I do not nor have I ever owned a car will someone explain
In: Other
OK, a lot of scammers have hooked onto this, but in the original format:
Car (and white goods) manufacturers legally have to offer a minimum level of guarantee on new goods, so they build an average cost into a new car. Higher quality cars should be less likely to break down (and also less likely to be abused by the owner) so their guarantee costs would be smaller.
The manufacture can offer some breakdown insurance for a longer time than the standard one, either financing that risk themselves, or through a company that takes the risk on. So if it breaks, the auto dealer fixes it, and the risk company pays for it.
That all goes belly-up quite fast. The repairs are farmed out to a back-street mechanic, the warranty is limited by time or mileage or excludes major components, the insurer disappears, or the deal was fake from the start.
Personally, I never owned a car that I couldn’t afford to walk away from.
These companies are either outright scams looking to steal financial information, or are offering more mundane scams offering a junk warranty that they’ll never actually pay out on.
They make a lot of robocalls and send out “FINAL NOTICE” letters excitedly “warning” you that your opportunity to extend the warranty on your car is about to expire and that if you don’t want to lose out on this opportunity you need to call them right now. The letters often look somewhat formal, and often include your actual car information so they look somewhat official, but they’re 100% scams.
When you buy a new-ish car, it will generally have a factory warranty. This means for a period of time and/or mileage- say, 5 years/100,000 miles- the dealer will handle otherwise expensive repairs.
When the warranty expires, the owner is completely financially responsible for repairs going forward. That can be a frightening prospect for many people, especially the elderly or poor.
Predatory warranty companies prey on this emotion by aggressively marketing non-factory “extended” warranties that claim to provide the same assurance that the factory warranty did. Generally however, these warranties are little more than scams- with extremely high deductibles, limited parts coverage, or numerous escape clauses that allow the provider to deny coverage. Or, it’s a scam entirely meant to harvest financial information.
The reason that the extended warranty scam is so culturally notable is that car registrations (in the US, at least) are semi-public record, so these companies can see when someone buys and registers a car- and aggressively solicit them. So a large portion of the population has experienced it.
Also, the people who absolutely no nothing about their car’s warranty, think that hiring a robo-caller to ‘extend it’, and are willing to give their financial information to a stranger over the phone are all pretty much the same people, so it’s an easy tactic.
Scam..trying to steal your credit card info, either out right steal it or sell you a warranty that they will never honor or pay out on. Either way, steal you info.
A bunch of scammers using falsified caller ID numbers will attempt to convince victims to purchase such an extended warranty, hoping the victim actually will hand over their payment information
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