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starquestbd22 07-29-2012 10:26 AM

My experience/research on third party service contracts/warranties
This post was spurred by a question in another thread. I would like to share my opinion/experience/research findings for anyone interested in reading them and felt that this was a more appropriate place than in the original thread.

This will be a long post but I urge anyone that has or might consider a third party warranty to read it. A third party warranty is one backed by a company that is independent of any auto manufacturer. Your dealer can still sell you these but that doesn't necessarily mean that they back it!

I initially purchased a third party service contract (warranty, whatever you want to call it) when I bought my used Ram off the dealer lot. It was kind of a hasty decision and I decided to do some research a few days later. I did a LOT of research on third party service contract/warranty companies and ended up cancelling mine (that was a whole other mess...started three months ago and still going on actually....I can tell you about that if you are interested).

The very large majority of what I read was negative. If you read the contract it basically says that if you don't follow the factory maintenance schedule rigidly or if you cannot provide proof that you have done so, the contract is void. I maintain my vehicles extremely well but I may not adhere to the factory schedule on the dot. Simply converting to synthetic oil and running oil change intervals greater than what the factory manual recommends would void the contract. In addition, I have heard that they will deny claims if the part has not completely failed. Example, you have a squeaky shock or a worn ball joint...they will not replace it until it absolutely fails. Or you have a fluid leak somewhere. They will likely tell you that seepage is normal and refuse to fix it. Who decides what "seepage" is? Also, I have heard that they will often force the shop to use used or substandard parts. They may also require the shop to perform complex, expensive diagnostic procedures...not necessarily to determine what is wrong but to determine why it went wrong so they can try to blame it on you and deny your claim. Most companies will not pay for diagnostic procedures. The finance manager at the dealership told me himself about a situation where a vehicle developed a head gasket leak. The company forced the shop to completely tear down the engine in order to look at the internals to make sure they weren't "blued" and that the owner hadn't overheated the vehicle. They refused to pay for the tear down diagnostics. Of course, the finance manager tried to put a positive spin on it by saying everything looked good and they paid for the head gasket repair! But how much did it cost the owner to have the engine torn down and rebuilt, lol?

My summary opinion is that the vast majority of these companies are simply out to take our money. They might pay for a small repair here and there so that they appear legitimate but chances are if you have a serious, expensive issue and look to your service contract that you paid good money for they are going to leave you high and dry. Chances are you will be better off with the cost of the contract in your pocket in the event that you have a substantial repair issue.

I can't comment on extended warranties that are sold, maintained, and backed by an actual auto manufacturer (a factory warranty) as I have no experience on them. What little I have read, however, including from members here on the forumz seems to indicate that this is the only type of warranty that is worth your money and will be there when you need it.

crazychevy88 07-29-2012 10:42 AM

I always thought those sounded too good to be true, I just wasn't sure how legit they were. Their commercials make it sound like everything is noo questions asked, it breaks they fix it. I've actually called a couple but didnt like the fake that I had to make a large deposit on the contract and then it wasn't valid until 3 months in and/or 3,000 miles from the start of the contract. Thanks for the heads up and all your research.

RansRAM 07-29-2012 11:19 AM

I'm actually glad that someone posted this so everyone has a complete picture. Personally I have never taken any kind of extended warranty and I have owned a great many vehicles over the years. There is a reason why they really push this when you purchase a vehicle (new or used). My biggest beef is having to sit in the office with the finance manager after being dropped off by the salesman. After negotiating an excellent price they will try and almost double your payments, I never fall for it however must endure the lecture. :i_rolleyes: For some people these warranties may make sense they are just not for me. This will be an interesting thread to follow as there are passionate points of view both for and against.

starquestbd22 07-30-2012 03:31 PM

Here's a little more detail on the mess I mentioned about trying to cancel my contract. It's fresh on my mind because I have been dealing with it again today. I'll try to keep it short.

* Purchased truck and service contract on 03/05/2012.

* Decided to cancel contract. Contract instructs me to send original contract, a letter requesting cancellation, and an odometer disclosure back to the dealer. Contract also states a full refund within the first 60 days if no claims have been made. I sent these docs (thankfully by certified mail) to the dealer on 04/20/2012.

* Sometime around the first of June I check my loan balance and find that the amount of the service contract ($1650) has not been credited.

* I call AUL (contract provider) and am told they have received nothing from the dealer. They email me a contract cancellation request form (what the dealer should have completed and sent in when they received my documents in the mail). I complete and fax the form back including an explanation that I had requested the cancellation properly before the initial 60 days expired and that I expected a full refund.

* Call AUL 24 hours later....they haven't received fax. I email it to them this time and request a reply email. I get nothing.

* Call AUL the following week to ask status. Am told my contract is cancelled and a refund check is pending. I ask how much it will be and they do not know. Instructed to call back at end of week.

* I forget to call at end of week so I called this morning only to be told that I will be receiving an 86.6% refund. UMMMMM, no. I don't think you people understand. Explain the entire bit to the lady on the phone who instructs me that she is passing my account on for review and provides me with an email address to which I send this entire story (except more detailed) and copies of the postage receipt and return receipt showing that I sent the cancellation request to the dealer back in April.

Awaiting further and will update. Sorry, turned out not very short.

RansRAM 07-30-2012 03:36 PM

^^^^ Their quick to take your money but painfully slow to give it back. The profit margin on these plans is huge. Best of luck and I hope you can recover all your money.

starquestbd22 08-03-2012 09:41 AM

UPDATE: I received an email from the person with AUL that was conducting the review stating that she had received my information and would be in contact within 24 hours. About a day and a half later I hadn't received anything so I sent an email requesting an update. Two days later I received an email stating that the review was complete and I would be receiving a 100% refund. So, yeah, it took a while but it sounds like I will be getting my money back.

immokalee98 08-22-2012 10:54 PM

Did you get your money back yet?

Grubrunner 08-22-2012 11:19 PM

Great post indeed and thanks for taking the time to write/post it.

You just may have saved a fellow Ram brother/sister undue headaches and heartbreak.


starquestbd22 08-23-2012 09:00 AM


Originally Posted by immokalee98 (Post 871951)
Did you get your money back yet?

Actually, no, not yet....not all if it anyway. I have received the original portion that they decided to refund me which came out to around $1440. Well, I didn't receive it but it did get refunded to the dealer and passed along to my finance company to be knocked off my remaining balance which is just fine with me. It has been three weeks now since I received notice that I would be receiving the remainder of the refund which is about $210. AUL told me they would be sending the check out on Aug 6th. I checked my loan history this morning and that payment has not been posted.

I called and emailed the contact at AUL. I will update when I hear something. I am so ready to be done with this mess. It really hasn't been too much work on my part (other than a bunch of phone calls and emails) and so far it has gone in my favor but it has been going on since April!!

snrusnak 08-23-2012 09:24 AM

I bought one when I bought my truck, went home and thought about it and cancelled it. So glad I did. I'd rather do work myself anyway, and I've had a couple issues, and they wouldn't have been covered anyway. They are out to make money, pretty much as simple as that.

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