Hi there. I’m Saul Reisman here at Saul’s Autotek in Denver, Colorado. And today I’m standing in front of this 2012 Ford F-150.
Now the reason that I’ve picked this vehicle, in particular, to talk about is that this vehicle had a transmission failure. Major problem. The vehicle couldn’t move under its own power, came in on a tow truck. Very expensive repair, thousands of dollars. However, the owner of this vehicle had purchased at the time they purchased the vehicle, an aftermarket warranty. Now, when you buy a vehicle brand new, it’ll come with a warranty from the manufacturer, typically a few years, anywhere from 30 to 100,000 miles, just depending on what components are covered. However, when you buy a used vehicle, the dealership, whether it’s new on their lot, or it’s just a used mom and pop dealership, will often offer to you to purchase an aftermarket extended warranty.
Now the reasoning behind that is, they’ll sell it to you with the pitch of, hey, you’re buying this car. It costs a lot of money. You’re going to pay every month for it. You know, for an extra $22 a month, we’ll wrap into your payment, this warranty program and that way something breaks, you can still make your payments and afford the truck. You won’t be able to just go broke and say, oh God, I have to make this horrible, expensive repair and not make my payment and be upside down stuck with it, facing a repo or being unable to repair the vehicle and making the payment on something you can’t drive.
Well, I understand the reasoning behind that. I don’t support it, and the reason is, aftermarket warranty, companies have very, very specific stipulations in their terminology. Literally depending on what state they were written or licensed in. The reason for this is because the four largest insurance carriers in the United States own the majority of the aftermarket warranty companies in the United States. Because all an aftermarket warranty is, is an insurance policy, and they’ve been in the insurance business making billions and billions for over a century. So they already know how to take your money doing that to convince you, via fear, that you won’t be able to fix your car. You need this warranty.
Well, the reality is, I’ve been doing this for 10 plus years. I’ve dealt with thousands of aftermarket warranty claims, and I can tell you that there’ve been two times in my career that I’ve seen an aftermarket warranty company pay more than what they were paid in the first place ever. The most common thing that we’ll see is an aftermarket warranty will cover some of the components that failed, but not all. In the case of this vehicle, the transmission failed. The aftermarket warranty company said the has got 150,000 miles on it. We would like to send you a used transmission with 147,000 miles in it to put in the vehicle as that’s fewer miles than what are on the vehicle otherwise. So it is of like kind and quality of the vehicle, and as a result they only wanted to pay for that 147,000-mile old junkyard transmission to put and replace this 150,000-mile junkyard transmission.
Now, most aftermarket warranty companies will offer to cover a portion of the repair like this company did. They want us to put in that junkyard transmission even though they know this one failed at 150 000, they think one with 3000 miles less will be in perfect shape. Well realistically, that doesn’t make a lot of sense. Transmissions are a wear item. They use clutch packs inside that are made out of the same material your brake pads are made out of. If your brake pads were burned up, would you let somebody put ones on that had a 147 000 miles? No way. You would tell them they’re crazy and there’s no way you’re going to do that. That’s not safe.
However, all the warranty company actually has to do by law is to replace it with something of lesser mileage than it currently has. So though they often cover almost all of the labor to replace the transmission, they only want to pay for that junkyard unit. Well, that junkyard unit costs about $600 and the replacement unit that’s either been rebuilt by a major rebuilder or new from the dealership costs between $2 530 and $3 500.
So the reality is this warranty isn’t helping this guy very much. So we talked to the owner and we said, “We want you to have the most reliable truck there is. We offer a three-year warranty on anything we do and we can’t support that warranty putting in a junkyard transmission with a 147 000 miles. If you want us to do it, we’ll do it. But we can’t honor a warranty for it since it’s a junkyard part. If you want us to do it the right way, we would love to do it the right way and put a new component, a rebuilt component into it so that we know it’s going to work right and it’s going to last. That we can follow our warranty and that we can keep you on the road.”.
So we always present to our guests every option possible. Even though the warranty company says, “We’re going to pay to aTt to put in a junkyard transmission,” we let the owner know that they could do that and it would only cost them their hundred dollar deductible. Or if they want a better unit they can put in a better unit, but it will cost them substantially more, even though the warranty will cover a portion of it. Now in this case, the owner opted to do the better repair. They want the more reliable repair. They want to guarantee it’s going to work right, and we’re happy to support them with that. Now their warranty covered almost $1 500 in labor and parts. Well, that sounds great, but the repair’s over $4 000 and they paid over $4 000 for the warranty, something doesn’t add up.
And that’s why as a tenured auto repair shop facility owner, I will tell you that the best way to get your money back out of a warranty program is to take that money and put it in a savings account or a certified deposit. If you use a bank, you get a guarantee at the start of it that you’re going to get all your money back and you’re going to make interest. Maybe not a lot, but you’ll have more at the end than you started with. It also means that instead of spending a monthly payment towards something that might not get you anything, if you need that money because your transmission fails, you can call the bank and say, “Hey, I need that.” And they’ll give it to you right then and there. No calling and opening a claim, no waiting two weeks for an inspector to come and look at it. No waiting two weeks to get an approval from the warranty company. No more downtime for you.
We want you on the road. You don’t want your vehicle here for two weeks. I don’t want your vehicle here for two weeks. I want to fix it. I want to get it going. Your warranty company wants to pay you less than market value and take your time. Now, remember, time is something you can’t get back. You can give somebody their money back. “Here you go.” How do you give somebody their time back? Well, we care about your time, so we want to make sure that we respect your time. So we respectfully tell you that we think aftermarket warranty programs don’t support you. They support insurance companies making money, but we support you. So we suggest that if you’re going to spend thousands of dollars on something and you want it to be on that warranty, you should take that extra couple of grand and throw it in the bank. You’ll have it when you need it. You won’t have to ask anybody for permission for it or just get permission to get half of it when you really need all of it. Like this vehicle does.
Here at Saul’s Autotek, we’re going to keep you on the road. We’re going to keep you reliable and we’re always going to give you every option for the best repair possible. We’re proud to stand behind this vehicle because we know it’s going to last another a hundred thousand miles with the unit that we just installed. That makes me comfortable and confident. The same feeling it should give you. We want you comfortable and confident in your vehicle every day. We don’t want you driving around with a junkyard transmission because the warranty company didn’t want to pay for it and you’re worried it might fail again and cost even more downtime. Who knows what we’ll deal with then? We want you to have peace of mind, so here at Saul’s Autotek, we offer peace of mind seven days a week, 365 days a year.
Come and see us. 303-290-9900. if you’ve got a transmission problem or just a concern about your aftermarket warranty, we’ve dealt with them for decades and we’d be happy to help with yours. Talk to you soon.