What’s a car owner to do?
I was curious and started looking into the choices. I quickly found myself drowning in a confusing morass of terminology, regulations and lawsuits.
The clearest message I found came from Consumer Reports, which, in general, argues that extended new-car warranties are poor deals. A survey and report published in its annual auto issue in April found that 65 percent of about 8,000 Consumer Reports readers said they had spent significantly more for a new-car warranty than they had saved in repair costs.
Only about 5 percent said they had a net saving, and about 42 percent of extended warranties were never used.
Extended warranties are “a major profit center for dealerships,” said Rik Paul, automotive editor for Consumer Reports, adding that, on average, dealers collected around $800 on each extended warranty sold. In addition, many manufacturers offer volume incentives to dealerships to sell as many of these warranties as possible.
Gardiner Reynolds and Carol Saccucci of the Saccucci Auto Group in Rhode Island, which has sold thousands of warranties online. “We have to make a profit where we can make a profit,” Ms. Saccucci said. “There’s less markup on everything else.”
Still, there are consumers who want the assurance that if a serious problem occurs after the original warranty runs out, they will be covered and will not have to scramble to cover major repair bills.
So what’s the advice for those people?
