Many drivers purchase an extended warranty or service plan for their car to avoid costly repair bills.
These plans can cost thousands of dollars.
But some drivers find their plan doesn't cover a problem or expense when they need it most.
One of those drivers is Glendora Cornist, who just bought a new SUV. She said she was happy with the vehicle but said it comes with a monthly payment she didn't want.
You see, Cornist had hoped to keep her 2015 Dodge Minivan.
But the transmission had other plans.
"When I put it in reverse, it would kind of jump," she said. "The transmission had four different codes that showed, and the transmission needed to be replaced."
Discovers catch with her warranty
Cornist figured the extended warranty she had purchased would cover the repair.
"It's $124 a month," she said, explaining the extended warranty she purchased, "and I'm like, that's doable."
But when her mechanic contacted her extended warranty company, they learned she would have to pay out of pocket for a full inspection upfront.
"About $1,500 just for the teardown," she said.
After that, coverage for the $4,000 repair wasn't guaranteed, based on the contract's fine print stating that pre-existing conditions were excluded.
Cornist said that depending on what the inspection found, it could have been considered a "pre-existing situation."
Watch what consumer group found about extended warranties:
Expensive with "too many exclusions"
Kevin Brasler and his team with Consumers' Checkbook have investigated service contracts sold through dealerships and third-party companies.
"What we see over and over again," he said, "is these companies really, actively try to deny claims even when it's a valid claim. They go to great lengths not to pay out.”
According to their findings, Brasler said many plans are too expensive and have too many exclusions.
"For hybrid cars, batteries aren't covered," Brasler said. "Most of the stuff inside your car in terms of entertainment systems and seals and things like that aren't covered. Brakes aren't covered. So most of the repairs that you'd think, ‘I'll be able to get a free repair if this goes wrong,’ that's not the case.”
Brasler warns that another problem is that some shops won't accept payments from third-party plans. You need to pay out of pocket and then apply for reimbursement.
Most consumer advocates push car owners to budget and save for repairs rather than spend extra on an extended warranty.
Brasler points to one exception when a warranty might be worth it: if you have experienced many problems with a new vehicle during the manufacturer's warranty, "maybe consider buying a warranty from the manufacturer to extend that time period," he said.
In the end, Glendora Cornist decided to trade in the broken minivan rather than risk having to pay for a $3,000 or $4,000 repair.
"Now I have a car note on a fixed income," she said. "That's what I was trying to avoid by having a warranty."
She wants others to know her experience so you don't waste your money.
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