Am I Charged Interest On The Warranty I Purchased With My Car?

Question

I purchased a used vehicle and got the bumper to bumper warranty for 2 years/24 months. I have only had the car about 6 months.

I was told that when I sell the car or trade it in I get a portion of the warranty cost back, how is this amount determined?

Also, am I paying interest on the warranty?? On my credit the loan amount is showing the total with the warranty cost so is that right?

I am confused about this because if I go to trade the car in I need to know my balance. If someone is in the car business could you enlighten me? It would be much appreciated!

Answer 1

if you bought the car with your credit card and it shows the total amount owed every month after you make a payment and it is just one amount then yes what they did is put the cost of the warranty and the car together then you are paying interest on the warranty and the car also i never heard of getting money back if you sold or traded car what happens is you lose your money for the warranty and the warranty is no good because they are usually void after original owner sells the car

Answer 2

First things first.  The warranty you purchased would be prorated at DEALER cost (not what you paid for it) if you sell or trade the car (or just want to cancel the warranty).  You would have to contact the warranty company to inform them you no longer have the car or no longer want the warranty.  

example:  you paid $1000 for the warranty, the dealer cost was $600 (pulling numbers out of thin air here).  The warranty was for 24 months, so you have used on fourth of its value.  If you traded or canceled today, you would get a check back from the waranty company for $450.

I am assuming you financed the car (and the warranty was included in your financing).  Yes, you are paying interest on the warranty.  If you wish to determine how much you owe, simply call your finance company where you make your car payment, and ask them what your payoff is.