I Don’t Want Your Freakin’ Extended Warranty…

These past weeks, my family and I have been shopping for a minivan to accommodate our extended family of 7 — and finally replacing our 11 years old Ford Contour. The experience left me wondering if the auto industry really needs the bail out money at all. If I have to judge by how some of these car dealers acted, my guess would be NO.

Out of all the dealers I visited, I had a particularly horrendous experience with Hillside Honda in Jamaica, NY. The sales team was nice and courteous, but the financing guy and his manager was a whole different story.

honda-odyssey

Beware of the Car Financing Guy

I got to the dealer at about 2 PM on Saturday and managed to negotiate the $37,000 minivan down to $28,600. A little more negotiation knocked the destination charge down by another $335. All said and done, the car was mine for $32,200 after the 8.375% NY state tax. All that was left to be done was the financing.

Is that interest rate for real?

I track my credit score using Credit Karma, and I know my score was good (I am around 790 with TransUnion and around 830 with the other two credit agencies). So it was a shocker when the financing guy said my interest rate would be 8.99% for a 72 months loan! When I asked if that was the best rate that I qualified for, he conceded that it wasn’t and told me I could have 66 months loan at 7.99%. Talking about having my best interest in mind! — and by the way, the interest rate is still high!

If I agreed to this, the total cost of the car would be $40,934, an increase of $8,734 to the total price!

Lower the monthly payment by leasing

Sensing that I didn’t like the high interest rate, he tried to switch me into a leasing agreement and explained that I could lower my interest rate and my monthly payment will be around $150 less per month. All I have to do is pay the lease for 39 months, and buy out the car for $16,900.

What a tricky bastard. I cut this leasing conversation short by saying that I don’t understand car leasing, and I don’t buy what I don’t understand.

If I agreed to this, the total cost of the car would be $42,450, an increase of $10,250 to the total price!

Do you want extended warranty with that?

Next, he proceeded to ask me if I want the extended warranty, an alarm system, and a LoJack for my car. I said no to all three, but he insisted. After going back and forth a few times, he finally let it out that these items would increase my monthly payment by another $90! Sounds cheap right? Try multiplying that by 66 months…yes, $5,940 more.

He tried to argue that the alarm system (which adds $17 per month) would lower my insurance cost by 5% — that’s only $42 a year compare to the $204 I’ll be paying. Hmm, let me think. No, thank you.

He asked a few more times, and I kept telling him that I don’t want the extended warranty on one of the most reliable car on the road, I don’t need an alarm system, and I don’t need the LoJack.

If I agreed to this, the total cost of the car would be $46,874, an increase of $14,674 to the total price!

The Last Straw

This guy was annoyingly persistent, and after insisting about 30 more times, I finally gave up and walked out of his office hoping to find help from a manager. Unfortunately, the manager was rude and told me that I have no right to raise my voice in his showroom. Excuse me, I can’t complain? I didn’t even curse — geez.

He then pulled me into the financing office again and said, “Do you understand what profit is? We need to make a profit in order to sell you the car…” — this guy is freakin’ kidding right?

Then he went on to say that he is losing money on the car and I have to buy at least the alarm system (and with a remote start) for him to give me the car. I told him that his sales team shouldn’t have agreed to the price in the first place and what’s he’s doing is not only rude and unprofessional, but it’s a complete BS.

After spending a whole frustrating hour with these two (insert any bad word you want here), I finally gave up and told him that I am scrapping the deal.

Hillside Honda Complaints and Problems

Here are a bunch of complaints against Hillside Honda that I just found. Unfortunately, I didn’t find these before walking in the door. From ConsumerAffairs.com: Consumer complaints about Hillside Honda, Jamaica, NY

Conclusion

When you’re shopping for a car, you have to be careful. These guys are equipped with all kinds of pressure tactics and tricks. And I’ll repeat the golden rule of car negotiation here — negotiate the price of the car and not the monthly payment. As you can see, the leasing option has the lowest payment but it was actually one of the more expensive option.

Just to give you a little closure, I did finally buy an Odyssey from a different dealership. The price after tax was about $900 more, but the interest rate was much lower and the customer service was heavenly.

And thank you to President Obama and his Stimulus Plan, the sales tax I paid on the car will be tax deductible for 2009 tax year. I am a happy camper.

If you are shopping for a car, or recently bought one, let’s hear your story.

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About the Author

By , on Feb 26, 2009
Pinyo
Pinyo is the owner of Moolanomy Personal Finance. He is a licensed Realtor specializing in residential homes in the Northern Virginia area. Over the past 20 years, Pinyo have enjoyed a diverse career as an investor, entrepreneur, business executive, educator, and financial literacy author.

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Leave Your Comment (21 Comments)

  1. Pinyo says:

    @Teresa, I am sorry but I can’t help you with an affidavit. However, please feel free to use the content of this article to support your case.

  2. Teresa says:

    Oh, I wish I had read your article before I went out there and bought a car from Hillside Honda.What a nightmare it was!! They sold me the car alarm and Lojack for the total price of $5,295.00. They charged me over $2,500 for the car alarm which they tried to sell you for $900.

    As of now, I have a pending case against them in Small Claim Court with a court date at the beginning of August.

    Do you think you can help me out by giving me an affidavit letter on what happened to you? It would really really help me out. I am trying to gather as much evidence as possible about what they are doing to their customers. Do you have any suggestions for me? Please e-mail me. I could really use your help. Thank you so much.

  3. Andy says:

    Great story and glad to see a happy ending. I am sure Hillside Honda in Jamaica, NY are regretting their bad service, because this article – thanks to the prominence of your blog – will soon float to the top of google searches. Really bad PR for them!

    • Pinyo says:

      @Andy – #5 if you search “hillside honda complaint”. If you want me to place first for “hillside honda,” I’ll have to make a few changes to the article….but that would be too funny. :-)

  4. Pinyo says:

    @Ron – Thank you. Yes, I love the Odyssey. The best luxury car I’ve driven.

    @Scott – I took my toddler with me too, but he left early with his mom. So I ended up walking to the train station instead of driving home in a new Odyssey.

    @Patrick – Yeah, I was at a Chrysler dealer and the guy quoted me $33k. I kept telling him that Crysler website quoted $26k for the same car. He looked at me with a straight face and said I got the price wrong.

    @Leesie – I don’t understand either. You figured they would be on their best behavior right now. But no, they still acting like thieves and liars.

    @ron – I did that with my 2005 Element — i.e., bought the extended warranty and cancelled it a day later. I didn’t want to go through the same hassle, that’s why I refused to buy it.

  5. ron says:

    i just traded in my 07 focus for an 07 fusion. the focus was in bad shape (my son) got a great deal but at the end he said I HAVE TO BUY the extended warranty so we can make a little money. I asked him “can i cancel at a later date?” he said yes. I purchased the car and cancelled the warranty the next day.

  6. fathersez says:

    Wish I had read this before I bought my car. Though I did not feel I got a raw deal, (our car, a Toyota Camry is now 4 years old), I did not do any research at all. Just walked in like the Donald, pointed to the car, signed on the dotted line and walked off.

    Good to know that consumers now have awakened.

  7. Nicole says:

    Yeha no kidding, extended warrenties are usualy a total ripoff. Better to put that money towards an “emergency fund” which can apply to any machine/device that craps out on you.

  8. Michael says:

    Don’t worry. If it is like the last car I bought I got about 30 offers to buy an extended warranty over the next 6 months.

    I paid cash for my last car and I still had to sit in the finance office for over an hour while this dude harassed me to buy so much stuff. I kept asking him why I was here, here is your check now let me go. I almost offered him an extra $100 just to let me go so I could get some food.

  9. Leesie says:

    The extended warranties are marked up anywhere from 50% and on up by dealers because they get all kinds of incentives, bonuses, etc. from the car companies. With this knowledge in hand, it’s best to shop around and tell the dealers you are aware of this. Why those people treated you the way they did doesn’t make sense as you went elsewhere to make the purchase – their loss!

  10. Patrick says:

    I had a similar experience while looking at a used BMW (I later bought a Mazda). These guys were awful – changing prices and quoting me different numbers. They tried bullying me and outright called me a liar when I quoted them what the BMW dealership wanted for a similar car with upgrades and less mileage. Then the manager came over and tried being friendly, told me he was a former Army Ranger (he knew I was in the US Air Force) and that he wouldn’t do another military member wrong. Whatever. They gave car dealerships a bad name.

    Glad to hear you got a good deal! :)

  11. Scott says:

    I give you a ton of credit for walking away. Many people wouldn’t do it and feel like they have invested time in the salesperson and just want to get the deal over with. When I bought our used Prius several years ago I took my toddler with me so I would have an easy excuse for a time limit. I just told the sales people that I needed to go change a diaper :)

  12. Ron says:

    Don’t you just love that Odyssey? We have one too, but we bought from a salesman that had a great reputation with my wife’s family — and we live 4 states away. It still went smoothly and we had zero pressure.

    Way to stick to your guns on the financing. Maybe one of these days that dealership will learn it’s lesson, especially if a few MORE bloggers push this blog post! Hehehe. You just got included in my weekly roundup!

  13. Pinyo says:

    @Weakonomist – I would use my credit union more if they don’t charge $3 every time I speak to the rep — what a stupid, stupid policy. Unfortunately, I have my mortgage with them before them implemented the policy.

    @Slinky – I wish I had done a little more research too. I haven’t shop for car for a long time and I didn’t think dealerships have gotten so bad. I did found two good ones, but the rest are bad.

    Another story: A Chrysler dealership keep quoting me a price $6,000 above what’s shown on the Internet (I check right before going there) and won’t negotiate price until I put down a deposit to show that I am “serious” about buying a car. Too funny.

  14. Matt Keegan says:

    Most extended warranties are a rip off in my opinion. The only reason you need one is if the model is iffy which means you shouldn’t buy the car anyway. Best to keep a car for a certain amount of time and bank on at least one major repair way down the line. Hopefully, you’ll be on to your next set of wheels by then.

  15. Steve says:

    It’s stories like this that tells me that either that dealership is going under, or they are going to have to get new management! It’s a shame, because Honda is such a top of the line vehicle. I agree with you: having your game plan figured out before hand, and being willing to walk away from the deal is the only way to go!

  16. Slinky says:

    I just bought a car a few months ago. Unlike you, I had a lovely experience. I did a ton of research and walked in knowing exactly what I wanted. I also researched the various dealers in my area and ended up going with the one closest to me because of the great reviews. I have to say that they live up to their reputation. They did offer various warranties and such, but they didn’t pressure me. When I said I knew what Gap insurance was and I didn’t want it, he simply moved on. I actually went with their financing, because they offered a better rate than my credit union. There were one or two things that I didn’t like (like a shift knob that didn’t really fit right). These problems were all with third parties products and the dealership simply issued me a refund, even mailing any paperwork to me so I didn’t have to make a special trip there.

    To be honest, I didn’t really think an honest dealership existed, but I may have actually found one. :)

  17. Nick says:

    I just purchased a vehicle this past weekend as well, a 2007 Pontiac Vibe (which is really a rebadged toyota matrix) We decided to go with a certified used vehicle so we could miss out on the worst deflation of the vehicles value (the first two years). The F&I guy also pushed the extended warranty very hard on us. He showed us how little it would add to our monthly payment, only $37 a month. A quick trip to my calculator showed that to be over $2200 dollars. He quickly “worked on that” and the price of the warranty dropped all the way down to $875. I wonder how much profit is on those, eh? I still told him the certified warranty the vehicle came with would be plenty. He thought we were making “a very big mistake”, but I held tough and we got the car about 1000 bucks under what edmund’s TMV said we should. I left happy.

  18. Squawkfox says:

    Pinyo- Good on you for walking away from the deal. Showing us the math is awesome. It’s astonishing how little drips of interest over time really add up! Stumbled!

  19. Oh man you should have contacted me before going in to the dealership. I bought my Honda Accord last year from a dealership known for similar bad apples. I did all my negotiating online, and refused to even talk on the phone with anyone until I had an offer faxed to me.

    I got pre-approved from my bank before going in, but the dealership offered me a better rate so I went with them. They also tried to sell me on that warranty and lojack.

    And they were tryin to screw you with that rate. I got a much lower rate and my credit score was around 730. Go get financing from a credit union. With a score like you’ve got you should get a lower rate.

    If you want some help on how I negotiated for my car, shoot me an email. You sure did get a good price though!

  20. Four Pillars says:

    Wow – great story! I can’t believe what a bunch of scumbags they were.

    I guess they were counting on you falling in love with the car or just wanting to get the deal done. They didn’t know who they were dealing with! :)

    Mike

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