Why You Should Never, Ever Cosign for Anyone, Ever.
Dear Attorney Zeigler,
We purchased a new car a couple months ago and we spent $3500 on an extended warranty. The finance guy told us that we would not get our loan approved without it. A friend told me that it didn’t sound right, but I want to have the extra protection of the extended warranty. What should I do?
That is a concerning practice. I cannot think of a lender that would require a buyer to purchase an extended warranty on a car. It is especially concerning that you were told to buy one for a new car. You should consider filing a complaint with the Consumer Protection Unit of the Georgia Department of Law (www.consumer.ga.gov).
Second, an extended warranty on a new car is practically useless. Here’s why:
An extended warranty, or vehicle service contract, is an agreement to cover the cost of repairs to problems like broken components or manufacturing defects. Extended warranties cover repairs after the manufacturer’s warranty has expired. They usually do not cover wear-and-tear or routine maintenance items such as brake pads, tires, air cleaners, or oil changes. Typically, an extended warranty contains language that states that it will not cover any component that is already covered by a manufacturer’s warranty. Since they cover your vehicle for a set number of years or miles (or both), it makes little sense to purchase an extended warranty that will run at the same time as your manufacturer’s warranty. That is not to say that you should not ever purchase an extended warranty. 
Instead, consider purchasing an extended warranty when your manufacturer’s warranty is close to its expiration date. Keep in mind that many extended warranties also have a waiting period before coverage starts. Purchasing the extended warranty or vehicle service contract in this way requires you to be aware of your vehicle’s warranty and its expiration date, but it could save you thousands in the cost of a warranty and the interest associated with financing it.
You can buy an extended warranty from an auto lender or insurance company. You should carefully review what each extended warranty covers and compare costs before purchasing. Evaluate the value of any extras, such as towing, trip interruption protection, or roadside assistance. Compare the value of those plans that require you to pay a deductible before the plan kicks in and those that will pay every dollar of repair costs.
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