Self Admin Warranty

[grant8064 219]

Hi Guys,

We're currently with RAC for warranties offering 6 months on 3K + cars but it's costing us a fortune per year and we end up having to take all the calls, moans and deal with the claims ourselves as most customers refuse point blank to deal with them themselves. Last year we did approx 40k in warranty costs and had payouts for claims not totalling more than 10k, plus it's always a struggle getting them to play ball.

We want to self admin warranties putting a figure of £100 per vehicle into an account and building a fund to use. We'll still be doing the same donkey work as we are now but hopefully will be better off financially and be able to be a bit more flexible about what we pay out on.

Question is are the Lawgistics books any good? We use Lawgistics for our legal stuff and find them helpful. Any other recommendations?

Any tips, tricks, hints or things we need to be aware of?

Cheers

[trade vet 703]

Hi Grant

Been doing it for years,it definateley works,especially if you are doing at least 10 per week.Set up a separate account and put £100 per sale and it quickly mounts up and claims won’t give you a headache.If you have your own workshop,it even works better.

We just lifted the T and C’s from other warranty books and added a few of our own.Basic booklets don’t cost much.However,unless things have changed,you can’t have them printed up as warranty books,warranties have to be underwritten by an insurance company.You can call them ‘mechanical breakdown agreements’ or something and you should be OK.

 

[grant8064 219]

52 minutes ago, trade vet said:

Hi Grant

Been doing it for years,it definateley works,especially if you are doing at least 10 per week.Set up a separate account and put £100 per sale and it quickly mounts up and claims won’t give you a headache.If you have your own workshop,it even works better.

We just lifted the T and C’s from other warranty books and added a few of our own.Basic booklets don’t cost much.However,unless things have changed,you can’t have them printed up as warranty books,warranties have to be underwritten by an insurance company.You can call them ‘mechanical breakdown agreements’ or something and you should be OK.

 

Cheers for that mate,

We've been considering it for a while but been busy expanding and only just got round to doing it after going through some figures. In theory it should save us a fair bit of time trying to squeeze blood from the current warranty supplier each month. 

Good shout on the wording, I had read something about that before but wasn't certain about it. I think we'll start off with the basic booklets and maybe look into making some adjustments once we get settled.

Thanks again

[Arfur Dealy 823]

3 hours ago, grant8064 said:

Hi Guys,

We're currently with RAC for warranties offering 6 months on 3K + cars but it's costing us a fortune per year and we end up having to take all the calls, moans and deal with the claims ourselves as most customers refuse point blank to deal with them themselves. Last year we did approx 40k in warranty costs and had payouts for claims not totalling more than 10k, plus it's always a struggle getting them to play ball.

We want to self admin warranties putting a figure of £100 per vehicle into an account and building a fund to use. We'll still be doing the same donkey work as we are now but hopefully will be better off financially and be able to be a bit more flexible about what we pay out on.

Question is are the Lawgistics books any good? We use Lawgistics for our legal stuff and find them helpful. Any other recommendations?

Any tips, tricks, hints or things we need to be aware of?

Cheers

Don't offer a warranty

[grant8064 219]

1 minute ago, Arfur Dealy said:

Don't offer a warranty

Not really an option for us. Bread and butter stock sold locally to regular Joes. They expect cover of some kind and frankly so would I if I went to a dealer paying retail money. 

[Arfur Dealy 823]

I'm a member of Lawgistics and use all of their paperwork also  I tell my buyers I stand by my responsibilities under the CRA but do not offer a warranty.

23 minutes ago, grant8064 said:

Not really an option for us. Bread and butter stock sold locally to regular Joes. They expect cover of some kind and frankly so would I if I went to a dealer paying retail money. 

Grant that's cool, if you are selling nearly new cars and competing with Main Dealers at their level then of course a warranty would be expected.

[grant8064 219]

39 minutes ago, Arfur Dealy said:

I'm a member of Lawgistics and use all of their paperwork also  I tell my buyers I stand by my responsibilities under the CRA but do not offer a warranty.

Grant that's cool, if you are selling nearly new cars and competing with Main Dealers at their level then of course a warranty would be expected.

We're not quite at nearly new but it's stock our client base would expect some form of cover on, we just want to get the costs down and have a bit more flexibility really. 

I can totally see your viewpoint though especially with your stock profile being rarer and more unusual stuff than our Corsa's and Mondeos! The videos must also be a good bit of back up for your kind of stock too...no arguing that you've hidden something when there's a video showing all the good and bad bits

[BHM 994]

Do you actually need to channel money into a “warranty” account or is that just to keep tabs on costs? Surely forget the external warranty company and simply pay out repairs as & when necessary.

[have a word with the wife 299]

4 hours ago, grant8064 said:

Hi Guys,

We're currently with RAC for warranties offering 6 months on 3K + cars but it's costing us a fortune per year and we end up having to take all the calls, moans and deal with the claims ourselves as most customers refuse point blank to deal with them themselves. Last year we did approx 40k in warranty costs and had payouts for claims not totalling more than 10k, plus it's always a struggle getting them to play ball.

We want to self admin warranties putting a figure of £100 per vehicle into an account and building a fund to use. We'll still be doing the same donkey work as we are now but hopefully will be better off financially and be able to be a bit more flexible about what we pay out on.

Question is are the Lawgistics books any good? We use Lawgistics for our legal stuff and find them helpful. Any other recommendations?

Any tips, tricks, hints or things we need to be aware of?

Cheers

hi, question, where does this £100 going to be coming from ?

is it from your  own pocket ?

is it from the sale price?

if its from the sale price then your £100 dearer than jo down the road who doesnt give a warranty, jo down the road sells his warranty, he explains that his warranty is THE BEST, he explains the pitfalls of national warranties run by major companies, he explains that when his customer has a problem he speaks to jo direct, and jo explains his warranty and how it compares to major warranties, he explains that major warranties only cover complete failure of a item, and if its simply worn out its not covered at all, jo gives a example, he explains that when the alternator  stops working, its worn out ! and its £130 plus labour ! he explains that under his warranty, this IS covered, because jo can fit a reconditioned [or second hand] alternator that will be warranted itself for 12 month including labour ! he explains its £99 for his warranty, compared to up to £300 for the same thing in a glossy book, jo s customer refuses the warranty, the car is sold no warranty implied or given, jo s customer accepts the warranty, he gets a 3 month major mechanical warranty that is worded very very carefully,[especially the title, as said re wording "warranty"] it doesnt cover clutches,belts,etc its engine/box starter alternator, and doesnt cover consequential damage.

dont give warranties, explain theres no hidden costs in your windscreen price, sell the warranty, put that money in a tin, awkward customer wants warranty throwing in ? refuse, if hes moaning now, he will moan later, explain if you want he is already well covered by the cra

[grant8064 219]

28 minutes ago, have a word with the wife said:

hi, question, where does this £100 going to be coming from ?

is it from your  own pocket ?

is it from the sale price?

if its from the sale price then your £100 dearer than jo down the road who doesnt give a warranty, jo down the road sells his warranty, he explains that his warranty is THE BEST, he explains the pitfalls of national warranties run by major companies, he explains that when his customer has a problem he speaks to jo direct, and jo explains his warranty and how it compares to major warranties, he explains that major warranties only cover complete failure of a item, and if its simply worn out its not covered at all, jo gives a example, he explains that when the alternator  stops working, its worn out ! and its £130 plus labour ! he explains that under his warranty, this IS covered, because jo can fit a reconditioned [or second hand] alternator that will be warranted itself for 12 month including labour ! he explains its £99 for his warranty, compared to up to £300 for the same thing in a glossy book, jo s customer refuses the warranty, the car is sold no warranty implied or given, jo s customer accepts the warranty, he gets a 3 month major mechanical warranty that is worded very very carefully,[especially the title, as said re wording "warranty"] it doesnt cover clutches,belts,etc its engine/box starter alternator, and doesnt cover consequential damage.

dont give warranties, explain theres no hidden costs in your windscreen price, sell the warranty, put that money in a tin, awkward customer wants warranty throwing in ? refuse, if hes moaning now, he will moan later, explain if you want he is already well covered by the cra

£100 from the sale price.

We're almost always £100 more expensive than Joe down the road and it works because of what Joe's like.

Our competitors mostly offer an internal warranty included in the vehicle price, same as we currently do with our externals and plan on doing with the self admin. A few offer no warranty and upsell an external one but these are mostly prestige dealers. Our customers are the type that expect some duration of cover included IMO.

In four years of external warranties we have sold a handful of extended terms...most of our punters are rightfully sceptical and have no faith in paying extra to protect a laptop in Currys, a sofa in DFS or for a used car. I also don't want to be selling an extended 12 month product on a seven year old car. Ten months in and something fails, warranty company naturally won't pay out and the punter comes moaning to me complaining that the product is worthless. There's enough local companies doing that already for us to realise it's everything we don't want to do.

I do see your point about abiding by the CRA as that should be enough to invoke confidence in a buyer but explaining to our customers that cars are sold without warranty unless they pay extra on top of the screen price doesn't sit well when they can go elsewhere and get a similar car with a (5 star gold plated but meaningless) 6 month warranty thrown in for similar money. I also don't want to be highlighting the ins and outs of the CRA when i'm trying to sell a car to an excited potential buyer.

[Stalker 180]

12 hours ago, Arfur Dealy said:

Don't offer a warranty

Mmmmmm..... Because that installs confidence in a customer!

[Anglo9 26]

13 hours ago, grant8064 said:

£100 from the sale price.

We're almost always £100 more expensive than Joe down the road and it works because of what Joe's like.

Our competitors mostly offer an internal warranty included in the vehicle price, same as we currently do with our externals and plan on doing with the self admin. A few offer no warranty and upsell an external one but these are mostly prestige dealers. Our customers are the type that expect some duration of cover included IMO.

In four years of external warranties we have sold a handful of extended terms...most of our punters are rightfully sceptical and have no faith in paying extra to protect a laptop in Currys, a sofa in DFS or for a used car. I also don't want to be selling an extended 12 month product on a seven year old car. Ten months in and something fails, warranty company naturally won't pay out and the punter comes moaning to me complaining that the product is worthless. There's enough local companies doing that already for us to realise it's everything we don't want to do.

I do see your point about abiding by the CRA as that should be enough to invoke confidence in a buyer but explaining to our customers that cars are sold without warranty unless they pay extra on top of the screen price doesn't sit well when they can go elsewhere and get a similar car with a (5 star gold plated but meaningless) 6 month warranty thrown in for similar money. I also don't want to be highlighting the ins and outs of the CRA when i'm trying to sell a car to an excited potential buyer.

Couldn't agree more. we used to up sell external warranties and they were a pain in the backside in terms of admin/payout . we changed to self funded (A1 warranties)a few years back and despite my initial sceptisicm I haven't looked back , wish I'd done it years ago . Every car pops £100 in the pot , 120-150 cars a year soon adds up , customer deals direct with warranty company so they can happily play bad cop and help eliminate the chancers . I feel much more in control now plus it's a good sales tool and builds customer confidence .I would add that we PDI/MOT everything before advertising and have a low claim rate so the fund is really healthy....had a DSG box grenade this month , £1400 bill ..yes it's a bummer but I'll still be well ahead at the years end , not stressed and with happy customers .

 

 

[trade vet 703]

Selling warranties either your own or someone else’s can hamper the sales process.I have found that people who pay for warranties often return and make claims which are not covered and it creates bad feeling.However,when you throw in your own warranty,not only is it far cheaper in the long run,but you are in control and can react quickly to claims.You find that with a lot of claims ,your punter will be happy to pay for a proportion of the work.

As for not offering warranties,if you have a Credit Licence and want to do prime finance,if you don’t offer warranties or payment card facilities,I doubt any of the ‘big boys’ would offer you a rates and terms contract.

[EPV 631]

I use Warranty Assist and they are well priced for what they offer in my opinion. Approx £150 for a 3 month warranty on a 6 year old german saloon with a long ticket and recent service, as an example. I haven't had a claim (yet) so time will tell but their cover is pretty comprehensive and the customer support is there, you get a dedicated account manager.

[Arfur Dealy 823]

11 hours ago, Stalker said:

Mmmmmm..... Because that installs confidence in a customer!

A warranty is an insurance policy.  Do you trust insurance companies, I certainly don't... I would rather trust a reputable Dealer on his word...

[lastyboy 23]

I have done my own for about 8 years. I put in £80 for cheaper stuff and £100 for dearer stuff. Every now and again I have a bigger claim but I prep my cars well and most never come back. Theres 50k in the fund now so happy days.

[grant8064 219]

Cheers for all the replies to this one guys, been really helpful as always.

[have a word with the wife 299]

22 hours ago, grant8064 said:

£100 from the sale price.

We're almost always £100 more expensive than Joe down the road and it works because of what Joe's like.

Our competitors mostly offer an internal warranty included in the vehicle price, same as we currently do with our externals and plan on doing with the self admin. A few offer no warranty and upsell an external one but these are mostly prestige dealers. Our customers are the type that expect some duration of cover included IMO.

In four years of external warranties we have sold a handful of extended terms...most of our punters are rightfully sceptical and have no faith in paying extra to protect a laptop in Currys, a sofa in DFS or for a used car. I also don't want to be selling an extended 12 month product on a seven year old car. Ten months in and something fails, warranty company naturally won't pay out and the punter comes moaning to me complaining that the product is worthless. There's enough local companies doing that already for us to realise it's everything we don't want to do.

I do see your point about abiding by the CRA as that should be enough to invoke confidence in a buyer but explaining to our customers that cars are sold without warranty unless they pay extra on top of the screen price doesn't sit well when they can go elsewhere and get a similar car with a (5 star gold plated but meaningless) 6 month warranty thrown in for similar money. I also don't want to be highlighting the ins and outs of the CRA when i'm trying to sell a car to an excited potential buyer.

excellent feedback thank you, i too wouldn't offer extensions to the warranties, i wonder how many of our dealers on here actually sell warranties?

the following line may help people who are unsure about either company or self funded warranties, and the whole warranty itself,  i use it quite a lot = "a warranty doesnt come anywhere near covering your rights as much as your consumer rights" and " a warranty can't / doesn't take away any of your consumer rights"

so there's either way to look at the whole "warranty" in itself ? in todays society?

final note for grant, spend some time getting your wording right in your self funded warranty 

Edited February 14, 2018 by have a word with the wife
speling

[grant8064 219]

4 minutes ago, have a word with the wife said:

 

final note for grant, spend some time getting your wording right in your self funded warranty 

Cheers, we're being stupidly cautious and are probably going to take far too long over it but I appreciate your concerns. Duly noted! 

[Stalker 180]

13 hours ago, Arfur Dealy said:

A warranty is an insurance policy.  Do you trust insurance companies, I certainly don't... I would rather trust a reputable Dealer on his word...

No i don't trust insurance companies, however... the thread is "self admin warranty"

Not "insured warranty"

We do our own... give it away for free... Our Customers love it.

[A & S 20]

We have been trading from our site for 16 years now, the first year we were giving 3 months warranties on our vehicles through a warranty company. The first year we bought £6000 worth of policies from the warranty company they paid out £550 which was a claim on a Vauxhall Omega, we cheekily asked the warranty company rep for some of the money back from the policies after seeing the stats. You can guess what the reply was....

We then started to do our own in house warranties where we put £50 away in a reserve account for every warranty given, it works really well for us as we make sure the cars go out in good order so we have minimal come backs. The money saved pays for my self assessment tax. We have been using Law Data Books which are about £5.50 + vat per book.

 

[Stephen 21]

If you put it down as an accrual in your accounts it will also come off tax bill and you can build it up for years and tax Mam can’t get hands on it 

[justina3 518]

10 hours ago, Stephen said:

If you put it down as an accrual in your accounts it will also come off tax bill and you can build it up for years and tax Mam can’t get hands on it 

That’s an interesting thought however using the balance kept as an accumulation against future liabilities on your balance sheet would keep the funds out of the p & l balance sheet, at some point when it is moved over it would attract tax at that point, wouldn’t it be almost like storing it as a dividend at some point it has to come out and there are HMRC with there hands wide open.

(I am not saying it wouldn’t work more thinking out loud to the idea)

 

 

 

[Stephen 21]

Yes if you move it from an accrual, the tax man will want his share but ive got accruals going on for 5 years or more and never had a problem if they are genuine accruals. I tend to sometime use some of it if for instance you get an unexpected big bill. Then it doesn't affect me really like it would if I didn't have accruals. Why give the tax man it if you don't have to, Just my thoughts currently sitting on about 50k of accruals, stock devaluation, slow moving stock, van repairs etc

[justina3 518]

4 minutes ago, Stephen said:

Yes if you move it from an accrual, the tax man will want his share but ive got accruals going on for 5 years or more and never had a problem if they are genuine accruals. I tend to sometime use some of it if for instance you get an unexpected big bill. Then it doesn't affect me really like it would if I didn't have accruals. Why give the tax man it if you don't have to, Just my thoughts currently sitting on about 50k of accruals, stock devaluation, slow moving stock, van repairs etc

I am confused (and not trying to be funny please dont think that) you agree once any balance is removed from an suspense account be it accrual or similar it will attract tax, then you comment you can use it for an unexpected big bill ! so how do you move the money to pay a bill without it forming part of your balance sheet, only time i could see that working if you had it form part of a work in balance but unless your fixing up antique cars cant see how that would work either.

Maybe i just need more coffee