How to Avoid Auto Warranty Scams and Frauds

car warranty fraudThere are a lot of reasons for getting an auto warranty, but sometimes it is absolutely necessary to get one.  If you have bad credit and need a car you will want to make sure you get an extended warranty.  Why?  Well the most common cases for repossession of vehicles involve auto repairs that are too high to pay.  With the high cost of an auto repair on top of mounding bills, someone with bad credit will have to give up their vehicle.  But a solid car warranty can avoid all of that mess, and makes practical sense for those with good credit as well.

But what do you look for when choosing a good company and how do you avoid auto warranty scams?  You are probably reading this because you already know the problem exists.  Once you purchase a car, whether it is new or used, you will be inundated with phone calls, letters, and emails, all claiming that you need to sign up with them for a warranty.  It can often be misleading because they will say they represent the dealership from which you purchased the car and that they are just following up with you.  Now, if someone contacts you via telephone or letter it does not mean it is a scam, even if it is a littler rude and annoying.  But you definitely want to look them up on the Better Business Bureau website just to make sure they are legit and have a good track record.

There have been a lot of problems with car warranty scams in the past, and although many of them have been shut down, you still need to be careful.  It is all too easy for a company to pretend they represent the dealership and explain how important a warranty is for you and your situation.  But if it s fraudulent company you will never see a single red cent when you run into car troubles.  They will probably not even want to examine the car before covering it either.  Why would they care if all they want is to collect your money every month.

Sometimes a scam will pretend it is calling on behalf of the automobile manufacturer.  This is a shady way of doing business and is definitely not the truth.  Most of the time the manufacturer will not contact you directly.   They will often even tel you about a satisfaction guarantee so that if you are not satisfied with the coverage you can cancel at anytime.   Don’t buy into this either.  When you try to call back to cancel, you will end up going through an endless loop of call transfers and will not be able to talk to anyone.  That is the nature of scams.  They simply don’t want to talk to you unless you are wanting to give them money.

Now this does not mean that you should only buy warranties from the dealer.  There are many great 3rd part warranty companies out there like Warranty Direct, US Fidelis and others, and they can often be even better than buying through a dealership.  You will pay less and have more than just bumper to bumper covered on your car or truck.

These are a few tips to help you avoid auto warranty scams, but leave a comment below if you know of any other tips that will  help our readers stay away from these fraudulent companies.

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2 replies on “How to Avoid Auto Warranty Scams and Frauds”

  1. It can be hard to know who to trust! One way to figure out if a car warranty company is legitimate or not is to see how easy it is to get in contact with them. If they list a number and ways to contact them on their website, chances are you will be able to reach someone should you have questions. Scams will make it difficult to get a hold of them should problems arise. Good luck!

  2. Excellent point Shannon. These scam companies try to fly under the radar as much as possible so if you can’t reach anyone on the phone it should be a big indicator that something is wrong. Hmm, I should have mentioned this in my post. See, this is why I have people write guest posts now and then.

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