Monday, August 15, 2011

A little info on warranties to pass along.

Some good information on warranties that may be helpful in negotiating your car purchase.

Warranties are a written promise that your vehicle will perform just as it did when it left the car lot, for a designated period of coverage time. Warranty stipulations vary by manufacturer, but here are the basics:
  • “Bumper to Bumper” warranty
    This is the standard warranty that comes with most new vehicles, and spans usually 3 years or 36,000 miles. This package covers nearly everything on the vehicle not affected by normal wear and tear, and may even include some other perks like roadside assistance, periodic maintenance, towing services, car rental reimbursement and some electronic equipment coverage. In most cases rust, emission control equipment, tires, brakes, hoses, belts, bulbs, wipers, drums or rotors are not covered.
  • Powertrain warranty
    This option is an extended warranty that is available as an upgrade when you purchase the vehicle. This coverage spans on average 60 months or 60,000 miles. This will provide additional coverage on the engine, transmission, drive axle and water pump. Rental car benefits and towing services are usually included. Powertrain warranties are also transferable to the new owner, should you sell your car.

    When purchasing your extended Powertrain warranty from the dealer, don’t be afraid to ask for discounts. Dealers may mark up the price over 100%, so be sure to negotiate. You can also check online to see if you can find an independent warranty company offering a better deal.
  • Corrosion/Rust warranty
    Body panels in new cars are often pre-treated in the factory with agents to protect against rusting and corrosion. This warranty is usually included in your purchase of the vehicle and protects rusting through on the sheet metal of the car, not on surface rust. Perhaps this is something you would want to consider if it is not included and you live in an area where the vehicle will be subject to inclement weather. However, by just keeping your car clean, there should not be a big problem with rust. During the winter, ensure that your undercarriage is clean and free of road salt.
  • Emissions Equipment warranty
    This coverage is required by law for all vehicles covering smog pollution reduction equipment for a minimum of 5 years or 50,000 miles.
  • Used Car warranty
    These are usually very limited on coverage options, but may span up to 30 days. Some cars are sold as-is, with no coverage available.
Make sure when shopping for a warranty of your own, you know the following:
  • How long will your vehicle’s coverage last?
  • What does it cover?
  • Who is allowed to service your car, and is the labor cost included?
  • What are the Terms & Conditions?
  • Are there any limitations?

Rebate vs. Special Dealer Financing
Once you’ve narrowed your choices down, it’s time to start really getting down to the nitty-gritty on pricing. First, take the invoice price of the model, and instead of obtaining the package price the dealer provides for the options you’d like in your car, check online at a buyer’s guide site like to find the prices of each option listed separately. Add those amounts to your invoice price, and you have a base figure to work with.

From here, apply any sales or rebates that you have gathered. These change weekly, so be careful when factoring in this number. You may think this is your baseline number, but alas – hold back for the holdbacks! The manufacturers sell the car to the dealer, but place a certain percentage (usually 2 - 5%) in a savings for that dealer. At the end of each quarter, the manufacturer issues a check to the dealer, and this guarantees that the dealer has profited that particular quarter. You can find the holdback rates within the same buyer’s guides where you will obtain the option pricing, and you can subtract the appropriate percentage from your figure, resulting in your new number – the number close to what you will be paying for that vehicle! (Hey, there’s still some overhead.) But remember that trade-in? Yep...that figure comes out of your number, too.