The difference between factory and extended warranties.
I read your article about the study you did in which dealers charged more for the same repairs than independent shops. But I have a question. I have a competent mechanic, who I have used on my vehicles for years. However, I recently bought a new Honda Accord and purchased the extended warranty. Now I'm reluctant to take my car to this competent mechanic for repairs because I'm concerned that the dealer won't honor the warranty and pay for the repair bill. Might he use this as an excuse to not pay my repair bill? -- Sam
RAY: Well, now that you've given him the idea ...
TOM: Actually, we need to differentiate between the factory warranty, the extended warranty and scheduled maintenance, Sam. What you say is true for the factory warranty (that's the 3-year/36,000-mile coverage that comes with every new Honda). Repairs or recalls covered under that warranty are handled exclusively by Honda dealers. And if you go someplace else and try to send the dealer the bill, he'll tell you to go jump in a transmission-fluid-filled lake.
RAY: But the extended warranty is a completely different story. Most extended warranties that dealers sell are administered by third-party insurance companies -- not the vehicle manufacturer. And the insurance companies don't care where you get the repair made.
TOM: Here's how it works: When a customer of ours has an extended warranty, we have to call the insurance company before we make the repair. After we spend an hour on hold listening to Wayne Newton Muzak, we tell the representative what's wrong and what we plan to do, and he or she gives us an authorization number. Then the deal's done. After that, the insurance company is committed to paying the bill. And the money can be sent directly to the repair shop, or you can pay the bill and have the reimbursement sent to you.
RAY: And it works the same way for the dealer. With a third-party extended warranty, dealers have to get preapproval for repairs, too.
TOM: Now, for scheduled maintenance (i.e., oil change, 7,500-mile service, 15,000-mile service), you can go anywhere you want, EVEN during the factory warranty period. These services can be much cheaper if done by your own mechanic. And having them done by someone other than the dealer does not void your warranty, despite rumors to the contrary.
RAY: So I'd take your car to the dealer for repairs while it's under factory warranty, Sam. And if you like the dealer, you can do your maintenance there and keep going there after the factory warranty runs out. But if don't like it, or if you prefer someone else, you can do your regular maintenance and use most extended warranties anyplace you like.