Vehicle Service Contracts

Here’s why you should only trust service contracts backed by your car’s dealer or manufacturer…or by my #WiseChoices.

You should never trust “third-party” vehicle service contracts or extended warranties. They are not supported by your vehicle’s manufacturer or dealer. Flighty, independent companies contrive them, then push them on consumers through aggressive, unsolicited phone, mail or spam solicitations. Some of the companies run TV commercials.

Companies like CarShield of St. Peters, Missouri.

The Better Business Bureau of the Mid-South issued an alert on CarShield after giving it an “F” rating. Nancy Crawford, communications director for the Mid-South BBB, said CarShield racked up 352 complaints between Jan 1, 2016 and the end of last year. Crawford said most of the complaints alleged deceptive claims about coverage and a lot of difficulty canceling them once the jig was up.

Crawford recounted the story of a St. Louis man who bought a CarShield service contract after seeing its commercial. When his vehicle’s timing belt faltered, he had it serviced by a St. Louis dealer. The dealer submitted a $3,500 claim on his behalf to CarShield. CarShield denied it. The man had to cough up the $3,500 and pay out of his own pocket. He hired an attorney to go after CarShield. The company caved under legal pressure. CarShield not only paid the $3,500 repair claim, but also refunded the consumer the cost of the CarShield service contract.

Crawford warned that most of the bad actors in the third-party vehicle service contract industry operate out of Missouri. She said consumers have filed a total of nearly 1,500 complaints against them with the St. Louis BBB.

Randy Hutchinson, president of the Mid-South BBB, received two unsolicited service contract offers from CarShield on his vehicle. It’s a new vehicle still covered under its manufacturer’s warranty. CarShield’s protections would not “extend” Hutchinson’s manufacturer’s warranty terms, like an extended warranty is supposed to do. They would simply duplicate them — a complete waste of money.

“Shady companies have been peddling extended auto service contracts for more than a decade,” Hutchinson said, “and consumers have continued to file complaints against their deceptive marketing practices.”

This one’s easy to avoid, folks. Simply ignore ALL unsolicited third-party vehicle service contract offers. They’re not worth the paper they’re printed on. The companies will likely disappear within a few years, leaving you holding the bag — or they will push a plan that offers unnecessary duplicate coverage your vehicle already has under its manufacturer or dealer warranty.

You can trust your vehicle’s manufacturer’s warranty (typically three years, 36,000 miles), but know its terms and coverage. Obtain a copy of it from your manufacturer or dealer.

As for extended warranties, you should only consider those that have the backing of either your manufacturer or your dealer. Most dealers offer certified extended warranties on certain makes and models of their pre-owned inventory. Some are initiated by the manufacturer; others are dealer-drafted contracts.

I endorse three Mid-South auto dealerships that offer different versions of certified and/or extended warranties: Holly Chevrolet in Marion, AR; Vaughn Ford Sales in Marked Tree, AR and Serra Chevrolet Bartlett in Bartlett, TN. In addition to its own consumer protections and guarantees, Serra Chevrolet Bartlett offers a Motor Trend limited certified warranty protection on some of its pre-owned inventory. That’s a Motor Trend product, but it’s awarded only to an elite group of auto dealers who sell it directly to the car-buyer as part of the vehicle sale — unlike those deceptive third-party service contracts which are never sold by an auto manufacturer or dealer.

Here’s a good way to remember how to avoid a silly vehicle service contract hassle: if you can’t shake the hand of the person selling it to you, don’t buy it.

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