(Tallahassee, FL) February 13, 2009 – With hundreds of auto dealership closures nationwide – and more poised to close this year, the Service Contract Industry Council wants to assure consumers that service contracts from these dealers are viable and consumers should feel confident purchasing them during Presidents’ Day sales and beyond.

“If a consumer has a service contract from a dealership that is closing or has gone out of business, the first thing to do is contact the dealer directly or the service-plan administrator whose name is located on the contract paperwork,” said Timothy Meenan, SCIC executive director. “Service contracts are covered by the motor-vehicle manufacturer and in most cases repair service is transferable to another dealership.”

Vehicle owners rely on service contracts (sometimes referred to as extended warranties) to pick up after the manufacturer’s limited warranty expires, usually after three years or 36,000 miles. Service contracts also can cover essential yet costly-to-repair systems not covered by the manufacturer’s power-train warranty, such as air conditioning, power windows, electronics, and navigation.

“Ninety-five percent of all auto service contract claims submitted annually to our member companies are covered,” said Meenan. “As the average age of vehicles on the road continues to increase and consumers seek to maximize value, service contracts can help consumers manage unexpected, expensive repairs and keep their vehicles reliable and safe longer.”

The SCIC works with state legislatures to implement consumer protection laws that ensure the viability of most service contracts should a retailer or dealer go bankrupt.
Consumer tips and more information are available at www.go-scic.com.

Motor Vehicle Service Contracts by the Numbers in the U.S.:

10,000,000 – number of service contracts sold annually for both new and used vehicles
95% – percentage of annual claims covered under existing service contracts
30 – number of “free-look” days to review and return a service contract for a full refund
10,000 – number of components in a typical motor vehicle
$4,000 – approx. cost to replace an integrated computer unit or repair air conditioner
$2,500 – … transmission
$1,000 – … transaxle
$650 – … power steering
$500 – … alternator

Here are some tips: (ConsumerReports.org®)

Use a credit card. Whether you're making a down-payment, ordering parts or accessories, or getting repairs or service, use a credit card. If the dealer fails before your vehicle or parts are ready or before you have a chance to complain about shoddy or incomplete work, you can challenge the payment with your card issuer. If you pay with cash, check, or debit card, you'll likely be out of luck. Just be sure to use a credit card with no balance so that you don't pay finance charges.

Don't let a dealer pay off your loan. When trading in a vehicle, car owners typically leave it to the dealer to pay off the balance of any loan, using either the equity in the trade-in or by adding the amount to the new loan. But that's dangerous. In the past, cash-strapped dealers have delayed the payoff or missed it altogether. If that happens, you can end up with a damaged credit score or on the hook for the amount still owed on the trade-in. So while it may be inconvenient, it's best to pay off the vehicle yourself, before trading it in.

Make sure the loan was paid. Similarly, if you're buying a used vehicle, make sure there's no outstanding lien. If there is, you may find that your "new" used car suddenly has been repossessed, even though you're making your payments on time. You can avoid the problem by insisting that the dealer obtain a permanent vehicle registration instead of letting you drive away with a temporary one. Also, check the paperwork before you buy and make sure the dealer has a lien release or a title with no lien holder listed.

Make them it do it now. If the dealer is promising to fix or replace something in a used car or provide some additional service or accessory for your new one, don't let him put it off. You'll likely be out of luck if the dealer disappears. Instead, make the dealer fulfill any promises before you accept the vehicle.

Scrutinize the paperwork. Making sure everything is correct is especially important these days because if you end up signing a contract that contains fraud or misrepresentation and the dealer fails, it may be difficult getting your money back, even if you can get a regulatory agency or court to rule on your behalf. Before signing, verify that the deal is exactly as you expect. Is the negotiated price correct for both the vehicle you're buying and your trade-in? Is the loan amount and interest rate exactly what you were quoted? Are there any services, add-ons, accessories, fees, or other extras listed that you didn't authorize? Don't rush to sign, no matter how much the dealer insists that the fine print is just a formality.

Check that used car thoroughly. If you're relying on a dealership-provided warranty, as opposed to the remainder of the manufacturer's warranty or third-party coverage, you could be on your own if the dealer fails. That's all the more reason to have any used car you're considering looked over by an independent mechanic.

About Consumer Reports
ConsumerReports.org®

Consumer Reports® and ConsumerReports.org® are published by Consumers Union (CU), an expert, independent nonprofit organization whose mission is to work for a fair, just, and safe marketplace for all consumers and to empower consumers to protect themselves.
website: http://www.consumerreports.org/cro/cars/index.htm

About SCIC
The Service Contract Industry Council, www.go-scic.com, is a national trade association whose member companies collectively offer approximately 80 percent of the service contracts sold in the U.S. for home,auto, and consumer goods. The SCIC educates consumers about service contracts, encourages its members to pursue high standards of customer satisfaction, and has developed and promoted model legislation to regulate the industry with standards designed to protect the consumer and the industry.
Contact:Phyllis Laorenza-Linnehan /781-275-7226 /phyllisll@verizon.net