Secret Warranties Can Save Car Owners Thousands in Repairs

Getty Images An unexpected auto repair bill can blow a big hole in your budget, but there may be a way to save up to thousands of dollars with just some research. According to the November issue of Consumer Reports, many consumers are getting ripped off because automakers don't widely promote programs that provide free or deeply discounted service work. Such secret or hidden warranties cover often cover things like air conditioning system problems, peeling paint or faulty parts that don't affect the safety of passengers. They contrast that to recalls that cover problems relating to safety, such as the General Motors (GM) ignition switch recall earlier this year. "If you're having a problem, particularly a recurring one," said Jonathon Linkov, deputy auto editor at Consumer Reports, "definitely do some leg work. Talk to the dealer service department." Input your vehicle identification number on the manufacturer's website to find such service actions or campaigns. Tougher Task If You Bought a Used Car Automakers often learn about problems with their vehicles from consumer complaints. They may be frequent enough to pop up in a statistical analysis, but not so widespread that they affect all vehicles of that particular model. If that's the case, the manufacturer often offers a limited extension to the warranty. The magazine reports that, at any given time, consumers can find "one or two of these out-of-warranty service actions from many manufacturers." Second or third owners of a vehicle are more likely to miss out on these repair offers, because dealers' letters of notification usually go only to cars' original buyers. Such offers also are usually included in technical service bulletins the automakers send to their dealer service departments. So if you're driving a used car or don't use a dealer for repairs, you really have to search out these offers. "The general idea of a program that has a running fix is great," said Linkov, "but the fact that you have to dig to find it is a problem." Consumer Reports says that "if your car develops a notable problem that's not connected to wear and tear or collision damage, it might be worth checking" to see whether there is a technical service bulletin related to it. Even if no warranty extension is available, a common problem could give you leverage in negotiating a discount. Linkov says you can push the issue with a regional service manager. "It never hurts to ask." $4,400 or Free? You Decide So how much money can you save by uncovering a hidden warranty? A Consumer Reports staffer got an estimate on repairing the air conditioning of a 2007 Honda (HMC) CR-V. The price: $681, plus tax. But after asking Honda customer service about an extended warranty, the price for the repair came down to $100. Another Honda needed a lower block replacement. The bill for parts and labor came to $4,400. With the warranty, the repair was free. Consumer Reports notes that Honda is among the most reliable cars on the road and that its service campaigns are "unusually generous." Linkov notes that hidden warranty programs often cover problems that affect only a relatively small number of cars. To research these secret and hidden warranties, you'll need your vehicle identification number. Then call the dealer's service department, check the automaker's website, look in the "owners" section of SaferCar.gov or go to ConsumerReports.org/carrecalls. When you get into that back office and start signing all the paperwork, the topic of extended warranties will come up pretty quickly. Ellie Kay, an author of 15 finance-related books, notes that such warranties are negotiable. "Before you sign on the dotted line, check out other sources of extended warranty pricing," she says, such as those provided by your bank or insurance company. "Then either use this lower price in the financial and insurance office for negotiation to get them to match the price, or buy it from the other source." A scenario from Kay during her last car purchase: "The dealer quoted me $4,200 for a three-year extended warranty for my 280SLK Roadster Mercedes that included a $250 deductible. USAA -- my insurance company -- gave me a three-year warranty for $3,200 with zero deductible. I've used the new warranty once already. The bill was $1,100 and I paid nothing because of the zero deductible." Bottom line: The default extended warranty is almost always the worst deal. 1. You'll get the dealer's extended warranty You may have a monthly payment figure in your head when shopping for a new car, but your interests are better served when you focus on the out-the-door price instead. "A sales rep can often trick you by offering a lower monthly payment, but [one that] will stretch out the terms of the loan," says David Bakke, a car buying expert at MoneyCrashers.com. You can reduce the overall cost of the car via negotiation and by skipping accessories and add-ons. "Things like navigation systems, rims, floor mats or car audio/entertainment systems can be purchased from a third party vendor, usually for less."