection the vehicle went through before being placed on the lot for sale, and whether they have any paperwork to prove that. It important to see the paperwork to know what you are buying.

If you are at a manufacturer authorized dealer of the vehicle (i.e. you are at a
dealership looking at a Chevy) the dealer will have warranty history reports on file and can see all the mechanical repairs performed while the vehicle was under warranty. Ask to see that as well, so you can best understand the history of the car that you are buying. Inquire about the CarFax report to see if there is a previous accident that may void any warranty coverage.

If you don’t like the answers you are getting, then perhaps an extended warranty is not only a bad idea; perhaps the car (or dealership) is as well. If so, and you want to purchase an extended warranty, you are better protected.  Unfortunately, a warranty company can still deny coverage. Most often, the reason is that the condition must have been pre-existing. Having asked questions and demanded the documents as stated above, you are now in a position to be able right the wrong. You have proof that the condition was not pre-existing as the dealership showed you a clean bill of health in the way of inspection records, warranty history reports, or a CarFax report. So either the warranty provider is trying to avoid their obligation, or the dealership provided you false information to induce your purchase; if that is the case then you may be dealing with fraud.

How about an extended warranty when it comes to a new car? Some people believe that spending the money on an extended warranty on a new vehicle is a waste of money. A new vehicle comes with a manufacturer’s bumper-to-bumper warranty. That’s all the protection you need in the first few years.  If the vehicle has problems in those years, then an extended warranty would be useless to continue taking care of that problem. If the vehicle is repair free throughout the original manufacturer’s warranty period, then a car dealer or other extended warranty vendor will be happy to sell you a new policy at the end of your warranty.

Larry SmithConsumer Rights Attorney at SmithMarco, P.C.Larry P. Smith is a consumer attorney and the founder and Managing Partner at SmithMarco, P.C. He has tried dozens of consumer rights cases to verdict and has arbitrated over 700 cases. Additionally, he has amicably resolved over 3,000 consumer fraud, Fair Credit Reporting Act and Fair Debt Collection Practices Act cases via settlement. Mr. Smith has been a guest on multiple radio outlets including WLS and WGN in Chicago providing consumer advice. Mr. Smith also provides leadership and delivers lectures to the National Association of Consumer Advocates, The National Consumer Law Center, and the Chicago Bar Association. Latest posts by Larry Smith (see all)