Extended warranty on car purchase?

[CHCRandy]

They are not charging sales tax on the $17,000 trade. She originally paid $17,500 for Equinox, -$500 trade + $3600 for extended warranty (which can be cancelled and refunded), + $700(which can be cancelled and refunded) for tire and wheel protection, and nearly $1500 in sales tax + doc fees, etc. Total due around $22,700

The Escape deal looked kind of like this. Advertised Price was $21,350 but they say it didn't include the $1900 cost of CPO warranty which has to be included since car has already been certified and paid(I don't agree with this but have no leverage). So that made Escape starting price around 23,000 - 17000 trade - 4300 down payment from warranty refund + 440 sales tax on the 6000 I guess. SO it was 23,000 + 440 sales tax should be 23,500 or so, but they are coming in at total due of $25,100 on Escape.

I think they are taking the 23,000-17,000-4300+440 = 2100 and then adding that to the original loan amount of 22,700.

Does this make any sense to you guys? I honestly think they are doing some shady shenanigans here but this is confusing to me (which is part of their plan I think).

Edit: I think I figured out the $1600 discrepancy. I think it has to do with the sales tax and trade in, but still can't figure it out in my head. I think they are not refunding the sales tax and most likely not paying the sales tax on the Equinox. They charged her sales tax when she bought it, but now they just want to allow $17,000 trade in........shouldn't they really give her $17,000 + $1,190 sales tax?

 

[M67]

An Equinox is not a Ford.

Good call. Half asleep when I posted that and the equinox didn't register

 

[CHCRandy]

Personally I'd get out of the whole deal if possible. She got a junk vehicle and now they want to finance her into another that doesn't have a good history.

I think that would be her preferred preference, but I have torn apart her contract on the first vehicle and having no luck finding a legal leg to stand on. I am all ears though. The only things I could find I can not prove, since it is not in writing. 1. The salesman told them it was an AWD then when it went in service at Chevy they said it was a FWD, not AWD. I tried finding an ad to collaborate the dealer misrepresented the vehicle and can not find a listing any longer. 2. The salesman told her and the son in law when they bought it that there was a 14 day "love it or leave it" deal, if you don't like it bring it back within 14 days. We all know that is BS though. Wish she would have had me with her when they went, I would have had that in writing.

 

[BehindBlueI's]

They are not charging sales tax on the $17,000 trade. She originally paid $17,500 for Equinox, -$500 trade + $3600 for extended warranty (which can be cancelled and refunded), + $700(which can be cancelled and refunded) for tire and wheel protection, and nearly $1500 in sales tax + doc fees, etc. Total due around $22,700

The Escape deal looked kind of like this. Advertised Price was $21,350 but they say it didn't include the $1900 cost of CPO warranty which has to be included since car has already been certified and paid(I don't agree with this but have no leverage). So that made Escape starting price around 23,000 - 17000 trade - 4300 down payment from warranty refund + 440 sales tax on the 6000 I guess. SO it was 23,000 + 440 sales tax should be 23,500 or so, but they are coming in at total due of $25,100 on Escape.

I think they are taking the 23,000-17,000-4300+440 = 2100 and then adding that to the original loan amount of 22,700.

Does this make any sense to you guys? I honestly think they are doing some shady shenanigans here but this is confusing to me (which is part of their plan I think).

Edit: I think I figured out the $1600 discrepancy. I think it has to do with the sales tax and trade in, but still can't figure it out in my head. I think they are not refunding the sales tax and most likely not paying the sales tax on the Equinox. They charged her sales tax when she bought it, but now they just want to allow $17,000 trade in........shouldn't they really give her $17,000 + $1,190 sales tax?

They aren't going to refund sales tax. This isn't like returning merchandise at a store, you aren't "unbuying" the car. You are taking an item you purchased and applying it's value toward a new purchase.

Purchase price - trade in amount = amount taxed.

I *think* warranties are subject to sales tax as well, but am not 100% sure. Down payment does not affect tax calculation.

 

[CHCRandy]

They aren't going to refund sales tax. This isn't like returning merchandise at a store, you aren't "unbuying" the car. You are taking an item you purchased and applying it's value toward a new purchase.

Purchase price - trade in amount = amount taxed.

I *think* warranties are subject to sales tax as well, but am not 100% sure. Down payment does not affect tax calculation.

And if they did a "Refund" they would refund sales tax I guess, but then charge you sales tax on entire Escape price, with no difference in cost? So does this deal seem legit to you BBI? I think the Escape has to be worth more than the Equinox...so it only makes sense she is paying a little more to swap, I guess. She is basically paying the warranty refunds in difference, but payment dropped. Thank you guys for taking the time to look this over and reply.....I hate being a skeptical dog sometimes.

 

[BehindBlueI's]

And if they did a "Refund" they would refund sales tax I guess, but then charge you sales tax on entire Escape price, with no difference in cost? So does this deal seem legit to you BBI? I think the Escape has to be worth more than the Equinox...so it only makes sense she is paying a little more to swap, I guess. She is basically paying the warranty refunds in difference, but payment dropped. Thank you guys for taking the time to look this over and reply.....I hate being a skeptical dog sometimes.

Right. If they did a refund, you'd get all of the original purchase price back (they'd probably hold back doc fees, which are just profit for the dealership but they claim is paying for the cost of the paperwork to transfer ownership) but then you'd owe sales tax on the entirety of the new vehicle. If it's a legit deal or not, I don't know the value of the vehicles involved so I can't really say. Look up the values on Edmunds or KBB and see if they are comparable.

If she's made any payments yet, you also want to make sure that it doesn't get eaten along the way. Also watch for loan origination fees being paid again.

Honestly, my gut says they are making money coming and going. Dealerships aren't in the habit of swapping out cars just because, unless there's a legitimate issue that can't be repaired. All of the add-ons make me more suspicious. Remember dealerships have five profit centers and the F&I office is one of them. Pay close attention to the paperwork, especially if you aren't bringing your own financing.

 

[CHCRandy]

Right. If they did a refund, you'd get all of the original purchase price back (they'd probably hold back doc fees, which are just profit for the dealership but they claim is paying for the cost of the paperwork to transfer ownership) but then you'd owe sales tax on the entirety of the new vehicle. If it's a legit deal or not, I don't know the value of the vehicles involved so I can't really say. Look up the values on Edmunds or KBB and see if they are comparable.

If she's made any payments yet, you also want to make sure that it doesn't get eaten along the way. Also watch for loan origination fees being paid again.

Honestly, my gut says they are making money coming and going. Dealerships aren't in the habit of swapping out cars just because, unless there's a legitimate issue that can't be repaired. All of the add-ons make me more suspicious. Remember dealerships have five profit centers and the F&I office is one of them. Pay close attention to the paperwork, especially if you aren't bringing your own financing.

I booked both cars and Equinox is 17,500 non CPO retail and Escape is 23,000 CPO retail. I think they are trying to be fair, but I imagine they are trying to make a little to cover the repairs on the Equinox and hassle, since they are not in business to lose money. Then I got involved and offered to co-sign which then dropped % from 8%(don't even ask) to 2.9% and possibly an additional $750 rebate. I am sure they are pissed they are losing out on commissions on warranties and bonus for jacking % rate, which is why they are now demanding the $2000 CPO warranty be added to listed price. I know they jacked % rate up because they offered her 5% on the Escape. I think they were trying to get payments to be same, but she can get 750 rebate with Ford. Her credit score is not good enough for Ford, but mine was. I think it is about as broad as it is long....but I appreciate your time helping me understand. Sure wish people could just be honest to one another.

 

[1911ly]

She needs to call Ford Customer service. The Ford ESP, Extended Service Protection, is valid in any State, and Canada. Sounds like she went in with the wrong attitude.

This was 21 years ago. And my wife is no longer with us. Back then the extended warranty was with an "insurance company". And pretty much a joke. The car was a POS from day one. I could tell stories of our Ford experience that would amaze you. But I won't crap up the ops thread.

 

[jkaetz]

I personally never buy any warranties.....but she is pretty adamant that she wants an extended warranty. Any of you have any suggestions or advice? I told her if her luck is like mine, if she buys warranty she will never need it and if she doesn't buy warranty the car will blow up 1 day after factory warranty. Just looking for wiser input....... thanks.

Hi Randy! With regards to warranties, I declined the extended warranty on my wife's German vehicle with a very recognizable star on the hood in 2011. Most people would say I am crazy but almost 100k and 7 years later we are currently even or below the cost of the warranty with repairs. As others have said, paying yourself the warranty $$ and you'll likely be better off. Of note I have not gone back to the dealership save for one of the out of warranty repairs. Independent shops are far more reasonable with hourly rates.

Good luck with the dealership. I've recently discovered the only thing worse than a car salesperson is a home salesperson.

 

[luger fan]

This was 21 years ago. And my wife is no longer with us. Back then the extended warranty was with an "insurance company". And pretty much a joke. The car was a POS from day one. I could tell stories of our Ford experience that would amaze you. But I won't crap up the ops thread.

There, as Shakespeare said "Is the rub". The Ford ESP is the BEST in the business. Most aftermarket were a joke and many we told the customer we were glad to fix car but YOU spend 6 months TRYING to get your money back.

 

[AtTheMurph]

$700 tire warranty? Seriously?

Sure.
$700/4 = $175

New tires cost about $175 so when your tire blows in 55k miles you get a new one! If it doesn't you paid for 2 sets of tires but felt better because you had insurance. That kind of peace of mind is priceless.

 

[CHCRandy]

Hi Randy! With regards to warranties, I declined the extended warranty on my wife's German vehicle with a very recognizable star on the hood in 2011. Most people would say I am crazy but almost 100k and 7 years later we are currently even or below the cost of the warranty with repairs. As others have said, paying yourself the warranty $$ and you'll likely be better off. Of note I have not gone back to the dealership save for one of the out of warranty repairs. Independent shops are far more reasonable with hourly rates.

Good luck with the dealership. I've recently discovered the only thing worse than a car salesperson is a home salesperson.

Hi Jason,

Yes sir. I agree with you on warranties. I never buy them and most of my truck repairs I do on my own. I bought a new Malibu last year and didn't buy any extras, I can still extend if I decide to keep. I need a new truck and will probably get another F250 since I pretty much have ball joints and wheel bearings down to a science on it.

Dealership car salesman suck bad! I think it is BS they advertise a car for $21,350 as a certified pre owned then force customer to buy the $1995 CPO since it is already done. You can go to Ford Protect and buy a 100,000 mile bumper to bumper for $2600....seems like it is misleading to consumers and false advertising.

I have not bought a house in 20 years but I work with enough realtors to know that is some cut throat business as well. You think about it and selling houses is a lot like cars, you have a lot of people involved in the deal and that usually complicates matters....and I think sometimes they like to complicate in order to confuse. Always easier when 2 individuals are just dealing with each other direct. So did your house buyers decide they could live with the roof? Hope it worked out for you.

 

[jkaetz]

So did your house buyers decide they could live with the roof? Hope it worked out for you.

It did work out, after two other reports stating that the roof did not need replacing they accepted and we closed last Monday. Thanks again!

 

[Ziggidy]

My car is currently in the shop, 6 days waiting on parts. My fob went bad and my struts were leaking. I have 72k on a 2011 T&C. Warranty will cover it all, including my rental for the time it’s in the shop.

IMO, you’ll never know if it was the right decision until you need it. My last 4 autos had the extended and I strongly recommend them.

I always shop online for them and get a pretty good discount.



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[breakingcontact]

I think statistically they don't pay off. That being said, my $2200 extended warranty just covered $4000 in transmission and driveshaft work.

 

[mmpsteve]

In 42 years of driving, I've never paid for the extended warranties. I've been pretty lucky not to have had big ticket items go bad, so if I have a problem now, I'll just pay up and still be money ahead. It is getting riskier as cars become more complex, though.

 

[fnpfan]

I work/run the office in a shop, I have dealt with dozens of these warranty companies, most of them are useless... so be very aware of the coverage and fine print or you are just dumping money down the tubes.

 

[Ziggidy]

I have had extended from Ford, Chrysler and Chevy (GM). I shopped online for them and got a discount each time, substantial. I usually keep my cars for a while and they paid off. The one time I sold it before the extended was over, I get a rebated refund.

This guy is a happy camper.

I have heard horror stories about 3rd party - which I never had and never will.