Service Contracts A service contract is a promise to perform (or pay for) certain repairs or services. Although a service contract is sometimes called an extended warranty, it is not a warranty as defined by federal law. A service contract may be arranged any time and always costs extra; a warranty comes with a new car and is included in the original price. Used cars also may come with some type of coverage. The separate and additional cost distinguishes a service contract from a warranty.
Auto service contracts may be sold by vehicle manufacturers, auto dealerships or independent providers. If you want to buy a service contract, shop around so you understand just what you’re buying. Coverage varies widely. Other tips:
Research the company responsible for paying your claims (usually called the contract administrator or the service contract provider). Service contract sellers (also called brokers) do not decide what repairs are covered under the service contracts they sell, and they may assert that they have no further responsibility to you once you buy the service contract.
Check on licensing and registration within your state. While many states do not regulate contract administrators, some states (including California, Florida and New York) have strict regulations.
Before you do business, check out the seller and the contract administrator with your state Attorney General (naag.org), local consumer protection agency (consumeraction.gov) and the Better Business Bureau (bbb.org) to make sure no unresolved complaints are on file.
The phone numbers for these organizations are in your phone book or available through directory assistance or Internet directories.
Extended Warranty Considerations
ReplyDeleteGood advice from the FTC...
Service Contracts
A service contract is a promise to perform (or pay for) certain repairs or services. Although a service contract is sometimes called an extended warranty, it is not a warranty as defined by federal law. A service contract may be arranged any time and always costs extra; a warranty comes with a new car and is included in the original price. Used cars also may come with some type of coverage. The separate and additional cost distinguishes a service contract from a warranty.
Auto service contracts may be sold by vehicle manufacturers, auto dealerships or independent providers. If you want to buy a service contract, shop around so you understand just what you’re buying. Coverage varies widely. Other tips:
Research the company responsible for paying your claims (usually called the contract administrator or the service contract provider). Service contract sellers (also called brokers) do not decide what repairs are covered under the service contracts they sell, and they may assert that they have no further responsibility to you once you buy the service contract.
Check on licensing and registration within your state. While many states do not regulate contract administrators, some states (including California, Florida and New York) have strict regulations.
Before you do business, check out the seller and the contract administrator with your state Attorney General (naag.org), local consumer protection agency (consumeraction.gov) and the Better Business Bureau (bbb.org) to make sure no unresolved complaints are on file.
The phone numbers for these organizations are in your phone book or available through directory assistance or Internet directories.