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Extended warranty/prepaid maintenance packages on a used car

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The Patriot Way

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Not sure if this is really the right place but I don't know where else this question would go. I recently purchased (financed) a pre-owned 2019 Mazda CX5 with 22k miles, about a week ago. This was my first time buying a car from a dealership rather than a friend or a family member. Despite my best intentions and all my research, I think I ended up getting suckered into buying way more protection from my car than I really need. I was offered a powertrain/bumper to bumper 7-yr contract with a company called Portfolio Protection (very mixed reviews) for $2,400, a 5-yr prepaid maintenance program for $1,800, and a $400 surface protection (dents/dings) package for a total of $4,600 in protection. In exchange, I received a lower APR from 3.39% down to $2.69%. The guy was nice enough but talked in circles and I got lost in the math, but I finally agreed. When I got home I read the fine print and crunched the numbers, and calculated that I would actually be charged pretty much the total cost of the warranty and maintenance plans over the course of the 5 year loan so the lower APR doesn't make a difference. I called the local Mazda dealer and he said he would just get rid of all this stuff since they're pretty reliable cars and I would have to get a lot of service to just break even.

I emailed him three times this week to cancel the programs and received no response, and finally yesterday I emailed the general manager of the dealership and copied three other managers. Today he called me (guess I got someone's attention and they told him to take care of this) and he tried to walk me through how supposedly the bank picks up some of the cost and I'm actually only paying $2,200 for the programs, not $4,600. It didn't make sense, but the way he explained it is that my original payment was going to be $460, but is now $497 ($37*60 = $2,220). I asked him to break down how my payment was going to be $460, since my math gives me a monthly payment of $422. He said he couldn't do it and didn't have the numbers in front of him, but will call me tomorrow so we can go through it. I'm more likely to keep all this stuff if it's actually $2,220 but I am hoping someone may be able to shed insight into this stuff since I'm not savvy at all about car buying and this is my first loan. I broke down the math below. Sorry for the long elaborate post but any help would be greatly appreciated.


Total with Protection Plans - with Fees, Tax: $30,384.63
Minus $2,500 Down Payment: $27,884.63
Interest Charges (2.69%): $1,981.57

Total Cost of Loan (with interest): $29,866.20
Monthly Payment: $497


Total WITHOUT Protection Plans - with Fees, Tax: $25,784.63
Minus $2,500 Down Payment: $23,284.63
Interest Charges (3.39%): $2,062.37

Total Cost of Loan (with interest): $25,347
Monthly Payment: $422
 
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biophase

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If you look at it from a strictly monthly payment perspective, you are paying $75 more a month than you wanted. I assume that this is over 60 months, which comes out to exactly $4500.

The interest charge doesn't really matter, because yes, you are paying only $80 more in interest for the warranties. But you are paying almost $4500 more in principle.

When did you purchase this car? If it was within a few days I'd go back and get rid of that stuff or try to return the car.

They basically upcharged you $4500. And they would have given you the 2.69% APR anyway on the loan without the warranty.
 

Raoul Duke

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When buying from a dealership: Always have them itemize the contract/quote.

The majority of the stuff they put in the contract. The manufactures have already paid. You are more, than likely, paying to keep the lights on.
 

The Patriot Way

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If you look at it from a strictly monthly payment perspective, you are paying $75 more a month than you wanted. I assume that this is over 60 months, which comes out to exactly $4500.

The interest charge doesn't really matter, because yes, you are paying only $80 more in interest for the warranties. But you are paying almost $4500 more in principle.

When did you purchase this car? If it was within a few days I'd go back and get rid of that stuff or try to return the car.

They basically upcharged you $4500. And they would have given you the 2.69% APR anyway on the loan without the warranty.

Thank you, yeah that's what I said too. I'm basically paying the full amount of the warranties after all is said and done. But I got confused when he started telling me how I'm actually only paying $2,200 but it's not adding up. I bought it exactly one week ago. When I talk to him tomorrow I'll tell him to just cancel it all because it just doesn't feel right. I feel bad because of the pandemic but hey, it's my money.
 
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The Patriot Way

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When buying from a dealership: Always have them itemize the contract/quote.

The majority of the stuff they put in the contract. The manufactures have already paid. You are more, than likely, paying to keep the lights on.

I have the invoice but I don't know if that's the same thing - it's a long sheet of yellow paper. It's just so much stuff but I have a feeling they're just intentionally confusing me so I won't be able to tell that they're screwing me.
 

Raoul Duke

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The Patriot Way

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Sep 19, 2017
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