Auto Warranties Not Required For Financing

Posted: Feb 10, 2011 |Comments: 0 |

In the world of auto warranties, there is a lot of information to digest. From details about what the terms and conditions of your warranty mean, to tips on how to find the cheapest rates. But amongst all the good information is a lot of bad information, based on myths, hurt feelings and bald-faced lies. It can be tough to weed out the bad details from the good, but there is one very important fact about extended warranties that every new car buyer should know.

When you go into the dealership to sign on the dotted line for your new car, you might hear something a little surprising from the sales person. They will tell you all about their wonderful extended warranty, and how it will ease your mind for years to come. That may be true, but then they hit you with something that just does not sound right. Your sales person tells you that you have to buy the extended warranty, even though it is presented as an option. Why? Because you won't qualify for dealer financing without it.

Maybe you thought that your qualification for financing was as simple as your credit? Not the way the sales person tells it. They say that, because your financing is for X number of years, and the manufacturer's warranty is only for Y years, which would leave a total of Z years uncovered. The financing company, you are told, doesn't want to finance a car that might end up with a severe problem, but no warranty coverage. So, sign here, or you might lose the car altogether.

This is completely, totally and equivocally false. You do not need to buy the extended warranty, unless you want to. It is an option, and your selection of that option will have no bearing on your approval in the financing of your car.

Why would a sales person tell you this? Simply put, the sales person makes a very large commission on extended warranties that are sold at the same time as the car itself. By using a little fear to motivate you into the purchase, the sales person is making a tidy profit.

Regardless of the reason, it's simply not true. You will see when you decline, despite the sales person's most convincing arguments, to purchase the extended warranty. You will probably hear that, in the end, the sales person managed to "go to bat" for you, and find a way to miraculously get the financing approved.

In the end, remember that auto warranties have nothing to do with financing - unless you're the sales person that profits off it.

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