Worst Car Extended Warranty: Avoid These!
Michael Collado is a car buying expert and has been a professional automotive writer since 2009. He’s written about dealership sales, vehicle reviews and comparisons, and service and maintenance for over 100 national automotive dealerships. Previously, Collado was a copywriter at the ad agency TBWA/Chiat/Day where he worked on brand campaigns for Nissan, ABC Television, Sony PlayStation, and Energizer. His recognition in the ad industry includes awards from Communication Arts and The Clios.
Collado has a Bachelor’s degree from the University of South Florida, with a major in Psychology and a minor in Marketing.
Extended warranties allow you to protect your vehicle when the new car warranty has expired. However, there are many bad actors out there selling extended car warranties that are not worth the paper on which they are written.
To avoid any costly mistakes, we've researched which extended warranties to consider and which ones to avoid.
Table of Contents
Red Flags That Indicate Bad Warranty Company
The first thing you should do is look for the red flags that will tell you immediately that you are about to purchase a bad extended car warranty. Here are some warning signs to look out for:
- Bad Reputation and Reviews - The first thing that you should do is read the consumer reviews. You can go to sites like Yelp and Trust Pilot. If the extended warranty company has a less than three-star overall rating, then you should avoid the company.
- Lack of Industry Endorsements - Be sure to check automotive editorial websites such as FindTheBestCarPrice.com, JDPower.com, and ConsumerReports.com to look for any extended warranty companies that should be avoided.
- Aggressive Salespeople - Be on the lookout for salespeople who are pushing you to sign an extended warranty. Aggressive telemarketing tactics are a sure sign that you are being offered a bad extended warranty contract.
- Unclear Coverage or Lack of Transparency - A good extended car warranty should be clear about what is covered and what is not covered. If you don’t understand the contract, don’t sign it!
- Major Limitations - An extended warranty should protect you in case your vehicle runs into common issues that affect high milages cars. If the extended warranty coverage doesn’t cover common issues like transmission failure and brake system issues, then avoid it.
Extended Warranty Companies to Avoid
There are some notorious extended warranty companies that you should avoid at all costs. Here are the top three “Stooges” when it comes to bad extended warranty companies:
- US Fidelis - This former major player in the extended warranty world is not BBB accredited and the review site ComplaintsBoard.com is filled with unhappy customers. You will want to avoid this company at all costs.
- Direct Buy Auto Warranty - How bad is this company? Well, Direct Buy AuitDirect Buy Auto Warranty has an astounding one-star average rating on Yelp from 140 reviews. That’s all you need to know about them.
- US Automotive Protection Services - Not only does US Automotive Protection Services have an average one-star rating on Yelp, but they also have lots of complaints on BBB.org’s website.
What To Do If Warranty Company has scammed you
If you feel that you have been scammed by a warranty company, don’t worry. There are some steps that you can take to get your money back. Here are the three immediate steps that you should take:
- Reach out - First, you should reach out and contact the warranty company. As the saying goes, the squeaky wheel gets the grease. If you raise a stink, they may offer you a refund. Most people are not proactive and take this step. During your call, inform the company that you will take further steps - including legal action - if they do not give you a refund.
- File consumer complaint - Be sure to file a consumer complaint in your state. Taking this step can potentially help you get your money. Also, if enough people complain, the state will take action against the company.
- Legal action - Your final step is to take legal action. If the extended warranty cost is below $8,000, then you can take the company to small claims court. This is a big advantage because you don’t need to hire a lawyer and the company is not allowed to use a lawyer to represent them.
Tips to Avoid Car Warranty Company Scams
Make sure you don’t end up dealing with bad extended warranty companies. Here are three ways that you can avoid falling for an extended warranty trap:
- Avoid aggressive salespeople - If a salesperson is pressuring you to purchase a contract without answering your questions, then you should avoid the contract at all costs.
- Skeptical of unsolicited calls or recorded messages - Avoid purchasing any extended warranty contract from an unsolicited phone call or recorded message. Many unethical companies use cold calling to get new customers.
- Never give out personal information - No extended warranty company needs to know your personal information. If you get a call from a company that asks for your license plate number or driver’s license information, simply hang up.
Reputable and Trustworthy Extended Warranty Providers
At this point, you may think that the entire extended car warranty industry is filled with scammers. That is not the case, there are some trustworthy extended warranty companies out there. Here are three top choices.
- Endurance - Consumer Affairs gives Endurance an overall rating of 3.8 out of 5 stars from over 1,400 reviews. This is among the best average in the industry. Endurance has a reputation for providing excellent coverage at reasonable rates.
- CarEdge - This company is not only excellent when it comes to extended warranty coverage, but they also provide extended warranty coverage for electric vehicles.
- Olive.com - This is the creme de la creme when it comes to trustworthy extended warranty coverage. This company enjoys an overall 4.5 out of 5-star rating from Consumer Affairs.
Frequently Asked Questions
What are some of the worst extended warranty companies?
The three extended warranty companies to avoid include the following: US Fidelis, Direct Buy Auto Warranty, and US Automotive Protection Services.
What are some of the more reputable extended car warranty companies?
The three top extended warranty companies include the following: Endurance, YAA, and Olive.com
What are some warning signs of a car warranty scam?
Companies that use aggressive sales tactics, send unsolicited cold calls, and do not provide reliable customer service should be avoided. Also, avoid companies with low ratings and complaints on consumer review sites.
Who do I report car warranty scams to?
You can report extended warranty scams to your state’s consumer review board, the state attorney general. You can also take the company to small claims court in your city or county.