No Fixed Abode: Putting Out a Contract on That Honda

Jack Baruth
by Jack Baruth

I’ve always been suspicious of the word “ally.”

As a child, reading John Toland and William Shirer when most of my classmates were still sounding out words one syllable at a time, I didn’t much care for the Allies. Instead, I rather approved of the Axis powers — minus that treacherous Stalin, mind you. Save your disapproval. The rest of America must have secretly felt the same way or else we wouldn’t have surrendered our vehicle-manufacturing capabilities to Germany and Japan. Indeed, I think that President Bush made a mistake talking about the “Axis Of Evil.” First off, that sounds like a really bad-ass metal band. Second, it implies that the countries involved might eventually create reissues of the Messerschmitt Me262 Sturmvogel, which would be enough to sway any man with functioning testicles to their cause.

But “Ally” is also a euphemism for GMAC, the company that sucked up $17 billion worth of taxpayer money so it could offer 0-percent financing on Chinese-made Buick Envision SUVs. And since the nice people at Ally learned precisely nothing from that bailout, the same way your neighbor’s kid Chadwick learned precisely the wrong lesson from his parents’ decision to replace his 2014 Mercedes-Benz SLK 250 with a 2016 Mercedes-Benz SL 550 after Chadwick tripped out on Ecstasy and barrel-rolled said SLK into a kindergarten schoolyard, Ally busies itself offering all sorts of additional financial “products” via direct mail to all sorts of people.

I’m one of those people.

Ally wants to cover my 2014 Accord V6 ( did you know I had one?) with a special service contract. Who’s the bigger fool here: Ally, for offering me a contract, or me, for considering it?

Ally sent me a piece of direct mail that asked me to assess my needs for protection. You can take this test a bunch of different ways; like a Choose Your Own Adventure book from the ’80s, most of the paths lead to the same conclusion, and that conclusion is to give Ally a chance.

If you want to give Ally a chance, you won’t find any way to do it on that web page; it wants you to see a “qualified dealer.” Presumably this is part of Ally’s agreement with its dealer base. Luckily for me, there’s a nearly identical Ally site that’ll let me buy protection direct. But how much protection should I buy? Right now, my Accord has been in service for 32 months and 40,000 miles. I decided to extend my protection to what I would have gotten had I purchased a Hyundai: 60 months and 60,000 miles.

The Ally site claims that it will quote you without a VIN, but it refuses to admit the existence of any Accord besides the Hybrid unless you plug in a VIN. I put in the VIN of the non-metallic black 2014 manual V6 coupe that I would have purchased had I not bought my “Modern Steel” coupe. This is what I got.

Twenty-four hundred bucks — or, as the site helpfully tells me, just $112.05 a month. What do I get for that money? I get sixty K’s worth of coverage for all items great (the engine) and small (the radio). But the devil is in the details:

The list is too big to fit on the screen of my 17-inch laptop, but here are some of the highlights:

  • Correction of noises/odors/squeaks/rattles: This is fair. It’s not really an extended bumper-to-bumper warranty, and even some manufacturers have a fixed period of time beyond which they won’t fix minor issues such as these.
  • Hoses of all kinds: If your radiator hose lets go, that’s a shame.
  • Shock absorbers and cross members: I don’t think this would have surprised anybody 20 years ago. Today, those items are expected to last 100,000 miles.
  • Chassis frame, sheet metal, hinges, rust: This is not a body warranty. I think it would be courageous and fascinating for Ally to warranty a Honda against rust, and possibly suicidal for them to warranty a Mazda against rust.
  • Convertible and vinyl tops: This one caused me to raise my eyebrows a bit, because I can see some owners of “hardtop” convertibles like the Benz SL or Miata PRHT being blindsided by this down the road.
  • Every possible wear or service item: This, on something that bills itself as a “service contract.” Don’t sleep on this, as the kids say, because it could easily include something like an alternator.

As has been the case since time immemorial, and discounting various stunts by people who purchase warranties on hood-rich shitty used exotics with questionable or nonexistent histories, these extended agreements/service contracts/whatevers are best considered as a way to fix certain costs ahead of time, with the understanding that in doing so one stands a very good chance of spending more money than one would have otherwise. It’s possible to swap a junkyard V6 into an eight-year-old Accord for about $4,000. If you want to spend $2,400 against the chance of that $4,000, then I don’t think I would call you a fool for doing so.

As a Ford salesman, I rarely pushed the Ford ESP plan, even though it’s actually very good and it will dramatically reduce your cost of ownership for an even moderately troublesome car. The exception to this rule of mine was when I had customers who were clearly at the very edge of their financial ability to own the car they were purchasing. I explained to them that if they were struggling to make a $475 payment (or whatever) right now on a car with no problems, they’d have a much harder time making that payment and replacing a transmission at the same time. Few of them took my advice. Human beings are always unreasonably optimistic about the future. Were that not the case, nobody would ride a motorcycle or date Taylor Swift.

I’m not going to buy the Ally contract on my Honda. I do, however, think that it’s worth consideration. The only fly in the ointment is that Ally might not be around long enough to honor the contract if you need it. Maybe that’s pessimism on my part. After all, history has shown us that Ally is “too big to fail” and “too big to jail.” But I also remember that “new GM” didn’t have to pay the “old GM” debts. So maybe if you decide to get a service contact for your car, you should consider finding a more reliable ally than this one.

Jack Baruth
Jack Baruth

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  • Dapip33 Dapip33 on Oct 12, 2016

    I'm surprised nobody brought up Geico's mechanical breakdown insurance: I tacked this onto my auto insurance when switching to GEICO and am pleased to get extended warranty on my Mazda 6 (which has a wimpy warranty) up to 100k miles from GEICO. Granted, the aforementioned Honda in this article wouldn't qualify, but for newer vehicles I think it's a great way to go.

  • Bill Bill on Oct 13, 2016

    I wasted five years of my life/career working as a claims rep for an aftermarket service contract company. While a few people came out well ahead (I recall one person had $10,000 in repairs covered by a contract they paid $1,200 for) the reality is most of the customers lost and lost bad. On top of the usual exclusions the company I worked for would stretch the definitions of some exclusions when convenient. For example we covered split CV boots until one day the boss decided that we were spending too much money on cv boot claims and that they were no longer covered since they were now considered "maintenance items". And don't get me started on what constituted "abuse". The absolute worst though was when we partnered with many of the direct marketing companies that were so prevalent in 2008-10. I left the company in 2009 so I don't remember all the coverage details but we had a special series of contracts for them that basically excluded all the high frequency claim items, things like ball joints, seals and gaskets if the vehicle had over 75k miles, etc. Truly horrid contracts with horrid companies selling them. A few months after I got fed up and quit the Missouri AG sued quite a few of the companies we partnered with for their business practices. When selling the contract, dealers liked to explain them as covering everything except for maintenance/wear items, which really isn't true and can cost big. For example if your direct injected engine suffers from carbon deposits clogging up the intake ports and needs work to fix that, that isn't covered on any contract I know of since deposits and damage resulting from them would be excluded. Before I worked at the service contract company I would have said service contracts are a gamble, but a potentially worthwhile gamble. Now I would never recommend a service contract to anybody.

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