Tell me about extended warranties for cars. Googling around, opinions seem to vary. Among friends and family I get a gamut of opinions from “never buy a warranty from anyone except manufacturer” to “buy as much supplemental warranty as you can afford.” The vehicle in question is a 2012l VW convertible. If anyone knows any reputable companies for such a thing, all the better. Please give it to me straight about extended car warranties, the good, bad, and ugly.
I’ve only ever bought factory extended service plans, and from Ford. They’re backed and administered by Ford, and handled through their normal warranty system. I think the VW factory plans are backed by VW, but administered by a third party.
The aftermarket/third party “warranties” you can buy after your original ones expire can be worth it, but you have to be vigilant and read every single letter of the fine print. They’re not really “warranties” as much as they are insurance, so you need to be well aware of what is and what is not covered, and what the “warranty” company is obligated to do as far as sourcing parts. Also, like insurance, you usually have to deal with adjusters who will approve or deny coverage for a repair, and pay a deductible. I know of one person (IIRC another Doper) who had one of these on a car which lunched the engine, and the warranty provider would only cover replacement with a used engine. Given the mileage of the car, that’s really not unreasonable, but you need to be aware of that going in.
I recommend you watch/listen to this.
Extended warranties on any manufactured product as a general rule are an unwise investment. They are designed and well thought out by the seller to always take in more than they pay out.
Take a look at the bathtub curve and you’ll see why. Failure rates happen most often at the tail ends of a products lifespan. They usually happen early on, in which case you are covered under the manufacturer’s warranty, or they happen near the end of the products lifespan, in which case the extended warranty is already expired.
Extended warranties cover the period of time when failures are the least likely to occur. Sellers of these warranties know that, know the odds, and play them in their favor.
My friend the new-car salesman told be to never-ever buy the extended warranty.
My wife did so anyway. Which was alright, it wasn’t a disaster. Except that the dealer had an absolutely hopeless, worthless, service department. Eventually I just walked away from the extended warranty, because sometimes the car needs servicing. By a mechanic. Who actually opens the hood.
I have no reason to expect your dealer to have a worthless service department, but the warranty is still normally a waste of money, covering only things that don’t fail, in return for your money and your service contract.
Extended warranty sometimes covers road-side service. If you don’t have friends and family to rescue you if your car fails, and don’t have any other source of road-side service, you might consider that.
I bought one once, when I was young and clueless, and learned my lesson. Melbourne is right. It only covered parts not likely to fail. I didn’t have a ton of trouble with that car, but absolutely nothing that ever went wrong with it was covered under my warranty.
I would never buy any kind of extended warranty again.
My Wife bought one for her new 16 Subaru Outback. The finance guy convinced us that the car WAS going to break down and it’s SO expensive to fix. He talked so down about the car, I felt like just calling the whole deal off and walking out. He made us feel like we where buying a piece of shit (we had done enough research to know that we where not). It was very weird.
Later, in hindsight we called the dealer back and complained about high pressure sales. And saw that we paid nearly twice for the warrantee than what was offered online. We got the price knocked down on the warrantee to what was offered online by the dealership.
Only factory-backed plans. In one case it really paid off since the car had some serious issues right after the basic warranty ran out and in one case it was a wasted effort because Chevy and the dealer both turned out to be weasels. But I’ve done it for most cars I bought new and probably would do so again.
I cannot fathom why anyone buys these warranties. We all know what buying lottery tickets is a waste of money, but at least it is fun. Do some people find extended warranties to be fun?
you can’t see the difference? lotteries have odds on the order of several millions to one. CR says half of all buyers of extended warranties won’t need to use them. i.e. odds of 2:1.
cars are exorbitantly complicated machines, which we expect to be as reliable as toasters.
I bought an extended warranty for my Mazda3 in 2008–but ***only ***because of the provision they would refund the purchase price if I didn’t use it by the expiration date. Turned out that little Mazda3 was a great car and never needed anything other than routine maintenance. I got my money back after 5 years no questions asked.
And common sense tells you that it pretty much has to be this way: they wouldn’t be offering to sell you a warranty if they didn’t think they could make money on it.
The general rule of thumb is that it never (well, seldom) makes sense to buy a warranty or insurance on anything that you could afford to replace out of pocket. A warranty’s only value is that it protects you against the possibility of an unexpected expense that you couldn’t afford by charging you an expected expense that you can afford.
I bought an after market one on a car back in the early 90’s.
Huge mistake.
Like previously mentioned it’s really an insurance policy. And they’re sticklers on the fine print.
At 80K the car broke down on a Friday night and I was out of town. It needed to be fixed before Monday so I could get home. There was nobody available to talk to at the “extended warranty” place. They were a M-F 9-5 deal.
I had the car repaired. On Monday morning I was told by the warranty crooks that the repair was covered except I didn’t get prior authorization for the repair (which was covered) so it therefore wasn’t covered. They’d rather I be stuck for 3 days in North Bumfuck waiting for Monday. Jerks! :mad:
I can’t comment on OEM extended warranties. Now days I rarely keep a car past 50K.
These after market companies are predatory.
I got a solicitation through the mail one day. I can’t remember how they worded it, but at first glance, they made it read like if I didn’t pay this, I would be facing BIG penalties.
It wasn’t until I read the fine print I realized they were just trying to sell me a crap warranty.
Over the years I have purchased 3 extended warranties. On one, covered repairs equalled the cost of the warranty (actually I “made” about $100). On another, covered repairs equalled part of the cost, on the third there weren’t any covered repairs needed.
So, like all insurance-and that is what it is-they are not in general worth it if you can afford the rare high cost repairs. It is always better to self-insure if you can. But those warranties gave me peace of mind, so I had that going for me which is nice.
As for the quality of the insurance company, that varies as always. In my experience, extended warranties are never underwritten by the manufacturer, they are always third-party. The most the manufacturer will do is lend their name. All the warranties I have seen were clearly third party, even the Ford extended warranty sold by the Ford dealer. There may be actual manufacturer extended warranties out there, but I doubt it. Such things are profit centers for the dealers, the manufacturer doesn’t get anything out of them.
I’m sure you can see the other difference: with a lottery, you have a puny chance of being rich beyond your wildest dreams. With an extended warranty, you’re guaranteed to pay a lot of money up front for something that will most likely lose you money in the long term.
Depends who you listen to. If you’re talking to the salesman, your car is very reliable and he had a friend who drove it for eleventy billion miles with only oil changes and it only needed new wipers once in the snowzilla of ought-five. But as soon as you make the handshake to buy the car, the F&I guy informs you that you’re going to need constant repairs starting at 60,001 miles, and you might as well move closer to the dealership’s garage because that’s where the car will be parked every night anyway.
In reality, the amount of fixing that cars need has come down a lot. In 2005, the average car brand had 237 problems per 100 cars. In 2015, that number is 147. Warranties prey on people who think cars have the reliability of brown bananas.
http://businesscenter.jdpower.com/news/pressrelease.aspx?ID=2005089
http://www.jdpower.com/press-releases/2015-vehicle-dependability-study
I bought an extended warranty for a motorcycle once. I knew I was going to be putting some high miles on the bike and it was only about $500. It excluded wear items, brakes, tires and such. I had a problem with the shift forks in the transmission. When I went to get it fixed under the warranty they refused saying shift forks are wear items. When I looked in to it, and asked around, even the service manual says nothing about checking the shift forks, ever.
In the end the repairs cost me $3000 because to get to the forks to even look at them requires the engine to come off the bike. I wrote Kawasaki, my dealer, and one of the motorcycle magazines a letter asking why it wasn’t covered and said I wouldn’t be buying another of their bikes if they wouldn’t give me a good answer as to why it wasn’t fixed. They never did and I bought a different kind of bike.
Mr. Athena bought one for an Xterra he bought in 2000. I told him they were a scam, it was stupid, etc etc, but the deed was done (we weren’t married yet at the time, and I wasn’t involved with the purchase.)
A month or so after he bought it, they sent us a new contract, stating something like the warranty was only good at the original dealer he bought the car from. We immediately protest because 1) the contract was already signed, who the heck tries to redo it a month later and 2) we were planning on moving out of state within a year. They honored the original contract.
Several years later, the catalytic converter on the car died, and lo-and-behold, the extended warranty covered it with very little hassle.
Overall, it was a wash; the cost of the repair was right around the same price that the warranty cost. So in that case, we didn’t lose money, but it was pure luck (or anti-luck?). We don’t buy extended warranties anymore, for all the reasons stated in this thread.
I think a better strategy is to open a personal savings account and label it “my extended warranty account”. Every time someone pitches an extended warranty to you (vehicles, appliances, computers, cell phones, home electronics, etc.) pass on the warranty, note the price, and deposit that amount into your account.
If you ever need a repair done during the sellers extended coverage period pay for it out of this account.
I think you’ll come out ahead.
The guy selling the warranty is making money on it. That alone should tell you it is not a good deal. On average, the warranty costs significantly more than the repairs it covers. If you’re worried about unexpected repairs, throw a few grand in savings and be your own warranty.
This mostly goes for insurance too. Thing is, rebuilding your house after a fire or paying medical bills for the guy you crashed into are major expenses that most people struggle to cover on their own. What little warranties pay for aren’t.
Bought an extended warranty for my old Catera, and thank God I did.
We ended up costing that warranty company around 10 grand because of all the terrible things that happened to it. Flywheel cracked, engine froze up…sooooo many problems.
I ended up getting rid of the car when the warranty company refused to put any more money into it.