A caller on a recent episode of “The Ramsey Show” shared a financial mess that stunned co-hosts John Delony and George Kamel. Ami from Tampa, Florida, financed a used car earlier this year, but things quickly went off the rails.
Extended Warranty Nightmare
“I financed a used car and I got an extended warranty with it,” Ami explained. “Recently, the engine blew up, and now I have no car and am stuck with this $30,000 loan.”
The car was worth about $18,000, but with a $6,000 extended warranty and other fees, her total loan ended up at $30,000. Despite the warranty, the mechanic is refusing to fix the engine unless she pays out of pocket for a teardown first. The warranty company may reimburse her later, but there’s no guarantee.
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Delony was floored. “You paid $6,000 for a warranty against an $18,000 car?” he asked. “At that ratio, that would be like buying a warranty for a $500,000 house that costs $175,000. You must have bought the Cadillac Lexus Atomic Diamond Platinum warranty.”
Kamel was equally shocked. “That is insane,” he said. “I’ve never heard where you have to pay, and then maybe the warranty company will reimburse you later.”
Ami admitted she had been emailing the warranty company, but hadn't gotten any results. Delony pushed back: “I’m not messaging anything. It would be my part-time job. Whenever I’m not working my full-time job, I’m working on this and fighting it. I’m showing up in person every day until they know me by name.”
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Debt Pile-Up And Family Struggles
On top of the $30,000 car loan, Ami has another car loan for $13,000—a car she gave to her unemployed mother. She also has an $8,000 personal loan and several credit cards.
Delony and Kamel urged her to consider taking back the car from her mom. “At least you’re less in debt on that one,” Kamel said. “Mom needs to figure it out.”
When asked how she planned to get around, Ami said she had been borrowing a customer courtesy vehicle from the aircraft maintenance shop where she works. Kamel encouraged her to ask coworkers for help navigating the mechanic situation. “They've got to know what an engine looks like,” he said.
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A Wake-Up Call
“You’re getting hosed at every dealership you go to,” Kamel said bluntly.
Their advice was that she should pursue a full refund on the extended warranty, consider fixing the broken car just enough to sell it, and get serious about overhauling her finances.
“You’re going to have to make a lot of hard choices and fight really hard, probably for the next few months,” Kamel said.
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