There's a new TELEVISION commercial extolling the benefits of a prolonged vehicle warranty. It shows one customer relaxing conveniently in the waiting room of his automobile repair shop (he has the vehicle extended warranty) and another person disappointed and mad that he'll have to spend for his vehicle repairs (he certainly doesn't have a prolonged strategy). What's fascinating is that the business repeatedly states that, with the guarantee, the repair work is FREE. This is a little bit deceiving ...

The business notes that the gentleman with the service warranty will not have to pay the $1,200 to change his electronic control unit. Nevertheless, the truth is that extended vehicle service warranties that have no deductible and cover these types of electronic components cost $3,000 to $5,000 - in advance. As you can see this is far from FREE. At the $5,000 mark, this guy's vehicle needs $3,800 in "covered repairs" just to break even, provided the service warranty does not expire. They go on to say that towing is covered 100% which they will pay your repair shop directly. There are problems with both these declarations also.

If you read the fine print, towing is only covered specific ranges - don't believe they'll let you tow it back to your trusty local mechanic if you break down 200 miles away. Moreover, the vehicle service center is under no responsibility to accept money from "your" extended service warranty company, therefore needing you to pay up front Tow Chandler and then get compensated. Most notably, as we discuss routinely at RepairTrust, car repair work approximates change significantly. Your extended guarantee might (according to their price quotes) only pay $1,700 if your automobile needs $2,000 worth of work. Your stuck paying the distinction of $300.