I recently bought a new(er) car which still has 8 months left on its factory warranty. Never having owned a car under warranty before, I got to wondering about extended/aftermarket warranties that extend your warranty by 3-4 years. Not the ones offered by the dealer, the aftermarket ones offered by private warranty companies.
Any experiences, any companies to recommend? Is the whole thing a scam?
I’m sure someone with car sales experience will pop in here a give you the SD, but I’ll help with what I can.
Let’s put it this way, in many cases extended warranties on cars are a shade better than the extended warranties you get at Best Buy on your DVD player: It’s just really expensive insurance for stuff that probably won’t go wrong.
BUT, a lot will depend on what kind of car you are looking at covering, the cost of the warranty, and what it covers. All of these things are very important. Unfortunately, these warranty companies have actuaries working for them, and they definitely know the odds of you car breaking and costing more than the warranty price to fix. And they set their prices accordingly.
What they don’t know is how your car has been treated. Say you live in the frozen north of Michigan, drive your car through piles of salt, run the heater year-round, never let it warm up in the morning and are lax about changing the oil. You might be in a situation where the odds of you having a catastrophic breakdown would be greater than someone else. You might consider a policy that covers rust, new engines and heater cores and fans. Other other hand, if you only drive your car to church and back, then maybe not so much.
Also, there was a warranty company within the last five years, I think, that went bankrupt. Everyone with a policy through that company was SOL.
From what I understand, the good answer is: Extrended warranties are generally not recommended. However, if you must buy one, do it through a manufacturer, or at least with the manufacturer’s guarantee.
I had a warranty for 6 years. A week after it ended my muffler fell down. They’ve got it down to a science, I think.
One thing to think about with warranties: They usually cover manufacturing defects. With more time/mileage on a car, it is easier to say the part which failed was a wear item as opposed to a manufacturing defect. Truly, no part wears out within 200 miles. 50,000 miles is another story.
I purchased an extended warrantie through Jaguar and had some repairs done over the summer. The work had to be pre-approved and inspected by the extended warrantie company, and I had to prove that I maintained the vehicle before they would pay. But they did pay. I had more problems with the RI Jaguar car dealer than anything else.
Problem was, I found the vehicle on cars.com in the Boston area. I’m living in NY, but was visiting RI when my car broke down. So the dealer gave me a hard time for not being a regular customer. He wouldn’t take the time to review the maintenance history of the vehicle within the Jaquar database. I had to contact my dealer in NY to get maintenance records on a vehicle that was previously owned by someone else at the time and maintained by a Boston Jaguar dealership. Unbelievable.
The repairs paid for the warrantie. So was it worth it? I think so. Just be sure to cover your ass with your maintenance records.
Consumer advocates generally advise against them. In the big picture, they aren’t a good value for the consumers (as a group). Now, if you happen to have a failure on a covered item, it can be a great deal for you. But as with lotteries, the odds are not in your favor.
There’s a wide range of coverage and performance among the various warranty companies. Some are easy for the repair shop to deal with, generally approve repairs at the shop’s normal rate, and pay quickly. Others have a lot of hoops to jump through, limit their coverage to the failed part but exclude gaskets and fluids necessary to the repair, pay only an amount they determine even if the shop normally charges more – in which case the customer pays the difference to the shop-- etc. I’m sorry I can’t tell you which companies are a dream to deal with and which are a pure pain in the butt. As you can imagine, repair shops aren’t too fond of dealing with the latter.
Most companies offer several different plans with different coverage levels, which can range from minimal to fairly comprehensive. WARRANTY SALESMEN ARE NOTORIOUS FOR MISREPRESENTING THE COVERAGE. Be sure to read the warranty to see what’s covered. When it’s time to use the warranty, what the salesman said is meaningless – only what’s written matters.
Thanks for input y’all. I am still considering it. I have a few months to make a descision since my car is still under its original warranty.
Price (online quote and policy info, I don’t talk to salespeople) was around $700 for 4 years/50k miles, including engine/transmission (all lubricated parts), electrical, braking, steering, exhaust systems. I’m speaking in generalities but the list of covered items was very very long.
I know from experience that a transmission job is $2000+ and there are hundreds of $700 things that can go wrong in a car. Since I will soon be going back to school I do not expect to have an extra $2000 hanging around in the next three years… that’s what’s attractive about the warranty extension.
Like all insurance the best buy is to be self insured, if it won’t break you.
Ask yourself what you would do if the covered problem happened uninsured. If the answer is you’d just pay it out of savings or wait until your next paycheck to fix it, then insurance is a bad bet. If it would mean you couldn’t get it repaired and would not be able to get to work and would become homeless, then the insurance is worth it.
You have to be fairly poor for it to be worth it.
A friend in the used car sales business had spoof warrantee papers made up, they looked and read exactly like the regular warantee, but at the bottom, in very small print, it said
“Warantee does not include Parts or Labor”
I’ll be in school. The answer to what would happen is choice C: I’d have to put it on my credit card and spend a year paying it off. I am pretty much down to nothing as far as savings at the moment (not a good way to live, I am aware) so I am anticipating some extremely lean years ahead.
Almost all of these “warranties” have a deductible, usually ranging from $50-$500. This, IMHO, makes them more an insurance policy than warranty. Does the one you are looking at have a deductible?
And why was your muffler trying to stand up? 
$100
So the real cost is $700 plus an additional $100 every time you have a covered repair. You’re really insuring against a catastrophic failure (that’s covered) sometime over the next 4 years.