How do I Avoid Auto Warranty Scams?

Auto warranty scams are becoming increasingly popular as a quick way to make money. An auto warranty is a type of insurance coverage. New cars come with an auto warranty that covers any mechanical defects and provides assurance that there will be no surprise maintenance costs. These warranties are typically for a specific number of years or mileage and are used for service at automotive dealership service centers.

There are three ways to avoid auto warranty scams: investigate, check references, and verify independently. Invest the time and effort required to reduce your risk of becoming a victim of auto warranty scams. The more information you have, the better protected you are.

When approached about purchasing an auto warranty, write down all the services included. Look for details on participating auto garages. Take note of the length of coverage that is provided, both in years and in mileage.

Check the fine print to determine who is responsible for payment to the auto garage at the time the service is provided. Avoid any agreement that requires you to pay the costs directly with a promise of later reimbursement. The risk of fraud is very high with these types of arrangements. Ask if there are any restrictions on the year, model and make of vehicle that is eligible for this coverage. Powertrain, electrical and air conditioning usually have different time frames and mileage values, along with a detailed list of exactly what components are covered.

Contact at least four different auto garages which are participating in the program. Visit one and talk with the service staff to verify that the warranty coverage would be honored. All auto mechanic licenses should be posted. If you do not see any, this is an unlicensed shop and you should not purchase the auto warranty.

The most common auto warranty scams offer complete vehicle coverage, with no restrictions on time or mileage, for a reasonable fee. There are no restrictions on the auto garages that you can use and all fees are due upon signing. Remember that auto warranties offered by companies based in another country are rarely legitimate. Due to their location, it will be very difficult to sue them if required. Save your money and avoid these types of programs.