When I take my car in to the dealership where I bought it, I expect the service department to let me know if a needed repair is covered under my extended warranty. Recently, someone shared with me an experience which makes me wonder whether, along with the paperwork evidencing my warranty coverage, I've also misplaced my trust. This individual took his car in for a major repair and was given an estimate of $1,500 and told that his warranty did not cover the repair because his vehicle mileage exceeded the maximum warranty mileage. Later, thinking back to the time of purchase, he recalled that the very same dealer had sold him an extended warranty that covered repairs for a much longer period of time. In fact, he was "persuaded" to purchase an extended warranty for almost $2,000 when his credit report proved to be less than stellar. Along with a higher interest rate, financing was made contingent upon his purchasing the extended warranty. I can understand the higher interest rate, since that arguably relates to the greater risk assumed by the financing company. However, I don't understand how the purchase of a supposedly optional warranty reasonably relates to a customer's credit rating. In my opinion, requiring a customer who is already required to pay a higher interest rate to purchase a warranty as a condition of financing is equivalent to charging a double penalty. My question: Is this practice permitted by law?
Of course, the dealership's failure to recognize the extended warranty a couple of years later, despite its sophisticated computer records, only added insult to injury. It's hard for me to believe that a dealership that would coerce a customer to purchase an extended warranty in the first place would then innocently forget about its existence later on.
Posted by HK at August 1, 2004 12:55 AM | TrackBack