If you think that the negotiating part of buying your new car or truck was the hard part, then you'd better take a deep breath and think again.
Right after that ordeal is over, you are rolled right into the next stage called "F&I", which stands for Financing and Insurance, and is where the Finance Manager will offer you an "extended warranty" or service contract and "insurance".
Extended Warranty
Make sure you ask where you can have the vehicle serviced. Most extended warranties require that if you are within 50 miles of the dealership, the warranty can only be honored by that dealership. Not a problem if the dealership is right next to your house, but if you have traveled a distance to purchase your car, then this can be a REAL problem, because, yes, you guessed it! You have to bring your car to the dealership that sold you the extended warranty, even if it means driving 40 miles!Make sure you get a list of everything that is NOT COVERED by the extended warranty and what happens if your car breaks down due to a NON-COVERED item. Find out who (usually an insurance company) backs the extended warranty and what is their Best's Insurance Guide Rating.
Always remember that EVERYTHING is negotiable, and since some dealers markup extended warranties as much as 1000%, make sure that you negotiate the price of the warranty as hard as you did your car. Also remember that you don't have to purchase your extended warranty on the same day as you by your car. Reputable warranty companies will let you take up until the time that your factory warranty expires to purchase and extended warranty.
You cannot be required to purchase an extended warranty in order to obtain financing from the dealer, and should you purchase an extended warranty that you really don't want, you have a full 30 days to get your money back for the extended warranty, even if you financed the warranty along with the vehicle.
Warranty Terminology and Definitions
Basic/Factory Warranty - This is the warranty that is included with the vehicle by the manufacturer as required by the Uniform Commercial Code that requires all products to meet certain standards of merchanability. It is specified in "time period"/"miles."
Bumper to Bumper Warranty - The most comprehensive portion of the manufacaturer's Factory warranty, that covers all parts and systems, with the exception of certain "wear" items such as tires and wiper blades.
Emissions Equipment Warranty - Required by law for all vehicles covering smog pollution reduction equipment for a minimum of 5 years or 50,000 miles.
Extended Warranty - Is actually a service contract (insurance policy that covers mechanical repairs) that covers various mechanical systems beyond other warranties. Some manufacturers are offering extended warrant options on their vehicles.
Powertain/Drivetrain Warranty - Covers the engine, transmission, differential, and generally extends beyond the Bumper-to-Bumper warranty by a specfic number of months and miles, and cover items that could be a major repair expense.
Corosion/Rust Warranty - Generally extends beyond the Bumper-to-Bumper warranty and covers repairs due to rust or premature deterioration of major sheetmetal components.
Secret Warranty - Usually called Service Bulletins, they are offered by the manufacturer to repair defects that occur in a significant number of vehicles, that are NOT coverev by other factory warranties.
A listing of extended warranty internet sites is available here.