Ep.2 Why You Need an Extended Car Warranty

Understanding Extended Warranties: Women Buying Cars Episode with Meredith Reynolds

In this episode of Women Buying Cars, host Meredith Reynolds, a former teacher turned used car dealer, empowers women to confidently navigate car dealerships. She addresses common questions about extended warranties for used cars, explaining their benefits and differences from regular car insurance. Meredith offers practical advice on evaluating extended warranties, revealing three key secrets: you don't have to buy the warranty the same day you purchase the vehicle, you can buy it from other sources, and you can negotiate the price. She uses a real customer story to emphasize the importance of considering extended warranties for used cars.

00:00 Introduction to Women Buying Cars
00:55 Understanding Extended Warranties
02:32 Personal Experience with Warranties
06:08 Secrets to Buying Extended Warranties
09:52 Negotiating Warranty Prices
11:57 Conclusion and Final Thoughts

Questions to ask before buying a warranty: https://reynoldsautomotivekc.com/blog?category=warranty

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Transcript

0:04

You're listening to Women Buying Cars, and I'm your host, Meredith Reynolds. I'm a former teacher turned used car dealer, and I'm here to teach and empower women to walk into a car dealership with confidence and walk out with the car that's right for them. Do I need an extended warranty? Is this just another way for car dealers to make money? We'll answer those questions and tell you a couple of secrets on today's episode of Women Buying Cars. Buying a car is overwhelming. There are so many decisions to make, from which car to how to pay for it. And then once you sit down to do the paperwork, the car dealer is going to put forth all these other add ons. How are you supposed to know which add ons are worthwhile and which are just ways for the dealer to make money that you can bypass? Today we're going to be focusing in on extended warranties for used cars. So, let's talk about what a warranty is and is not. A warranty is essentially another type of insurance for your car. It is not the same as your car insurance. Your car insurance covers you if you were to get into a wreck or if a tree branch fell on your car. So, some type of damage to the exterior of your vehicle. A warranty covers you for mechanical failure. So something on your car that does not wear out naturally like brake pads fails, the warranty covers the repair of that item. Depending on which state you live in, when you buy a used car, the dealer will be providing you with a limited warranty. This is mandated by the state. In Kansas, where we sell cars, we are required to give one month or 1, 000 miles On the powertrain, which is the engine transmission and lubricated parts. We go a little above and beyond that, but that is the bare minimum. And that's going to vary by state and extended warranty is extra protection that you are purchasing when you buy your vehicle. This is called extended because it's going to go beyond the basic one month, 1, 000 miles. Often it's something like five years or 60, 000 miles. It's really going to depend on the vehicle you're driving. The older and the more miles your vehicle has, the shorter the warranty is going to last. Now, I'm going to be honest with you. Whenever I am purchasing something and someone starts talking about a warranty, I just kind of tune out because I'm already thinking, Nope, not going to buy that. I'm not going to spend extra money. I'm already spending a lot of money. I'm certainly not going to add on more because hypothetically something might happen someday. This is a decision I make when I am buying new electronics, appliances, because I assume my risk of a brand new item breaking down is low. Some of you will disagree with that and that's fine. I'm sure there's plenty of examples out there where someone bought a brand new washing machine and it tore up in a year and they had extended warranty and they were able to get the washer replaced for free. I have no doubt that has happened, but I have to balance the risk I'm taking when spending my own money on purchasing a warranty. A used car, however, I feel very differently about. A used car is a complex used machine. There are so many different parts. that could go wrong. For that reason, I do think it's a very good idea to seriously consider an extended warranty. We have a very loyal customer for purpose of this podcast. I'm going to name him John. He and his wife and his children have purchased something like six vehicles from us over the years. We recently ran into him. And he unfortunately let us know that the most recent vehicle he bought from us, which was maybe in the last 18 months or so, needed a new engine. This is so upsetting for him, obviously, but for us as well. We take pride in the vehicles we sell. We love having customers like John who knows that we try our very best to put out a quality product and provide great customer service. So he repeatedly comes back to us. So selling a vehicle that has a major problem a year and a half down the line, even though we had no way of seeing that coming, it never feels good to us. Now, when John had purchased the car, he sat down with us to do the paperwork. And like we do with every customer, we presented him with an extended warranty. On a newer vehicle, you're going to get a really good option. We sell one that is bumper to bumper. It literally covers Anything that goes wrong on the car that is not just regular maintenance. For example, at some point you're going to have to replace the brake pads, so that's not covered under warranty because it's not mechanical failure. In this case, with John, he had two ways to pay for the warranty. He could pay it all upfront in cash. If he's financing the vehicle, he could roll the warranty into his payment. So his payment would only go up by something like 50 a month, but he would have this bumper to bumper warranty. Now, if you did something like that, keep in mind you will be paying interest on the warranty just like you are on the vehicle. So that is a downside. However, the upside is it makes it much more affordable. So we presented John with these options. This is a big decision. The warranties we sell are somewhere just under 2, 500. That's a lot of money on top of the expensive vehicle you're already buying. So we know this is a very big decision. There are a lot of questions you should be asking the dealer. And I'm going to put a link in the show notes. with a list of questions you need to be asking. Now, here's the first secret I'd like to share with you about extended warranties. You do not have to purchase it that day. The dealer is going to want you to because they want to, to lock in on it before you've had time to really contemplate it and talk yourself out of it. But you absolutely do not have to buy a warranty the day of. If the car dealer. tells you you have to, that that's the only day they're going to offer it to you, then that leads us to the next secret, which is that you can go buy a warranty somewhere else. You don't have to buy it from that dealership. If you're getting your funding through the dealership, then financing the warranty with your car payment would have to be done there at the dealership. Okay, so if you're, if you're financing through them, you would have to buy the warranty through them if you want to finance it. But if you're not going to finance the warranty, then you absolutely can go look for a warranty somewhere else. Insurance agents, sell them. Credit unions, sell them. You can even email me and get a quote and I could sell you one. I'll put my email address. Feel free to shop around, especially if you are feeling a lot of high pressure there at the dealership. At the very least, I would ask for a 10 15 minute break so that you can read over the warranty information, maybe do some Google searching, and, you know, really think through what you're doing before you sign anything. You have every right to do that. While I told you at the beginning that the limited warranty the dealer is required to give you, depending on your state, will cover the powertrain, which is engine and transmission, an extended warranty should be covering much, much more than that. One that we sell, like I said before, is bumper to bumper. It's going to be covering the air conditioning, the electronic system, the sensors, pretty much anything. That's not regular maintenance. You need to read the fine print on what is and is not covered. And again, that's listed in the list of things to ask that's in the show note. So a used car is a complex machine. If you think about cars 30, 40 years ago versus today, there are so many more bells and whistles on today's vehicles that give us more safety and more luxury. Things like. Heated seats, heated steering wheels, blind spot monitor, backup cameras, the list goes on and on. All of those things, all of those bells and whistles are items that will eventually go bad. At some point, they'll need to be replaced. It's just inevitable. And like everything else, they're very expensive. So a warranty helps you with those huge items like engines and transmissions, but it's also going to help you with things that seem a little smaller, but really add up. Okay, according to Kelly Blue Book, the cost of an alternator replacement is somewhere around 800. Fuel injector replacement, 1, 200. Fuel pump. 1, 200. Mass airflow sensor replacement, somewhere around 500. And that's another thing, the sensors that tell us that our tire pressure is low, or that there's someone in our blind spot, or we're about to back into something. Those are all sensors. They can't be fixed. They have to be replaced when they go bad. And there are a lot of them on modern cars. Power steering pump replacement, 900. So to think about whether or not you need a warranty, you have to ask yourself, Do you have 1200 if you need to replace a part? Do you have 500 if you need to replace a sensor? If the answer is no, then you need to seriously consider getting a warranty. This brings us to another secret. You can negotiate the price of the warranty. You can at least try. The car dealer is selling you a warranty to make a profit. So my question at the beginning is, is just another way for the dealer to make money? Well, yes, it is a way for the dealer to make money. They're making a certain amount on every warranty. Therefore they are setting the price. That doesn't mean that you aren't benefiting from it as well, just because they're making money. They're purchasing the warranty at a certain price, and then they're basically selling it to you at a higher price so they can make a profit. Therefore you can offer them less. What's the worst that's going to happen? They're going to say, no, that's fine. Okay. They can say no. You can go shop around somewhere else. Don't be afraid to try to negotiate that price to get it to a place that you are comfortable. It is your money. It is your decision. And you are in control of that. If they tell you the price is non negotiable, then you say, Okay, I'd like a little time to look online and see what my other options are. They may then decide, hmm, I guess the price suddenly is negotiable, or they won't. And then you can go out there and see what the price would be somewhere else. So make sure you're comparing apples to apples. That might take some time. They may have to wait for you. They may need to go help their next customer while you are making this decision. You don't have to be on their time frame. You can sit in the lobby and look some stuff up and do some shopping around and come back to the paperwork when you are ready. So what happened to John, that loyal customer at the beginning who bought six cars from us and had one in the shop? Fortunately, he had purchased the extended warranty. He paid a 100 deductible and he got a new engine. The next time something goes wrong on his car, he will pay 100 again. We are so glad that he had that coverage so that he's not out so much money and so much hassle. The limited warranty that we offer would not have applied because this happened about a year and a half after he purchased the car. Only an extended warranty could cover it. To summarize the three secrets, you don't have to buy the warranty the same day you buy the vehicle. You don't have to buy it from the dealership and you can negotiate the price or at least try to. If this show has been helpful to you, please do me a huge favor and give me a five star review. Please subscribe to the show and share this with a friend. It would really help me grow my show. Thank you for listening and happy driving.