Having recently purchased a new vehicle, I’ve been given 30 days to decide whether or not I want to shell out an additional $700 for a warranty extending the manufacturer’s warranty from 60,000 to 100,000 miles. The last new car I bought (Toyota), I reluctantly purchased the warranty and never used it. I’ve often heard that buying an extended warranty is just putting money in the dealer’s pocket that will probably never be spent. My first two Toyotas were never taken back to the dealer for any problems, and so far, I’ve found none with this one.
What’s the opinion here? Should I spend the extra bucks or trust my faithful mechanic? (No, I have no intentions of going back to the dealer for anything except defects or recalls.)
Satan, I swear I was adopted!!! My last name shoulda been Murphy!! But I have a tendency to agree with WallyM7. However, this is a big purchase, so I’d like to see if anyone else has an opinion.
What if the hokey pokey is really what it’s all about?
I would suggest you put that $700 in a bank account, and that way it is avalible for WHATEVER arises those extra years, not just your car (e.g., your water heater blowing up, your fridge breaking, etc.) The only people I would ever recomend an extended warrenty to are people who live absolutly hand to mouth and who, should their car break down in a few years would surely have neither the money nor the credit to pay to fix it, and would then lose their jobs, their kids, etc. If you can stand to just leave the money in the bank, it is definitly a better deal.
One reason an extended warranty is a ripoff is because the car company gets your money now, but they don’t assume any liability until after the first 60K is gone. If it takes you three years to drive the 60K, they had free use of your money for that time. So the warranty didn’t cost you $700, it cost you closer to $1000 (i.e. put the money in a 10% investment now, and when your warranty runs out in three years you’ll have $932 for emergencies). If you leave that $932 in there and don’t have a problem, then when you buy your next vehicle in say five years you’ll already have $1130 in your ‘repair account’.
Extended warranties, undercoat protection, and all the other add-ons they try to hit you for are pure gravy for the dealership. Often they will make more profit on the undercoating and ‘interior protection’ than on the sale of the car itself.
The same is true of extended warranties on electronics, etc. The reason the salesman pushes you so hard to get them is because the bonus they get for selling the warranty may be more than the commission on the sale.
It also bears mentioning that the extended warranty is not backed by the manufacturer nor by the dealer. It is offered by a third party. If the company who wrote the warranty goes belly up you are S.O.L.
I agree with others here; extended warranties are mainly profit for the company you buy them from. A couple people in businesses where these things are prevalent have said as much to me, and a couple resource books also said the same. You’re better off buying a better brand to begin with, where possible. Which brings us to - car batteries: many now have “extended warranties” but that’s not what the salesguy tells you. - If you look at the car batteries of a particular brand, often they have three to choose from, for example-
a 3 year battery for 35$
a 4 year battery for 45$
a 5 year battery for 55$
buy the cheapest one. If the batteries are identical on the outside (except for the label) they are most likely identical on the inside; all you are paying for is an extended warranty on the original 3 year 35$ battery. Whoever makes them has to suspect that many batteries will last around five years - if they knew every battery would fail after only three years there wouldn’t be any financial incentive to offer the others at all. In order to compete with other brands they will try to offer the lowest possible single battery price, therefore it is more likely that a single battery costs 35$ than it is that two batteries cost 55$. If the batteries cost 35$ each (retail), they wouldn’t be willing to sell two batteries for 55$ (the first one for 55$, the second one free after the first one fails). - MC
My 7/75,000 extended warranty just ran out and I pretty much broke even–the repairs that were needed (cracked CV boots, transmission bearings) cost about the same as the warranty I bought. Too bad they didn’t find anything more before the warranty was up…I’m sure other stuff will break before 100,000.
Curiously, I bought the warranty because I tend to drive cars very hard. I told the salesman that I was going to get the extended warranty because, “the transmission will fail before 50,000 miles.” As it turned out, the bearings went at 49,500 miles.
In the end, I wouldn’t do it again. They calculate the value of the warranty based on the average repair costs plus profit. If you maintain your car well, you’ll fall below the “all cars” average and end up spending less than the original value of the warranty. Of course, the warranty does reduce risk by increasing cost–I felt much more comfortable with it than without.
I’ve never bought an extended warranty EXCEPT for my car. In my experience, it’s been worth the money. It’s a little like life insurance - you hope you don’t need it but when you do, it’s very nice to have.
On my current car, I bought the extended warranty for around $700. I’ve recouped that and more in repairs and rentals over the last five years. None of the repairs have been major but the cost of parts and labor plus the rental car reimbursment has been over $1000.
I was offered one at Circuit City for a vcr but I couldn’t get the clerks to write out what it was all about [and I can’t hear them so…]. They did quote the price, something like $25 for two years. Yep, you guessed it, could have used it after all. But I was able to fix it myself, being that kind of person.
You didnt state what the rules were for yours or what was covered. Like for the vcr you have to take it to them & its quite a drive both ways.
Oh, gosh, handy, the list of everything it covers is almost like the original warranty. The only additions are towing a certain distance (which I get through AAA), rental coverage (which I get through my insurance policy…and, yes, it works if the car breaks down, too), and $50/nite expense reimbursement if I get stuck in Backhole, WY and they don’t have parts. (Not sure where I could eat/sleep for $50/nite while awaiting parts or what that would do to save my sanity…)
Yes, a dealer would be required to do the work. No, I don’t like dealer repairs since they take four-eight times as long as my trustworthy mechanic, who specializes in Japanese cars.
Bottom line, these cars are incredibly reliable, and I’m going with the flow on this one. No extended warranty for me.
On my old 1985 Chevy Caprice Classic Wagon ( A fine car if ever there was one; a POX on the person who stole it on a flatbed one night…grr…), I bought a used car warranty. Amongst other things, it covered a new transmission, if that one failed. With LESS than 1,000 miles to go, it failed. It took an extra day for someone from the Insurance Co. to come, and watch the AAMCO guy take the transmission apart, ( they suspected fraud. I was shocked. Mom and Dad didn’t raise a crook.) But- they signed off on a new transmission, and that is what I got. It saved me 1400 ( minus whatever the warranty cost... 500.00 I think.). So, I saved $ 900.00.
Made sense to me Less than a year later, it was stolen <sob>
Cartooniverse
" If you want to kiss the sky you’d better learn how to kneel "
I’ve turned down a couple thousand dollars worth in extended warranties over the years and haven’t had a break down besides getting home to find the product was broken. You don’t need an extended warranty for that.
By the time most extended warranties kick in you’d be better off buying a new model anyway. Extended warranties on electronics are the worst rip off. The product is obsolete before the manufacturer waranty is finished.
I work for Best Buy, and we sell whats called a “Performance Service Plan” which is a kind of warranty by BB. I’ve got mixed feelings on them. They are almost pure fat for the most part, but some people they really do save a LOT of money. I dunno. Too bad you can’t forsee whose $3000 computer system will break one day after the factory warranty wears off and whose won’t. Ah, well. Such is how it is. They’re a bad idea but they save some people alot of money. Best Buy SAYS we’re not on commission, but we get perks for selling alot of PSPs. They SAY we don’t HAVE to sell PSPs, but we can be fired for not selling enough PSPs. What the shit!?
–Tim
I tend to sell them pretty well.
We are the children of the Eighties. We are not the first “lost generation” nor today’s lost generation; in fact, we think we know just where we stand - or are discovering it as we speak.
Almost forgot, Phobia. With the PSP, if your product is discontinued, and it’ll cost more to fix than to buy a new one, we give you a new one of comparable value. Most likely, if you buy bottom of the line, it breaks in two years, what you get is what WAS top of the line when you bought your first one.
Oh, gosh Homer, Tim…the reason I had such a problem with the new car extended warranty was because of problems I’d had with extended warranties on items I’d purchased from Best Buy (well, you brought it up). On the Best Buy items, after going through a lot of repair people who didn’t know squat, I ended up going directly to the manufacturers, who immediately sent out people to (1) replace the defective referigerator and (2) properly repair the air conditioner. I ended up writing a nasty letter to Best Buy, getting my extended warranties pro-rated and refunded (for NO service), and a VERY nasty taste in my mouth.
Best Buy has low prices, but I pity the next person there who tries to sell me an extended warranty!!! {And do they have some rule about NOT having enough cashiers when the crowds are pouring through those stores??!!??}
Extended Warranties on anything but a car?
NEVER.
Most electronics are either well built or priced to be a throwaway. Do I really want to fix a 2 year old vcr that cost at most a couple hundred bucks?
Extended Warranties on an automobile offered by anyone OTHER than the original manufacturer of that vehicle?
NEVER.
I bought an Aerostar from a Dodge dealership once, and a warranty too.
Every time I had a problem with it, I would have to bring it in to the Dodge dealership, who would then sub-contract the work to the Ford dealership down the street. Plus no one is accountable. Call the Dodge dealership, and they say it was in Ford’s hands, Call the Ford dealership, and they’d say I need to contact the issuer of the service contract. Round and around.
Here’s actually a good story of a dealership. I had just bought a 5 or 6 y/o car from a dealership. A week or so after I took it off the lot, the transmission was fried. I didn’t buy an extended warranty. The dealership predated a warrenty and let me purchase it. It cost less than the repairs.
Satan, I swear I was adopted!!! My last name shoulda been Murphy!! But I have a tendency to agree with WallyM7. However, this is a big purchase, so I’d like to see if anyone else has an opinion.