Dave needs car repairs and has a warranty he bought with the car, but the warranty company went bankrupt!
QUESTION: Dave bought a car in 2001 and got the extended warranty. It has 80,000 miles on it now and it’s having problems. He took it in, and found out the warranty company went bankrupt. The repair shop offered to pay for half the repairs in good faith. Is this deal legit, and what’s going on? Dave tells Dave the deal.
ANSWER: If you buy a warranty from a company, and they go bankrupt, you don’t have a warranty anymore. The dealer is just the marketer for the warranty company. When they sold you the warranty, 50% of what you paid for it was commission. Very little of it goes to cover car repair expenses. It’s always better to not buy extended warranties. Whatever the cost of the extended warranty is, set aside 50% of that and use it to pay for car repairs.