Terry Miro just turned 25, and was finally in a position to afford his dream car, a flaming yellow Nissan 300Z. He bought it from his local dealership.
The best part was, Miro thought, was that it came with a 6 month warranty from the dealership. “It was out of the factory warranty when I bought it, and I didn’t have enough money to get an extended warranty, that’s why I was glad it already had one from the dealership,” said Miro. But Miro did not read the car warranty’s fine print.
About 4 months after driving off the dealer’s lot, while on vacation at the shore, Miro’s car started having problems. “All the idiot lights practically went off at the same time, I knew I was in trouble.” Miro was glad that the car was still under the dealer’s auto warranty. The repairs were covered by the warranty, Miro had the work done, which totalled more than $1000, and was ready to pick up his keys and leave. But then he got a bill, for $538.77. He immediately rang his dealership to find out what was going on.
“They told me that I had a ‘fifty-fifty’ warranty, and that I was responsible for half of all repair costs. They said that the warranty sticker said that, but it would’ve been nice if someone told me. They just said ‘This car comes with a 6 month warranty,’ which is one reason that I bought it,” explained Miro.
Miro’s experience is by no means isolated. Instead of trying to sell a used vehicle “as-is,” many dealers warranty the car themselves, but do not commit themselves to pay the entire cost of repairs. Instead, they apply a so-called “fifty-fifty” warranty, which means the dealership an the customer split the total cost of repairs. In many cases, though, like Miro’s, that can mean a huge unexpected repair bill.
Brokers of extended warranties for automobiles such as AA Auto Protection offer plans that pay the total cost of repairs, taxes, labor, and parts, minus a small deductible. Many plans offer a zero deductible option. Advises Miro, “The lesson here is definitely don’t rely on the dealer’s warranty, or at least read the fine print.”
