David Slone Answers Your Questions: Are Extended Service Contracts a Ripoff?

According to David Slone, the General Sales Manager and Used Car Manager for Weld County Garage, many dealers call extended service contracts “extended warranties,” but that is a misnomer.  The terminology can be a little confusing, acknowledges David Slone, who suggests the term “extended service contract” is a better and more realistic description. David Slone says that an extended service contract provides the owner with peace of mind when it comes to unforeseen and possibly expensive repairs.

Good dealers, points out David Slone, don’t sell cars that they know are going to have major problems–but automobiles can be unpredictable.  David Slone explains that purchasing an extended warranty gives you the peace of mind that if something significant happens, the purchaser will be covered.  It is much like an insurance policy, says David Slone. If it is needed, you will be thrilled that you bought it. If it is never needed, you at least had the peace of mind while you owned it.

David Slone recalls owning a beautiful red Toyota Spyder many years ago that blew an engine. Thankfully, says David Slone the extended service contract covered all of the repairs except for a small deductible.  David Slone currently owns a Honda Odyssey that was purchased with an extended warranty, and it is not only out of the manufacturer’s warranty but it has long surpassed the miles allowed on the extended service contract. He says that he never needed to use the service contract.  Acknowledging that “you never know,” David Slone says that he was grateful for the peace of mind it gave him.

Are they a rip-off?

A wise man once told David Slone, “For every good thing, there is a counterfeit.” He agrees, saying that extended warranties are a great example.  There are many good and reputable extended warranty companies on the market – and there are some slimey ones too, reports David Slone. His advice to new car owners is to “do your research.” Check out the companies, suggests David Slone, and buy from a reputable dealer!  Most reputable dealers will not risk their reputation by selling junk service contracts, adds David Slone.

According to David Slone, there are several things to look out for when shopping extended service contracts.

  • How much is the deductible?  Don’t fall for the dealers that have huge deductibles, cautions David Slone.  A good rule of thumb is to expect a deductible of $100 or less.
  • What repairs are covered in the contract?  Probably a better question, according to David Slone is, “What’s not covered?”  Ask the dealer to go over the covered and “not covered” items, cautions David Slone.  Have them show these items in writing.  Most service contracts have different levels you can purchase with different levels of “what’s not covered.” If the dealer can’t or won’t give you a detailed description, don’t buy it!

How much should I pay?

That is the age-old question, agrees David Slone.  There is not a correct answer to that question.  Prices, according to David Slone, are based on so many different things, including mileage, make and model, whether or not it is 2-wheel or 4 wheel drive, the coverages, deductible, length of contract, and whether or not it is transferable. It is just not possible to give a solid answer to this question, says David Slone.  A car owner has the option of shopping online and purchasing from an online contractor or reseller, or he or she can purchase from a local dealer.  David Slone advises finding a trustworthy dealer, buying a car there at a fair price and buying a service contract at a price you feel comfortable with.

Is the price negotiable?

Everything is negotiable, advises David Slone.  Keep in mind: no one sells anything just for the fun of it.  Everyone wants to and needs to make a profit.  The dealer doesn’t need to make all of their profit on you but they do need to make a profit, points out David Slone.  If you find someone you like and trust, concludes David Slone, then you should be able to come to a price that works for you and allows them to make a living as well.



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