Extended Service Contracts.... questions answered

NYSpeed Automotive
1

First:
If anyone has an issue with one of our dealerships please ask for help because in many cases it is a simple fix as long as cooler heads prevail… yelling and getting pissed off doesn’t help anything get accomplished. We had almost 100,000 people in our dealerships last year so we are bound to make a mistake somewhere. You can’t make everyone happy and there’s nothing we can do about it but try our best and that applies to any business, not just car dealers. I do not have total control over what happens at our other dealerships and I apologize if anyone has a bad experience. I can usually make a call, find out whats going on and maybe help get any issues resolved but again I do not own them and cannot makes decisions for them. Another thing people forget is that everyone makes mistakes, EVERYONE, even you have made mistakes so don’t forget you were in the other persons shoes before and will be again.

Second:
Extended warranties are difficult to understand if they are not explained correctly so many finance managers leave out certain important info to get you to buy them. THIS IS INEXCUSABLE AND UNETHICAL. One thing to remember when you are buying a new/used vehicle is that there is alot of information being explained and it is possible to forget some of it, it happens all the time. People call me the next day or a few days after and ask me questions all the time. This is not an excuse just something that happens. There are also about a million different types of contracts, companies, coverages and deductibles. There are service contracts and extended warranties, full coverage, basic coverage, $0, $100, $50 deductibles, you get the idea. I sell them and I will not defend EVERY company because there are some companies who do nothing but screw customers and that is total BS. We try very hard to stay away from these comapnies and the minute we have an overwhelming number of problems we drop them. We use GMPP (General Motors Protection Plan) and Easy Care (Backed by Ford) more than any other companies. Some of our stores sell other types but I am not entirely sure which companies they are or what they cover.

Here’s some info that might be enlightening…
(I’m doing this off the top of my head so it may not be perfect)

GMPP
There are a few types of coverages: Major Guard, Value Guard, Basic Guard. Major Guard is a “true exclusionary” service contract which only excludes maintenance and appearance issues. These are things like stains, rust, hoses, belts, headlight bulbs, brake pads/rotors and tires; other than that is should be covered. This is 90% of what customers buy because it covers ALMOST everything on the vehicle. Value Guard is a “component coverage” that basically has a list of parts that will be covered, major stuff like a/c, powersteering pump, fuel pump etc. Basic Guard is exactly what you think… basic coverage. This is a powertrain contract that will only cover the engine, transmission, drive axle (4x4 unit if you have it) and the internal lubricated parts, thats it.

Easy Care
Works pretty much the same way as a GMPP but with 4 levels of coverage…Total Care, Primary Care, Stated Care, Power Care. Total Care is a “true exclusionary” just the same as the GMPP and the other three cover less and less. Primary Care and Stated Care are the “component coverages” that have a list of parts and Power Care is simply the powertrain coverage. One big difference between Easy Care and GMPP is that Easy Care has a tire and wheel coverage that is included. This means if you hit a road hazard (pothole, screw etc) and it blows you tire they will cover it at a $0 deductible no matter the contracted deductible. It also will pay for your rim if it becomes unsealable (bent, cracked etc) because of the road hazard that blew out your tire.

Deductibles
You get to chose which one you would like, usually there is a $0, $50, $100 and sometimes a $200. Depending which one you chose the price changes accordingly, the higher the deductible, the lower the cost. I do not recommend anything above a $100 because the saving does not usually outweigh the cost of the deductible. Ex. if you save $500 but come in for a repair 5 times and your deductible is $200 ($1000) you spent $500 more than you should have. Don’t do that.

There are alot of people who think service contracts are a scam but here’s my philosophy: if we pay $1000’s of dollars every year for our car insurance (I pay $2400 for 3 cars, no claims EVER) and we never use it why wouldn’t you spend $1000 - $2000 (about average) ONE TIME to pay for almost everything to be fixed on your car for several years? I have a contract on every car I own and I love them because I don’t have to worry about fixing my car, I give the keys to the service guys and they handle it. I have enough to worry about.

So those are the basics… what questions do you guys have? Any thoughts?

KEEP THE THREAD INFORMATIVE, NOT OPINIONATED SO PLEASE USE FACTS IN THE DISCUSSION. IF YOU DON’T LIKE SERVICE CONTRACTS THAT’S FINE BUT EXPLAIN WHY IN A MATURE MANNER.

2

:tup:

Now go get me a G8 GXP with 5k in rebates and 0% or i will complain of bad service.

3

I deal with these often. I especially love it when buy here pay here places sell the contract collect the money from the customer and then forget to send the contrat in.
During investigating repair complaints we find they are often misleading. I’ve seen many cases where a teardown is called for and then the waranty co. refuses to pay for some loop hole or something. Then the customer is stuck with the teardown cost. I’m sure some are better than other.

4

LOL

5

explain the benefit to buying at the time of the car purchase (if there is any?).

many people don’t know that you can buy most of these plans anytime you want from what I understand.

is it mostly about being able to roll the cost into the financing of the car?

6

I didn’t think of this but the companies to stay away from our new, privately backed. The contracts that are backed by the manufacturers are the ones to go with. This is because if a private company goes out of business the consumer is left holding the bag, if its backed by a manufacturer then they will honor the contract even if the company is gone. This is very important because the private companies usually have stupid rules that have lots of loop holes they use to deny claims and don’t stay around long if they don’t have the manufacturers to back them up.

Also, remember that almost every company, manufacturer backed or not, requires that you maintain your vehicle. This is a reasonable request because if you don’t maintain your car you’ll have more repairs because it will fall apart. I know Easy Care/GMPP have denied claims because people couldn’t prove that they changed their oil in 50,000 miles and the oil looked like sludge when it was “drained”. If it has been reasonably maintained you shouldn’t have a problem, if its obvious you abuse your car, then you’ll have a problem getting things covered. If you change your oil yourself or do your own maintanence then just keep the receipts for the parts/oil etc so you can show them if asked.

7

You can buy them anytime you want. Most companies will not cover a car older than 7 or 8 years and with over 100,000 miles. GMPP stops at 8, EasyCare stops at 10. The time of purchase is always the best time because you can roll the contract into the financing in most cases, some banks will not allow this if there are credit issues. Also, the more miles the car has on it or the older it is, the more expensive the cost of the contract.

Most price categories are 0-25,000 miles, 25,001-45,000 miles, 45,001-65,000 miles for a “total mileage” contract. Over that it will go to something called “Add-on” miles where you buy miles/years on top of what you have. Ex. you can buy 2 years and 24,000 additional miles on top of the miles on the car so if you have 74,000 miles on it now your get 2 years or 98,000 total miles before it ends. Most are bought as “total miles”. Ex. the car has 12,000 miles and you bought a 60 month, 75,000 mile contract. That means you have 5 years or a total of 75,000 miles on the odometer before the contract ends and these are always less expensive than “add-on” mile contracts because the cars have fewer miles at the start of the contract

8

Most companies only let you buy when its under warranty or at the time of purchase. Some let you after a full inspection (GMPP does not).

Buying at the time of purchase is usually cheaper (less miles on the car) and you can put it in your loan.

VSCs are my life, so feel free to ask away. I am sure Dave can cover most questions, but let me know.