Autosanity|Just another WordPress weblog

I thought that extended warranties would be a great topic after I heard that a young couple had just purchased their first new car, a Toyota Corolla, and bought an extended warranty from the dealership.  I’ll tell you right now - I think that extended warranties on ANY car, new or used, is a terrible idea. And, in this case, an extended warranty on a new Toyota Corolla? When you look up “bulletproof” in Webster’s dictionary - you’ll see a picture of a Corolla. I mean, practically speaking, this is one of the last cars on the planet that could, even remotely, benefit from any extra “protection.”

I came across a great article from Lucy Lazarony of Bankrate.com discussing the dangers of wasting money on such frivolity that should be read before you get anywhere near a car dealership. I’ll add a few thoughts of my own (naturally) on the subject that I hope will convince you to not waste any money on an extended warranty.

• High pressure sales due to huge profit margins. Dealers often markup these warranties by 100% or more. And, for this profit, the dealer only has to push a few more pieces of paper - no effort here, unlike undercoating, window tinting and “Scotch-guarding” the interior. So, the incentive to push extended warranties is huge. Meaning that you may be under intense pressure to get the warranty. Just say NO.

• Most newer cars already have some warranty. If the car you’re buying is less than 3 years old, check with the manufacturer (go to their website directly) to see if you can transfer the warranty to your name. Remember, if you buy a warranty advertised as “8 years and 80,000 miles,” the factory warranty will ALWAYS be the primary protection for the vehicle. In this case, if the factory warranty is for 3 years or 36,000 miles, then that amount of time and mileage is wasted with an extended warranty. By law, all fuel and emissions -related hardware are warranted for 100,000 miles.

• Statistics show that most problems will show up within 60,000 miles. For many cars sold today, the factory warranty will cover the majority of problems that show up before 60,000 miles. It’s a bit like gambling, but when you buy the extended warranty, the odds that you ever get your money’s worth are stacked so highly against you - much worst than your odds in Vegas.

• Was it abuse, or just normal wear and tear? This is the type of problem I read about most frequently concerning the extended warranty. Don’t fool yourself into believing that a warranty will jump right in and repair your vehicle immediately after a problem. On the contrary - these companies have a HUGE incentive in finding ways to NOT fix your car. There will be some kind of an investigation, mechanic’s opinions, etc. to deal with. And, if the decision is not one you like, your car will be sitting, dead and/or in pieces while you fight things out. Often, the grief in using a warranty far outweighs any possibility that you actually will get your car back on the road, unless you pay for it yourself.

So, take that money that you would have spent on a warranty ($399 - $2500) and use it to get that car paid off, get rid of some high-interest rate credit cards, or start a Roth 401k for a happy retirement!

With all of the flooding in the Midwest this spring and summer, the used car market is bound to be awash (no pun intended) in used cars for sale that have seen some high water. It was estimated that 200,000 cars were damaged during hurricaine Katrina, and many of those were fraudulently “reclaimed” and sold back to the public. It’s interesting to note that many of the Katrina cars found a new home in Bolivia - car registrations went up by 11% right after Kartina in that South American Country.

A flooded car is a bad deal.

As a used car shopper today, you must be extra vigilant (especially those in those states that had all the flooding) to make sure that you don’t wind up owning a waterlogged vehicle. The National Insurance Crime Bureau (NICB) offers a free VIN (vehicle identity number) check to see if the vehicle you’re looking at has been recorded as water damaged. Of course, many cars never get reported as having been flood damaged, so it is the buyer’s duty to be certain that the vehicle of interest is as sound as possible.

Here are some clues to look for.

• Gravel or sand in the car - especially in places feet could never reach. Place your hand up under the dashboard (careful as there could be sharp steel up there) and feel for sand or silt. Most sellers would never clean up here, and if the car was flooded, there surely would be something left here by flowing water.
• Electrical problems with the car. If the car is pretty recent, it would be strange to have one or more electrical maladies present. Maybe an electric window, mirror or seat adjuster has quit. It could be chance, however if there are more than one non-working electric items, be suspicious.
• Is the car priced way below its KBB value? Unless it has some other obvious defects, or it is a particularly un-wanted type of vehicle, then a way-too-low price could be a clue here.
• Too much air freshener used. Are there 6 green air freshener “trees” hanging about the interior? Does it smell heavy with perfume inside? The seller could be trying to cover up a musty smell that is caused by water damage. The best way to find the real odor of a car is to leave the windows up on a hot day, then hop inside when it’s good and hot. You’ll also be able to tell if they’ve tried to cover up nicotine smells, too.
• Is the car from a flood-ravaged state? Duh - this one may be obvious but sometimes a buyer won’t put two and two together until it’s too late.

Always be a cautious buyer and do your due dilligence before you hand over your cash.

I’ve now joined the “shopping for a car” crowd  because of a new driver in the family - read about it here. I figured that since we mostly drive older American Iron with lots of miles (1994 Taurus Wagon, 123,000 miles and a 1998 Ford Windstar with 127,000 miles), I’d better be on the lookout in case one of these senior citizens decides to turn into a boat anchor with air conditioning. Plus, with three drivers in the family, it would be convenient to have another vehicle available for my daughter to use.

Looking through Craigslist the other day, I spied a 2002 Ford Focus Wagon (with 5-speed, no less) for $5,000. The photo showed a decent looking car with 72,000 miles, silver w/gray interior and the ad said “Handles AWESOME in the snow.” I was only mildly suspicious that the car had been advertised for over a week and not snapped up. So I set up an appointment to see the car that day. And here’s what I found.

1. I Rang the doorbell & the lady who answered seemed mildly irritated that a potential customer had actually driven out to SEE the car. Muttered something about her children. But, she did offer a key and told my wife & I to take it for a test drive, after some initial chit-chat.
2. Before we drove off, she ran around to the driver’s side rear door and removed her husband’s dirty baseball cleats & socks. This was not as appetizing as you would think.
3. Sat down and went to adjust the driver’s outside mirror. Wait - it’s not there, just a hunk of plastic & wires where a mirror USED to be. She said her husband knocked it off in a snowstorm by hitting a plastic road barrier. “I thought it was AWESOME in the snow,” I said. No reply was offered. The passenger mirror was also damaged - missing the front cover. But the glass was still there.
4. Both front seats were filthy, and the passenger seat had upholstery damage. “Sorry for it being so dirty, I didn’t expect anybody to see it today,” the lady said. I thought, Really? It’s advertised on the internet for millions to see. I suppose she really doesn’t WANT to sell the car.
5. Carpets, mats and dash were filthy as well.
6. I reached for the little lever to adjust the steering column (the one on the bottom) and, guess what? It’s gone, broken off. I Can feel the ragged edges of the part of lever that is still there, but there will not be any steering column adjustments today. The wheel sits way up - must be to clear a big belly, I thought. I feel like I’m getting ready to drive a bus. The woman professes no knowledge about this defect. We shut the doors and start the engine.
7. The car drove fine and we went a few miles up and down the highway. No surprises here - surprise!
8. After we got back, there were more discoveries. There obviously were child car seats on the back seats at one time because the upholstery was trashed - fabric worn down in the shape of two car seat bottoms. Note: When my wife and I hauled car seats in the back seat of our cars, we put a towel on the seat FIRST, then strapped the car seat in. Voila - no damage. That didn’t happen here. Both front seat backs were pretty heavily damaged where the children (in their car seats) had kicked them. Repeatedly.
9. How in the world could a headliner get so dirty? From front to back, black, grimy marks stained the fake mousehair. Kinda like chalk markings on a sidewalk. Maybe the children fixed cars after preschool and didn’t have a handi-wipe.
10. Cigarette burns on the passenger seat and a general “smoky” smell. The woman’s husband used to smoke, but he quit. Not soon enough.
11. Windshield broken. The woman offered to have that replaced next week.
12. One side of the fabric on the cargo bay (behind the seats) was worn down almost bare.

Needless to say, my wife and I were ready to let this one go and bid the lady adieu. There was some talk of a lowball offer, but in the end, we decided that these defects would be too hard to live with. Days later, the car is still for sale. I guess lots of others thought as we did.

It’s too bad that such a nice car was rendered a mess by careless and sloppy behavior. But, the preparation for sale, or lack thereof, turned out to be a great lesson for “What Not To Do When Selling Your Car.”