You know, more dudes need to walk out after they start crap like add-ons already added in that you said you didn’t want. They do this as some dudes will give in meekly and for the rest “it doesn’t hurt to try”. If it did hurt to try, they might stop.
Most failures due to problems will either show up early or be caused by wear and tear which isn’t covered under warrenty.
It’s true, I might consider an extended warrenty on new tech, like an extra few years on a Hybrid battery.
Thanks for the good word! We’re still planning to test drive one together and I’m hoping the experience might change her opinion.
That’s funny, here in the St. Louis area, xB’s are pretty common. I see them on the road daily.
I tend to lean toward the “Big % goes in dealers profit column, small % goes toward repair claims.” But that is why they sell them. To make money. I don’t think they are into charity work.
Small print makes them slippery purchases too. Yes reapirs are expensive. But how many of your last dozen trips to a repair shop been for something other than normal wear-and-tear. I don’t think extended warranties are going to cover brakes, shocks, mufflers, tires, tune-ups, system flushes, belts, etc.
And stuff that is not wear-and-tear usually doesn’t start breaking until after 100K miles. Way past what any extended warranty will cover.
And then you run into the “Oh sure, the part is covered, labor is not.”
But you’ll always run into the folks that will respond when you tell them “warranties are a rip-off” with “Oh yeah, well tell that to the guy who just used his for the $1000 repair.”
That’s like responding to “lottery tickets are a rip-off” with “Oh yeah, well tell that to the guy who just won 2.4 million.”
Extended warranties are a high profit business. That’s why dealerships and salesmen push them so hard.
Extended warranties take advantage of the ‘bathtub curve’ of reliability. The bathtub is a curve that looks like, well, a bathtub with a slope on each end and a flat spot in the middle. The slope on the left represents early failure from defective components. The failure rate decreases over time as the defects are shaken out. The manufacturer’s warranty protects you against failures in this area of the curve.
Then you get to the ‘floor’ of the bathtub, where failures are rare. Once products get out of their early failure period, they tend to work reliability for a long period of time until parts start to wear out. Then the failure rate starts to increase, and that’s the right side of the bathtub curve.
Extended warranties sell you protection from failure during the period where failures least likely to happen. They run out before parts start wearing out, and the parts of the vehicle that DO wear out during that period are exempted from the warranty.
A lot of people think the extended warranty is just the manufacturer’s warranty with some years added on. But if you read the paperwork you’ll see that there’s a whole host of excluded repairs which were not excluded before.
One reason why the insurance is generally a ripoff is because there is an asymmetry of information between the auto company and the person buying the insurance. The auto company knows exactly how much each car on average is going to cost in warranty repairs - they have a huge collection of data to draw from. But the customer really has no idea. So they have no way of knowing if the price of the extended warranty is justified.
Also remember that the warranty is more expensive than it looks, because you start paying for it the day you buy the car, but you derive zero benefit from it for 3 to 6 years when the manufacturer’s warranty runs out. So you’re basically giving the car company a free loan for those years.
If you take the cost of the extended warranty and instead set up an equivalent fund in the bank for auto repairs, by the time your warranty runs out you could have several thoousand dollars in the account. That will cover you for all but the most unlikely large repairs - a blown engine or transmission might cost a little more, but you’ll have a good chunk of the cost.
Then when you get to the end of the life of the car, whatever money is in the fund can be used as part of a down payment on the next car, which will lower your payments even more. Then do the same thing with the new car.
:dubious: Whaaaat? Something does not make sense to my feeble mind.
Why are you adding the residual to the cap cost and then multiplying by the money factor?
Assume the following
Cap cost $24,000
Residual $12,000
I think the lease calculation should be (24K-12K /36) + (24K * Money factor).
The customer is borrowing $24,000, not $36,000. Explain please.
[nitpick]Also in California anyway, the tax and license is not part of the cap cost. It is added each month, so you don’t pay interest on the tax and license. [/nitpick]
It’s been a long time, but when I bought my Florida car, I did the paperwork for a Bank123 loan with the dealership, then when I went back to take it they said I’d been rejected by the bank. They offered me a different loan, with much worse conditions.
What options would a person have at that point? Is it possible to succesfully contest something like that in a reasonable amount of time?
Further :smack: details spoilered. I’d like the general answer, mostly because I think it’s the kind of stuff everybody should know, since anybody can run into this kind of problem.
The reason the bank rejected me was “insufficient credit record”. They’d been my bank for 3 years; I had a savings account, a checking account and an investment account with them. And they’d issued the Visa I used for the downpayment and, as soon as they got wind of its usage, raised the limit on it.
If you need a loan for a car, secure the financing BEFORE you go car shopping. And don’t tell the dealer you’re doing you’re own financing - it may affect the best offer you can get. But you should always know exactly what financing will cost you before you go shopping.
One way people routinely get screwed by car dealers is that they pick the car they want, agree to a deal, then get shocked by the monthly payments that result after financing charges are added. So they wind up negotiating a longer term on the loan to get the monthly payment back down to something they can afford, but this drives up the cost of financing even more, making the car really expensive.
Never negotiate for a car based on monthly payments. This is a standard technique used by car salesmen to hide the true price of the vehicle. If you start your negotiations by saying, “I can afford X per month”, you’re probably going to get a bad deal.
So… Arrange your financing, research the dealer costs on the vehicles you are interested in, use the internet to find out what kind of deals people are typically getting (you can find message boards for owners of most vehicles, where they often discuss what they paid). Run the costs through an amortization program to find out what the monthly payments should be, and use that to budget for your vehicle.
But when you go to the dealership, negotiate on vehicle price only. Volunteer no information about how you might finance the vehicle until you have a price. Get it in writing, and have them add “No extra charges or fees” to the quoted price. Then when you go in to write up the paperwork, read it VERY carefully. Every page. If you find any evtra fees and they tell you they are ‘standard’, point to your quote, and tell them that if the final price before tax doesn’t match what’s on your paper, you are leaving. And mean it.
What most people don’t know is that the dealership is the creditor until the loan is assigned to a lender. Essentially what we do is sell your loan to the bank. Until then the dealership holds the paper. If we can’t get the loan bought, with the conditions on your contract, we start to sweat. Big time. We can try to get it bought under different stipulations, and hope to hell you agree to it. If you signed the contract AND you have a copy of it, then you can tell the dealership that you will just make the monthly payments as outlined in your contract (point to contract terms) to them directly with a great big grin on your face.
This is why I do not contract deals until I have an approval sheet from the lender, and all required stipulations from the customer. Saves me a lot of stress.