Just curious what others are seeing. In the last 6 mos or so I have noticed a huge increase in ads for 3rd party service contracts. If its not automotive its home. The Automotive though has increased the most, I truly believe that every commercial break has at least 1 service contract ad. And that is on multiple channels, all I can say is that the profit margin must be huge to afford their ad budget.
3rd party service contracts
- Thread starter samven
- Start date
I get phone calls several times a week trying to sell me an 'extended warranty' on the 2011 Chevy Cruze that I traded in in 2014 due to coolant loss/sickening odor. Another 'money grab' attempt IMO....I wouldn't buy an 'extended warranty' from the manufacturer let alone a 3rd party huckster...
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Even though I do not personally believe in automobile service contracts, I recognise that there is a legitimate reason for a person to purchase one under certain circumstances (like a woman who travels alone).
The key to getting a legitimate 3rd party service contract that isn't a ripoff is to buy one from a company that sells them in California. In California service contracts are called Mechanical Breakdown Insurance (MBI) Policies and any company selling or administering MBI must be a licensed insurance company. Pricing for MBI contracts is regulated by the state’s Department of Insurance just like any other insurance policy, which puts limits on the profits MBI sellers and administrators can make. Car Shield is not sold in California, that should tell you all you need to know about them.
The key to getting a legitimate 3rd party service contract that isn't a ripoff is to buy one from a company that sells them in California. In California service contracts are called Mechanical Breakdown Insurance (MBI) Policies and any company selling or administering MBI must be a licensed insurance company. Pricing for MBI contracts is regulated by the state’s Department of Insurance just like any other insurance policy, which puts limits on the profits MBI sellers and administrators can make. Car Shield is not sold in California, that should tell you all you need to know about them.
I live in the epicenter of vehicle service contract companies and am friends with someone that owns one. I would never buy one unless it was from the manufacturer, like a Flood Ford ESP.
The only thing that I concluded from all these advertisements is that they must make a lot of money to be able to afford these commercials. That and the 4th original Ghostbusters didn't save or invest enough back in the day as still has to work.
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Costco was retailing a third part automotive service contract for a few years (through Century Warranty). I believe they no longer market third party automotive service contracts. If accurate, my guess is Costco was bombarded with complaints, and Costco has some of the better educated consumers as members.
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Nothing but a high-priced insurance plan.
I know on antenna TV commercials, these warranty commercials are on all the time.
I've bought 3rd party contracts through car dealerships in the past and never had a problem with them. Speaking with service management, dealers are only going to sell contracts from the "companies" they know will pay out w/out issue. Of course the dealer makes money on the sale of the contract and the buyer is most likely going to donate that ~$3K, but there are times you get your money back and maybe then some. I'm always disturbed at all the younger guys at work buying them and adding them to their loans. I would say nearly 9 out of 10 of them basically think they have to buy them.
The only time it wasn't an aggravating ordeal repeatedly saying no to an extended warranty in many years for me, was with my 2019 Ram 1500 purchase through Enterprise car sales. They handed me a sheet with various grades of 3rd party warranty coverages with pricing. I said no thanks and they said no problem.
I've bought 3rd party contracts through car dealerships in the past and never had a problem with them. Speaking with service management, dealers are only going to sell contracts from the "companies" they know will pay out w/out issue. Of course the dealer makes money on the sale of the contract and the buyer is most likely going to donate that ~$3K, but there are times you get your money back and maybe then some. I'm always disturbed at all the younger guys at work buying them and adding them to their loans. I would say nearly 9 out of 10 of them basically think they have to buy them.
The only time it wasn't an aggravating ordeal repeatedly saying no to an extended warranty in many years for me, was with my 2019 Ram 1500 purchase through Enterprise car sales. They handed me a sheet with various grades of 3rd party warranty coverages with pricing. I said no thanks and they said no problem.
I kept hearing a commercial on the radio and the play was vehicle owners need to have one of these plans/warranties/contracts just the same as having vehicle insurance. My favorite part from this commercial was (paraphrasing) the husband asking the wife (after the wife talks to him about why they need this is "so the repairs will cost us nothing?".
In various "car" related groups I peruse on Facebook, reddit, and other forums, the general consensus is that when you buy a used car, you must get the service contract and gap insurance that the dealer pushes. They roll it into the loan so the majority of folks don't even know how much they paid for them, that they can get gap insurance through their insurance agent (and not finance it for 5+ years), and so on. I guess gap insurance ain't a bad thing for some of these cases because now the vehicle loan is $3000+ greater than the vehicle's value after adding these things on !
It's a great money maker. People think theyarebuying an extended "warranty" but that is far from the case. Sit down and read the ENTIRE contract and you will se the amount of excluded items is more than what is actually covered. These are great for the companies that sell the and bad for the consume and the shops that have to deal with them.
I'm not sure that attack is warranted. Mark Zuckerberg still works at Facebook. Warren Buffet is still at Berkshire Hathaway. Elon Musk is still at Tesla and SpaceX. They could all retire easily.
Real GAP insurance is really cheap, most people don't understand what its is/does. It is not collision,comprehensive or liability insurance it only applies when the vehicle is deemed a total loss and pays the difference between the vehicle ACV and the remaining amount of the loan. I alway had to explain that to claimants and insureds, they sometimes think they have 2 policies and will collect twice, boy are theyPO ed when I explain that to them, I even got a TDI complaint. I've concluded that a large percentage of people are really clueless of what they buy especially since most people buy based on the amount of the monthly payment not the total cost.
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