Extended Warranty on a New Car to get low rate

[HECDOGGIE]

Alright guys.... Heres my question :

I recently purchased a 14 GMC - The finance manager said, XX bank will give you XX rate , however, you have to purchase Extended warranty and GAP.

I know two things, I dont need GAP - Truck Stickered at 42 and I was financing about 33K..

I dont need the extended warranty, especially on a new truck (5.3). I took the low rate, and bought the warranty and gap. Talked them down from 3300 to 2300 for both... I am going to cancel as soon as I make my first payment..
((when i negotiate a car, i negotiate price, not payment. I want to know bottom line cost))

Thoughts ??

[BP]

It sounds like the F&I guy made some money on you. I don't know of any bank that'd care if you added a warranty or gap insurance, they sell the loan at a set rate and the dealership's software calculates your payment. The F&I guy does creative math to get as much as possible out of you while giving the bank as little as possible.

[slow06]

Alright guys.... Heres my question :

I recently purchased a 14 GMC - The finance manager said, XX bank will give you XX rate , however, you have to purchase Extended warranty and GAP.

I know two things, I dont need GAP - Truck Stickered at 42 and I was financing about 33K..

I dont need the extended warranty, especially on a new truck (5.3). I took the low rate, and bought the warranty and gap. Talked them down from 3300 to 2300 for both... I am going to cancel as soon as I make my first payment..
((when i negotiate a car, i negotiate price, not payment. I want to know bottom line cost))

Thoughts ??

I would just cancel, no first payment necessary. Within 30 days you will get 100% of your money back.

It sounds like the F&I guy made some money on you. I don't know of any bank that'd care if you added a warranty or gap insurance, they sell the loan at a set rate and the dealership's software calculates your payment. The F&I guy does creative math to get as much as possible out of you while giving the bank as little as possible.

I believe some banks require GAP on their loans. Also the bank can offer the customer an "extended warranty" (some even branded with the bank's name) and they get a commission so that may have been the reason.

[Sean88gt]

Ahhhh dealership games.

[HECDOGGIE]

I hate the games, i will just cancel and get 100% applied to principal.

[Ruffdaddy]

Yeah you definitely got played...

[GhostTX]

Call your auto insurance. Many offer extended warranty coverage through your insurance. Costs less and you'll get near equivalent coverage, if you really want it (or required per bank, which sounds fishy).

[YALE]

Here's every conversation with a stealership guy I've ever had:
"C'mon man! Let me sell you something!"
"Aren't you selling me a car?"

[03mustangdude]

yeah got taken to the cleaners just bought a warranty online directly thru a ford dealer 8yr 125k 50 deductible for 1085. Its basiccare but covers the ac which tend to break the most often.

[slow06]

Call your auto insurance. Many offer extended warranty coverage through your insurance. Costs less and you'll get near equivalent coverage, if you really want it (or required per bank, which sounds fishy).

A financial institution cannot require you to purchase a service contract as a condition of loaning you money.

[HECDOGGIE]

A financial institution cannot require you to purchase a service contract as a condition of loaning you money.

So... worse case is my payment is higher because of the initial amt financed ?

I know when i cancel the warranty, the company is going to send the check to the lender which will apply the total directly to principal.

[Denny]

A financial institution cannot require you to purchase a service contract as a condition of loaning you money.

That would be whether or not you are approved. This was just for rate adjustment. An extended warranty and GAP would protect the asset that the lender is putting a lien on.

[slow06]

So... worse case is my payment is higher because of the initial amt financed ?

I know when i cancel the warranty, the company is going to send the check to the lender which will apply the total directly to principal.

I don't know if they would actually adjust your rate back up if you cancelled, I don't see much from that side of the business. You are right though, they usually put the money toward your loan (which is a good thing in my opinion, as it will bring your amount owed down a little bit).

That would be whether or not you are approved. This was just for rate adjustment. An extended warranty and GAP would protect the asset that the lender is putting a lien on.

Right. I was only intending to say they can't require either it as a condition of approving the loan. I don't have any reason to think the initial "requirement" as described was illegal.

[HECDOGGIE]

I don't know if they would actually adjust your rate back up if you cancelled, I don't see much from that side of the business. You are right though, they usually put the money toward your loan (which is a good thing in my opinion, as it will bring your amount owed down a little bit).



Ri

That would be interesting. The loan was approved at X rate, they didnt say , X Bank will do X if you also buy gap and ext warranty..

[Chili]

Just read the contract (finance contract). It will specify if there are conditions on the rate, and if it can change.

My presumption is that the F&I guy just lowered his cut on the rate since he would get paid out on the warranty and gap instead.