Post Content

 

When buying a car from a Massachusetts dealer, consumers might hear about automotive service contracts and extended warranties.  Both offer protections against certain problems that may arise, but there are differences between them.

An extended warranty is considered part of the purchase price of the car.  A common tshutterstock_577045444ype of extended warranty for used cars is the “Certified Pre-Owned” warranty, in which a manufacturer provides an additional protection for the vehicle.  These certified pre-owned cars go through an inspection process and must fit certain criteria such as age and mileage.  The criteria varies by manufacturer.  When purchasing a car with an extended warranty, make sure that your documents clearly explain what is and isn’t covered.

Service contracts are optional purchases and always cost extra.  They may be offered by manufacturers, dealers, and private companies.  They also provide protections against problems that may arise, and the details of what is and isn’t covered should be clearly listed in the service contract.  Consumers who finance their cars are often encouraged to add the cost of the service contract to the amount of the purchase that is being financed.  Be aware that the larger the purchase, the greater the amount of finance charges there will be.  Some car dealers partner with outside lenders such as banks and credit unions to provide the loans. Non-bank lenders such as “buy here pay here” dealerships must be properly licensed through the Division of Banks (http://www.mass.gov/ocabr/government/oca-agencies/dob-lp/consumermoneymatters/).  Consider it a red flag if the dealer tells you that they’ll only sell you a car if you also buy a service contract from them.

If your desired motor vehicle purchase has an extended warranty or a service contract, read the fine print before signing the paperwork!  Be sure the contact information for who you should contact in the event of a problem or concern is clearly stated.

Defects that impair the use or safety of used motor vehicles may be covered under the Massachusetts state lemon laws if the vehicle had less than 125,000 miles at the time of sale (http://www.mass.gov/ocabr/consumer-rights-and-resources/autos/lemon-laws/used-vehicle-warranty-law.html). Consumers who have extended warranties or service contracts are required to take reasonable steps to have their defects fixed under those protections before turning to the lemon laws.

More information about the differences between service contracts and extended warranties can be found at https://www.consumer.ftc.gov/blog/warranties-and-service-contracts-101.

If you have additional questions, contact the Office of Consumer Affairs and Business Regulation by calling our Consumer Hotline at (617) 973-8787, or toll-free in MA at (888) 283-3757, Monday through Friday, from 9 am-4:30 pm. Follow the Office on Facebook and Twitter, @Mass_Consumer. The Baker-Polito Administration’s Office of Consumer Affairs and Business Regulation along with its five agencies work together to achieve two goals: to protect and empower consumers through advocacy and education, and to ensure a fair playing field for all Massachusetts businesses. The Office also oversees the state’s Lemon Laws, data breach reporting, Home Improvement Contractor Program and the state’s Do Not Call Registry.

 

 

 

Written By:

Recent Posts

Doc Fee Audit posted on Jun 22

Doc Fee Audit

  “Doc fees,” short for “documentation or documentary fees,” are fees that may be charged by a car dealership as part of a motor vehicle sale. They are neither required nor prohibited by Massachusetts state law. What’s the scoop on doc fees? Doc fees generally   …Continue Reading Doc Fee Audit

Why Dish Network’s Do Not Call List Violations Matter posted on Jun 20

Why Dish Network’s Do Not Call List Violations Matter

  Earlier this month, a federal court in Illinois ordered penalties totaling $280 million against Dish Network as a result of litigation brought by the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) for violating the FTC’s Telemarketing Sales Rule and the   …Continue Reading Why Dish Network’s Do Not Call List Violations Matter

Preventing Elder Financial Abuse posted on Jun 15

Preventing Elder Financial Abuse

  It is estimated that five million elders are exploited each year in the U.S, costing them $36.5 billion annually. Yet, studies show that only 1 in 14 cases are reported to the authorities. As a group, the elderly control a large amount of the   …Continue Reading Preventing Elder Financial Abuse