Why Secondhand Car Warranty is a Waste of Your Money

10301515_778358932185510_3682542180261526536_nKeeping clients can be difficult. Many factors contribute to keeping clients returning over and over again and we strive to do the right thing by our clients which brings them back to us. To do this we are combating the misconception that all mechanics are thieves, we’re also combating a level of ignorance in some cases. Trying to explain to people that diagnostic time is chargeable or that in some cases genuine parts are required at the price of gold chicken eggs. Add to all these issues, the clients that can be lost due to gimmicks the car yards pull and the result is small mechanical workshops are struggling to keep afloat.
On average, twice a week we come up against the issue where a client has come into our shop with a vehicle that has any number of issues. After diagnosing the faults and informing the client that Mrs Jones’ cat is stuck in your engine bay, the client informs us that they have some form of warranty. It is important to note here that there are a few different variants of warranties and its a buyer beware situation.
Manufacturers warranty is a warranty issued by the manufacturer on brand new cars. This is the best and only sort of warranty you should bother with. The warranty is not offered by a dealership itself, rather its a warranty covered by the national distributor of that vehicle. When repairs are carried out by a local dealership the national provider reimburses the dealership for both parts and labour. This is a good system as it encourages the dealerships to do the right thing by the client as they are not losing money on warranty claims, rather they are actually profiting from this.
10471436_784996244855112_8136087790202452834_nOutside of manufactures warranty we advise never, ever pay for any other type of warranty. The warranty offered on secondhand vehicles by both dealerships and secondhand car yards is a third party agreement that the car yard is actually profiting from. In the eyes of the salesman, floor mats, roof racks and warranties are all up-sells to make him profit. The company who is required to honour the warranty is a third party and a separate enterprise to the car yard. These companies are about profit (as most companies are) and they don’t make profit by paying out on claims.
Granted some of these warranty claims have been upheld and the warranty companies have paid out the claim. However in the majority of cases the fine print states that ninety five percent of situations are not covered by this warranty. Its very important that if you consider buying any of these warranties to read the massive long winded document that is the terms and conditions, as well as the lengthy pages of what is and is not covered. Anyone who has read any of these documents will be in the know that almost nothing will be covered.
When you’re standing in the lot of a car yard looking at a shiny car that you have fallen in love with the salesman asks if you want to buy extended warranty with that we all by default go with “of course” under the misconception that warranty means we will have peace of mind that if anything breaks on our new baby, the seller will cover the cost of repairs. The salesman will not bother to pop this bubble of misconception as he profits form its sale and in many cases probably is not aware of the truth surrounding it.
10712616_838884249466311_8617162005751156375_oThe truth is that aside from an act of God and the crank shaft falling out of the vehicle, nothing is covered. Anything that is deemed normal wear and tear on a vehicle is not covered. Anything surrounding breaks, suspension, interior, tyres and wheels, exhaust and transmission is not covered. Anything that holds oil is unlikely to be covered. And that leaves you with very little that is actually covered. The warranty company gets away with this by using pharases such as “normal wear”, “reasonable and expected deterioration” and “extreme driving conditions”. All of these things are measurable in no way at all. Its some persons opinion vs yours. You will never, ever win this arguement.
The mega loophole used here is the “extreme driving conditions” phrase. We all assume this means if your car is in sub zero temperat
ures or in the dessert it counts but if you check your owners handbook for what is classed as “extreme driving conditions” is in fact all of the Australian continent. Basically, if you drive your car anywhere in Australia (frequently gets to below 5 degrees Celsius or frequently above twenty six degrees Celsius or on ice, snow, dust, pollen, dirt or gravel) then you’re deemed to be in extreme conditions and your car is no longer covered by aftermarket warranties. Different companies specify these parameters differently.
In the past twelve years of my career I have only once witnessed a warranty claim from used car warranty company upheld, in this case the company insisted on the use of secondhand parts to keep the costs low. Once out of an estimate of over one thousand claims. That people is why you should save your money and not bother with the used car or extended warranty.

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