Monday, June 12, 2006

Can I finance an extended auto warranty?

The short answer is yes. However, beware of the auto salesman who trys to lure you into buying an extended warranty by rolling the price into the sales price of the vehicle. That may sound like a good idea; but remember that you will be paying 6 to 10% interest for years on that extended warranty. That $1,800 extended warranty, tacked onto an 8% loan for 5 years, will actually cost you $2,644.79. And, that figure doesn't even included the commission that you will be paying to the salesman, the finance guy and the dealership for acting as the broker!

What is the alternative? Simple. Shop direct and save. Don't buy into the inflated pricing from a dealership. Take advantage of those internet-based warranty companies "Zero interest - Zero financing plans" with no hidden monthly fees. Some companies will promise you a zero interest-zero financing plan and then turn around and charge you a monthly "handling" fee, which can be up to $20 per month. So, look for the very best deal, which is an extended warranty company that is willing to accept a modest down-payment at 0% interest-financing with no monthly transaction fees.

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