Forced Extended Warranty Scam

Forced Extended Warranty Scam

Forced extended warranty scam is another manifestation of auto dealer fraud. You may come across with this scam when buying both used and new cars. The scenario for the scam is the following; you go to the dealership to buy a car, you negotiate the car price, choose the financing option and leave the dealership to be called when the financing is approved.

Soon, the dealer calls you to inform the bank that must have provided you with a loan is requiring that you buy an extended warranty with the car. The only justification the dealer presents for this (especially in the case of used cars), is that the financing company wants to be safe from the problems that a car breakdown may pose.

However, the reality is that no bank or credit union or any other financing agency can require that you purchase an extended warranty. This is a violation of law and the violation of consumers’ rights. So, when you encounter such a situation, be sure the dealer or the sales manager is trying to practice a forced warranty scam on you.

An extended warranty, otherwise also called a service contract, is a useful insurance and reliability tool especially for the pre-owned vehicles that have excessive wear and tear or high odometer readings on them. But if an extended warranty is being literally forced to you, then you should stand apart from it.

Besides, extended warranties are optional tools, not compulsory ones that can be purchased at quite low prices form a special company. So, in any case, you had better avoid buying an extended warranty or a service contract form the dealership itself.

Usually, dealerships charge extended warranties rather high and as a result you may be losing thousands of dollars due to the forced warranty scam.

In order to be able to avoid extended warranty scam, remember the following;

  • No bank or credit union is interested in the car’s condition, they want only the paperwork to be correctly organized and sent to them.
  • No bank has ever had the right to force a car buyer to get an extended warranty or any other insurance package.
  • Dishonest dealers may offer you extended warranties up to $2,500. No logical mind will agree to such a huge amount of money to be paid for a warranty.
  • Always be careful when signing the paperwork, as you may later on find out you have agreed to an extended warranty or any other unnecessary add-ons for your car.

Educate yourself before entering a dealership; never ever jump to buying a car without thinking for a good while. Anytime when offered something (extended warranty, add-ons, accessories), ask yourself whether you need it or not.