Dealership vs Warranty Company: Which is Cheaper?

Dealership vs Warranty Company: Which is Cheaper?

RV owners can obtain extended warranty coverage for their RV from two different sources: the RV dealership (usually at the time of purchase) or an online warranty company (this can be done at any time). Most Rvers agree that quality coverage is cheaper when purchased from a warranty company. 

The Same Coverage for Less Money

Dealerships often offer the same coverage from the same administrator as a warranty company, but at a significantly higher cost. Sometimes the plans are actually inferior, offering fewer benefits and less flexibility in choosing features like pay structure and deductible.

While many RV salespeople are very knowledgeable about the vehicles and their features, they are often less educated on the ins and outs of extended warranties. Nonetheless, dealerships make a lot of money from selling warranties, especially when the sale is financed (see below).

An RV dealer probably will not offer a customer every warranty option from multiple companies. Often they sell warranties offered by one administrator with which they have a business relationship. While a good warranty will benefit any RV owner, customers discover more options at lower prices when they shop around online.

No Interest

With dealerships, customers not only pay a higher price from the start, but that price only increases with time.

Warranty companies offer payment plans, not loan financing, so RV owners do not have to pay interest on their remaining balance. When financing a warranty through the dealership, however, the warranty cost is added to the principal of the loan.

That means RV owners pay interest on the warranty cost until the loan is paid, often years later. The added cost of interest can be thousands of dollars over the course of the loan.

While warranty companies offer pay-in-full discounts, the price difference between pay-in-full and payment plan options is loose change compared to the interest that can be earned off of the financed warranty balance.

Better Refund Options

If canceled, warranties financed through the dealership do not offer immediate money back. Instead, they take the amount off the end of the loan payments, meaning that the payments will end more quickly.

If the RV was purchased one year ago and the loan is paid over seven years, the RV owner won’t see any change in their payments for at least five years. When canceling with an RV warranty company, customers usually receive any refund due within 30 days.