When Ami drove her newly purchased used car off the lot, she thought she was set. Instead, she ended up with a blown engine, a $30,000 loan and a $6,000 warranty that won’t pay up — and now she’s fighting to keep her life from stalling out.
When everything went south, the Tampa resident took it to a mechanic. She was shocked to discover that the warranty company wouldn’t cover repairs to the engine.
“They’re trying to get out of it,” said Ami.
Instead, the company told her she’d have to pay for the teardown to determine the cause of the problem — an out-of-pocket expense she can’t afford.
“Basically, I have no car and I’m stuck with this,” Ami said.
After going back and forth with the dealership and warranty company, she ran out of ideas and turned to The Ramsey Show for advice.
“Does it not cover exploding engines?” asked co-hot John Delony.
The details matter when it comes to car warranties. Depending on the fine print, Ami might have to cover the teardown costs before the warranty pays for certain repairs.
“That is insane,” fellow co-host George Kamel said. “I’ve never heard where you have to pay and then maybe the warranty company will reimburse you later.”
It’s rare for a warranty to cover everything that could go wrong with your vehicle. But many do cover engine problems.
Since Ami paid $6,000 for an extended warranty, you’d think it would. But she may have overpaid. The average extended warranty costs about $1,300 a year, according to MarketWatch. Unless hers lasted at least four and a half years, she paid more than most.
“If you bought that warranty through that dealer, then there may be some liability on their part, that they’re pushing a bad product on you,” Delony said.
A key detail: Ami signed an as-is agreement when purchasing the car. Essentially, this legalese means that she purchased the car in its existing condition.
She’s not alone. Other customers of the same dealership have complained about similar warranty issues. The Better Business Bureau’s shows mixed reviews for the business, but many complaints share the same story. In its responses, the dealership often points to the as-is agreement, saying it doesn’t owe help to customers — even those who bought extended warranties.
Ami’s finances are stretched thin. She has the $30,000 loan on the dead car, another $13,000 loan for her mother’s vehicle, an $8,000 personal loan, a $700 loan, and several credit card balances. She’s driving a work vehicle now, but will eventually need her own car soon to keep her job and make ends meet.
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Delony admitted he’s confused by Ami’s lack of “going to war over this.” But she said she has been digging through the details and messaging the companies involved. The hosts encouraged her to dig even deeper.
“Ami, we need to change everything,” Kamel said.
Delony urged her to read the warranty paperwork line by line, looking for anything that could help her case. He told her to stop relying on emails and start phone calls — and in-person visits — until the problem is resolved.
“It would be my part-time job,” said Kamel, “Whenever I’m not working my full-time job, I’m working on this and fighting it. I’m going through the fine print. I’m working with an attorney. I’m showing up in person every day until they know me by name.”
Ideally, the work would push the warranty company to honor the repairs. If not, the hosts suggested she try to get a refund on the warranty.
To improve her financial picture, Kamel suggested reclaiming the car that she gave to her mom. As for what to do with the broken-down vehicle, Kamel told her to get it fixed so she can sell it or trade it in for parts.
Selling the car as-is would leave her with a large loan balance and no transportation, so the stakes are high. Both hosts told Ami to press the warranty company to pay for the repairs or issue a refund, even if it means hiring a lawyer.
For anyone buying a car and considering a warranty, it’s essential to read the fine print before signing. Look closely at all the fees in your contract. If you don’t know what one is, ask and try to get it removed.
When it comes to extended warranties, read carefully for any loopholes. Ami’s case suggests she may have to pay for repairs upfront and seek reimbursement, which is unusual and financially risky. If you don’t like the terms, don’t sign. Either skip the warranty or get help from a savvy friend, financial advisor or lawyer before committing.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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