I Bought A $6,000 Warranty And The Car Doesn't Even Run Anymore?

Summary

Title: Detailed Summary of "I Bought A $6,000 Warranty And The Car Doesn't Even Run Anymore?"
Podcast: The Ramsey Show Highlights
Host: Ramsey Network
Release Date: July 31, 2025

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Introduction

In this episode of The Ramsey Show Highlights, hosted by the Ramsey Network, a distressed caller shares his troubling experience with a financed used car and an extended warranty. The discussion delves into the pitfalls of extended warranties, managing overwhelming debt, and navigating warranty disputes. Expert advisors weigh in with actionable advice to help listeners avoid similar financial setbacks.

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Caller’s Predicament

Initial Problem: The caller, referred to as B, recounts purchasing a used car that came with a hefty extended warranty. Shortly after, the car's engine failed, leaving him without transportation while still being burdened by a substantial car loan.

• B: “So I financed a used car and I got an extended warranty with it. And now recently the engine blew up and so basically I have no car and I'm stuck with this like it's a thirty thousand dollar loan still with this car. Oh my gosh.”
  [00:06]

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Warranty Woes

Extended Warranty Issues: B purchased a $6,000 extended warranty, hoping it would cover major repairs. However, when the engine failed, the warranty company denied coverage, forcing him to bear the initial repair costs.

• B: “No, I guess not. No, they're trying. They're kind of like trying to get out of it, I guess.”
  [00:27]

Advisors’ Analysis: The advisors, A (likely the host) and C, scrutinize the situation, highlighting the disproportionate cost of the warranty relative to the car's value.

• C: “You bought a $6,000 extended warranty… that you have. Oh, with the highlighter.”
  [01:32]

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Financial Breakdown

Total Costs vs. Value: B originally valued the car at $18,000. After adding the extended warranty and fees, the total cost surged to $30,000. Consequently, the car's current worth plummeted to approximately $13,000.

• B: “Probably about 18,000. And then I bought the extended warranties and then out the door it came to 30, so. Whoa.”
  [01:11]

Comparative Analysis: Advisor C emphasizes the illogical expense ratio by comparing it to homeowner’s insurance, pointing out that B paid an exorbitant amount for minimal coverage.

• C: “You paid $6,000 for a warranty against an $18,000 car.”
  [02:17]

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Debt Overview

Multiple Financial Obligations: B's financial woes extend beyond the primary car loan. He also has an $8,000 personal loan, various credit card debts, and another car loan of $13,000, which he is managing on behalf of his unemployed mother.

• B: “I have a $8,000 personal loan, 700 loan, and then I have a couple of credit cards for 200, and then three for 500, and then one for 300, and then I have another car loan for 13,000.”
  [05:37]

Impact of Family Obligations: B has transferred his second car to his mother, who currently lacks the means to manage the payments, exacerbating his financial strain.

• B: “That car I gave to my mom.”
  [06:12]

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Expert Advice and Potential Solutions

Addressing the Warranty Issue: Advisors stress the importance of challenging the warranty company's refusal. They recommend taking assertive actions such as contacting legal assistance, leveraging personal networks, and meticulously reviewing the warranty agreement.

• C: “I'm calling everyone I know. I'm not messaging anything.”
  [03:28]

Managing Negative Equity: Given that B is "underwater" on his car loan (owing more than the car is worth), advisors suggest repairing the vehicle to potentially sell it or, if unfeasible, consider selling it for parts to mitigate losses.

• A: “If you get rid of for 2,000... you're upside down by... $28,000.”
  [07:13]

Debt Consolidation and Reduction: To alleviate the overwhelming debt, advisors recommend exploring personal loans to refinance existing debts, prioritizing high-interest obligations, and possibly selling the second car to reduce financial liabilities.

• A: “You're underwater on this car... your best bet is to try to get it fixed up so that you can sell it.”
  [07:13]

Utilizing Available Resources: While B currently relies on a work-provided car, advisors suggest tapping into knowledgeable contacts at his workplace for mechanical assistance, potentially reducing repair costs.

• A: “They've got to know what an engine looks like to be dealing with this.”
  [08:45]

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Financial Prioritization and Future Steps

Budgeting and Expense Management: Emphasizing the creation of a strict budget, advisors advocate for minimizing non-essential expenses and allocating available funds to high-priority debts.

• A: “Create your free every dollar budget today. The simplest way to budget for your life.”
  [08:38]

Legal and Consumer Protection: In cases where warranty companies act in bad faith, advisors recommend reaching out to regulatory bodies like the Better Business Bureau and seeking legal counsel to enforce consumer rights.

• B: “I've reached out to, like, the Better Business Bureau and all that.”
  [05:23]

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Notable Quotes

• B: “So I financed a used car and I got an extended warranty with it. And now recently the engine blew up and so basically I have no car and I'm stuck with this like it's a thirty thousand dollar loan still with this car.”
  [00:06]

• C: “You paid $6,000 for a warranty against an $18,000 car.”
  [02:17]

• A: “If you just sell mom's car and try to cover it... but you're way underwater on that, too.”
  [07:45]

• A: “Create your free every dollar budget today. The simplest way to budget for your life.”
  [08:38]

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Conclusion

This episode of The Ramsey Show Highlights serves as a cautionary narrative about the dangers of extended warranties and aggressive financing. It underscores the necessity of thoroughly understanding financial agreements, prioritizing debt management, and proactively addressing disputes with service providers. Listeners are encouraged to adopt disciplined budgeting practices and seek expert advice when navigating complex financial challenges.

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Disclaimer: This summary is based on the provided transcript and may not capture all nuances of the actual podcast episode.

Transcript

[A]

Brought to you by the EveryDollar app. Start budgeting for free today.

[B]

So I financed a used car and I got an extended warranty with it. And now recently the engine blew up and so basically I have no car and I'm stuck with this like it's a thirty thousand dollar loan still with this car. Oh my gosh.

[C]

So you said you got the extended warranty. Does it not cover exploding engines?

[B]

No, I guess not. No, they're trying. They're kind of like trying to get out of it, I guess. Basically they want me to do like, they want me to pay.

[A]

Who's there?

[B]

The mechanic. So it's not a mechanic shop right now, and they want me to pay for the tear down for it.

[C]

Who does?

[B]

Like, exactly. What's wrong? The warranty company.

[A]

The warranty company wants you to pay for them to tear apart the car to figure out what, what went wrong?

[B]

Well, no, the mechanic wants me to pay first.

[A]

And then maybe they'll reimburse you.

[B]

Exactly, yeah. And then maybe the warranty will cover it, maybe they won't. So.

[A]

Yikes. Okay, what's the car, what was the car worth before this issue?

[B]

Probably about 18,000. And then I bought the extended warranties and then out the door it came to 30, so. Whoa.

[A]

What?

[B]

Yeah. So now it's only worth 13,000.

[C]

How is it worth 18? You bought it for 18. You bought $12,000 worth of extended warranties?

[B]

Well, it was 6,000 and then I guess some fees got added. I don't know how it got up to 30.

[C]

You bought a $6,000 extended warranty?

[B]

Yeah.

[A]

And they just added 6,000 more in fees. I'm confused. I'm not convinced that you're. I feel like you're smarter than this.

[B]

Yeah, it was a really dumb thing. I don't, I don't know if I.

[C]

Bought a $6,000 warranty. They're paying for everything. They're paying for my toothpaste that morning that I used to brush my teeth. They're paying for everything. What, what could possibly be the holdup? Because you must have bought the Cadillac Lexus Atomic diamond platinum warranty. Because think about that. You bought a warranty that's one third the value of your car.

[B]

Yeah.

[C]

So what are they, how are they protesting any sort of service?

[B]

I don't, I don't know. And then I've messaged the warranty company. So I was at a shop before this shop prior because I had issues with the overheating. So they replaced the, the water pump on it and then Two days later I was driving down the road and it started overheating again. And then, and then it just wouldn't turn on. So I towed it back to that shop and they said, oh, it's nothing that we did.

[A]

How long ago did you buy this car?

[B]

In February.

[A]

Okay, and where did you buy it from? Like, was it a dealership?

[B]

It was, it was a place in Tampa. It was a Discovery Auto. It was a dealership.

[A]

Have you went back to them, like.

[B]

A big known deal? Yeah, I did.

[A]

What did they say?

[B]

A form that I, that I signed that basically says I bought it as is, so.

[C]

Yeah, but if they sold you the warranty, there's got to be some re. Here's the thing also, I'm not messing.

[B]

Like that there was anything wrong with the car.

[C]

No, no, no, that's what I'm saying. I'm saying 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.

[B]

Yeah.

[C]

And here's the second thing. I'm not messaging anybody. I'm calling everyone. I'm going to find a buddy who's a lawyer that's going to write me a letter. I'm calling everybody I know. I'm not messaging anything.

[A]

This be my part time job. 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.

[C]

Okay, how do you own a house?

[B]

No.

[C]

Okay, I'm making up a number here, but if you have a $500,000 house, depending on where you live, obviously you, your homeowner's insurance is going to be five or $10,000 a year. You paid $6,000 for a warranty against an $18,000 car. At that ratio, that would be like buying a warranty for a half a million dollar house that cost $175,000. So what you paid is so out of whack proportionally and you should be.

[A]

Able to get your money back for the warranty at least.

[B]

Yeah, that's what my next step was going to be. I just wanted to figure out if I should still continue to like, try to get it covered by warranty.

[C]

Yes, but you got a.

[B]

But I have to pay up front for the, for the whole teardown of the engine and everything. And so.

[A]

That is insane. I've never heard where you have to pay. And then maybe the warranty company will reimburse you later.

[C]

And, Amy, I'm. I'm confused by your lack of just going to war over this.

[B]

I don't have the money.

[C]

I don't know anything to do that, to get a. A ruler out and go line by line down this warranty that you have. Oh, with the highlighter.

[B]

I've been. I've been emailing the warranty company. I've been going through it and everything like that, and I've reached out to, like, the Better Business Bureau and all that.

[A]

Okay. Do you have any money right now?

[B]

No, not really.

[A]

What do you make?

[B]

I have a few hundred saved up. I make. Hourly or salary?

[A]

Salary.

[B]

Salary. I make about 49,000 a year.

[A]

Okay, and what other debts do you have outside of this 30,000 car loan?

[B]

I have a $8,000 personal loan, 700 loan, and then I have a couple of credit cards for 200, and then three for 500, and then one for 300, and then I have another car loan for 13,000. What.

[A]

What happened to that car?

[B]

That car I gave to my mom.

[A]

But you're still making the payments on it?

[B]

Yeah.

[A]

Why is she not paying the payments?

[B]

She doesn't have a job right now.

[A]

Okay. So this runs in the family. Okay.

[C]

Can you sell that car immediately?

[A]

The other car, what's it worth? The one your mom's driving?

[B]

It's not worth what it. What I owe on it.

[A]

Have you rolled a lot of negative equity into these?

[B]

That car? No, but that car I bought for, I think more than it was worth as well, so it. And it's only 2% interest on that car, so.

[A]

Well, at least there's the good News. We have 2%. Interesting. Oh, Amy, we need to. We need to change everything.

[C]

I'm.

[A]

I'm getting hosed at every single dealership you go to.

[B]

Yeah.

[A]

What's the interest rate on the $30,000 loan?

[B]

7%.

[A]

And did you roll negative equity into that one?

[B]

That one? No, I didn't. That was just.

[A]

Here's the deal. You're underwater on this car, obviously, and right now it's to the tune of $30,000, because I don't know if this car is worth anything. And so your best bet is to try to get it fixed up so that you can sell it, because your other option is, you know, trading it in or selling it for parts at this point, if it's kaput. And that's going to put you in a giant hole to where you're upside down by, you know, $28,000 if you get rid of for 2,000. And so getting the warranty refunded if they're not going to come through and fix anything is one at least step. But you're going to need the difference in a personal loan in order just to get out of this payment. And then you still need a car to drive.

[B]

Right.

[A]

In which case, I would rather take your other car back that you owe 13 on because at least you're less in debt in that, and mom needs to figure it out.

[B]

Yep.

[A]

But you're gonna have to make a lot of hard choices and fight really hard probably for the next few months to battle this thing out. And in the meantime, how are you. What transportation do you have.

[B]

Right now? We have a car that I use from work that we use for customers. I've been borrowing it from my.

[A]

From your employer.

[B]

So we have, like, a crew car. Yeah. That customers will use. So I work at a airplane maintenance shop, and so they'll drop their plane off and then sometimes take the car to lunch and stuff. So I've been borrowing that car.

[A]

Are there any folks over there who know cars pretty well who can help you navigate this mechanic situation?

[B]

Sure. They know mostly about planes. So, I mean, I'm not sure.

[A]

I feel like they're. They're cut from the same cloth. They've got to know what an engine looks like to be dealing with this. So I would be begging folks from work to say, hey, can you help me with this? I'm struggling. I want to make sure I don't get hosed once again. But the key is you got to come up with a difference just to get rid of the car loan. And to do that, you're probably gonna need to fix it up. And that's gonna mean saving up and when you can and covering the difference in cash or with a personal loan. I don't know of another way out of this right now, Unless you just sell mom's car and try to cover it. But you're way underwater on that, too. We're out of options here. Create your free every dollar budget today. The simplest way to budget for your life.