• Car Warranty: Common Hidden Fees to Avoid

    When shopping for a car warranty, you need to know that certain companies charge you hidden fees that increase your total cost. An unwary consumer can end up buying a warranty and still have to pay a lot of money as a result of these fees and other hidden costs. Read and understand the fine print on the contract and make note of what is covered and whether it’s really required.

    Extended Warranty

    It’s not essential for you to buy an extended warranty, as the manufacturer’s warranty may already cover what you need. Some unscrupulous dealers state that a car loan can only be approved if you buy an extended warranty or that the APR will rise if there isn’t any extended warranty. It’s best to ask such dealers to put the same in writing, in which case they will not continue to insist on you buying the warranty. Alternatively, choose another dealer if you aren’t convinced of the company’s reputation, and remember to avoid the cost of purchasing any unnecessary coverage.


    When buying the warranty, you must first find out if there’s a deductible amount and the value of this deductible that you’re liable to pay. You should also confirm if the deductible is charged per visit or per repair, as you might have many things to be repaired in a single visit. Choose a warranty which has a deductible per incident, as all the repairs for that incident will be covered. You should also find out if there is a limit on the number of claims you can file in a certain period.

    Terms and Conditions

    Some warranties require that a specific repair facility or towing service be utilized in case of repairs or breakdowns. These might be more expensive than others. You should confirm whether the repairs cover the wear and tear of parts or whether it’s only a breakdown warranty. It’s best to buy a bumper to bumper warranty that provides maximum coverage. Some warranties cover the parts but don’t cover the labor charges. This is another hidden cost that can affect you adversely.

    Hidden Charges

    Confirm whether the cost of the replacement vehicle you use is covered while your car is being repaired, as you need to be mobile. Also, the extended warranty shouldn’t cover something already covered by the manufacturer’s warranty. Some warranties require that you service your car at regular intervals, which in itself is a hidden cost. In this case, unless you keep the records of each servicing, you might be denied a claim.


    Some warranties pay for the repairs up front and others will only reimburse you after you send them the bills for the repairs performed. The latter might not be very convenient, as you will have to make up front payments and the company might deny the claim on some pretext. You could then end up bearing the complete cost of repairs.

    When shopping for a car warranty, choose a reputed company, buy a warranty with fewer terms and conditions and understand all the clauses listed on the contract before signing the agreement. Avoid relying on the brochure for information, as brochures are nonbinding, unlike contracts.