I’m not saying it was a good deal, but why is that a red flag for a scam? The way these usually work is you submit a claim for the repair expense. It’s not like a manufacturer’s warranty where you just drop the car at the dealer and they take care of the paperwork for you.
26,600 miles? That car is barely broken in. Hard pass on the “extended warranty”.
No shop could have an agreement to cover thousands of different plans from all over the country. Which means you pay for the repair and then hope the warranty company doesn’t actually claim it wasn’t covered and dare you to dispute it.
I’ve read that some of these extended warranties require you to use only authorized repair shops, which may not be convenient to you.
Mini Cooper Clubman is rated as pretty reliable. It’s not a “sporty” Mini, but properly looked after, it shouldn’t give you many problems. I assume that there is some warranty from the dealer that covers you if the engine falls off within a month or two, and I also assume that you have checked the service history. Given that, I think the extended warranty/service plan is expensive and not worth the money. Better to put the same amount aside in an interest-bearing account.
As for “I won’t miss if it stops working” - I beg to differ. I remember window winders and cars with no power assist on the brakes, and I sure would miss those. Rain-sensing wipers, auto-park, auto-dip lights etc, I can do without, but I’m glad I have them and would miss them if they stopped working.
Another point is that cars are like mobile computers these days, and if one thing stops working it is often symptomatic of an underlying problem.
All my posts upthread were general comments about service contracts in general.
Given the specifics of the OP’s situation that I finally went back to read, a service plan makes no sense given his planned car, planned mileage, and personal attitudes.
Actually I’m pretty sure it was a scam. The fine print probably said something like, you have to take the car to one of our network of approved providers. Who are probably few and far between & hardly any in your state…?
We were taken to the cleaners, as they say in the UK. Oh well, fool me once…
I think it can be said that it is never a good idea to buy a “warranty” that some retailer is pushing.
As a general rule, I certainly agree; but I can think of one (at least theoretical) reason it might make sense.
When buying an item such as a used car, the seller typically knows a lot more about the condition of the item than the buyer: how well it has been treated, what problems or potential problems it may have, etc. If the item is in better than average condition, it should be worth more, but how can the seller convince the buyer of this? One way might be to offer a “warranty” at terms that would be advantageous if the item were in worse-than-average condition.
First assumption appears to be incorrect. The dealer says they would try to “help” if something like that happened soon after purchase, but could/would not define “soon” in terms of time.
Second assumption is now correct:
Maintenance seems to have been pretty routine with no major issues. The accident does not appear to have been severe (i.e., airbags did not deploy) and I saw no detectable damage to the vehicle (though I will be checking again). I did test drive it, giving it the ol’ does it drive straight with no hands on the wheel test, as well as hitting the brakes hard after accelerating test. There was no drift either time. I took it on the freeway and the ride seemed completely smooth.
I cannot begin to express my gratitude for the responses in this thread so far. They have brought up concerns/potential issues that might otherwise not have occurred to me, certainly not in as timely a manner. I am now convinced the gold and platinum plans are not for me. For the sake of completeness, I am awaiting a quote on the silver plan - as well as having some other questions - which seems to cover most of the potential big ticket items (e.g., engine, trans, brakes) and will be cheaper, but going without an extended service contract is still very much an option in my mind.
Many thanks to all posters.
Ah! In the UK, there is legislation that compels a dealer to fix any defects that arise in the first 30 days, and in six months if they existed at the time of the sale. Buyers of seriously defective cars can demand their money back.
I assumed that something similar would apply in the USA.
Problem is, that in some living situations you effectively have to have a car. And in nearly all situations you have to have somewhere to live.
In the US they are called “Lemon Laws”, and like everything else they vary from state to state.
To be clear, that quote was not me. It was one line from the article I quoted.
At least in Illinois, the Lemon Law does not apply to used cars.
On a national level, we do have the Magnuson–Moss Warranty Act:
When they aren’t scams paid service plans act as repair cost insurance. They’ll reduce the cost of covered repairs and can be well worth it if something goes wrong with your car soon after purchase. Over time they may offer peace of mind but the cost of the plan will exceed the likely benefit you will receive. That’s why they are in business.
Even when they aren’t out and out scams, the “insurance” provider has a high motivation to take the money collected and pay it out to the owners by underestimating the future repair costs and become insolvent.
That’s because while these are touted as some kind of insurance, they aren’t regulated as insurance by almost any state.
In the time in my life where all these things were true:
- I needed to have a car in order to work (because all the good jobs in the metro area were in areas not served by public transit)
- I could barely afford a good used car (say 3-4 years old at a time when cars started becoming mechanic’s specials at 120-150k miles)
- I didn’t have $3000 to shell out if the engine or transmission needed to be rebuilt or replaced. Or at least that would put me in a precarious financial situation.
I still looked at the terms and conditions on the “warranty” plans the used car dealers were touting and concluded that they weren’t very likely to pay out.
Same thing with home warranty that the sellers realtor added on for “free” to our first home. It made it impossible to use. You’d have to wait months or at least weeks for the AC or furnace to be fixed under “warranty”. In fact the first thing the warranty document said was that it was NOT a warranty. Presumably because there are laws even in that business friendly state that have minimum standards for warranties.
This is true is most states. From this link:
Nearly all used cars as sold “as is” - if the transmission seizes as you drive off the lot, it’s your problem. Buying a used car without a careful pre-purchase inspection by a qualified mechanic is profoundly foolish.
I suppose that this is the difference between “Every man for himself”, and “Nanny State”.
I quite like the idea that “The State” says that if I buy something from a dealer, I should be able to assume that they will act professionally and not sell me a “Lemon”, and give me the legal means to resolve the situation when something goes wrong.
I can only speak to the MA lemon law. It’s rather strictly enforced. I believe it only applies to used car dealers, not private sales, and only for cars for personal use, not commercial usage. But if there is something wrong with a used car when you purchase it from a dealer they have t1 days or 3 attempts to fix it. If they can’t they’ll have to give you back your money.
There are almost no circumstances under which a used car warranty is worth it. Roughly 1/3 of the cost to you is paid out as a commission to the person that sold it to you. A chunk of the money goes to dealing with claims filed by owners of the plan and much of that cost is finding excuses to deny the owners’ claims. For an example, if you have an engine problem that can be tied to inadequate lubrication, you better be able to prove that you had every oil change done on time and that you didn’t run it low on oil. If the tie rod gets bent, it will be chalked up to collision damage and excluded. If a brake caliper seizes, you better be able to show that the brake fluid was changed at the appropriate interval.
Some portion of the premium goes to salaries for the executives at the warranty company’s executives and dividends for its owners. Only a tiny portion of the money you pay for the plan is used to pay service costs for car owners.
It’s impossible for the average owner to come out ahead but it’s also incredibly rare for any owner to come out ahead. A long time ago on the internet, I read a story by Doug DeMuro about how much money he saved with a service contract on a used Range Rover. He was unknown on the internet before he bought the service contract and became a somewhat notable internet journalist based, in large part, on making out on his warranty. That is, he actually became famous for getting more money out of his warranty than he paid for it because everyone knows how rare that circumstance was. It’s like he was the first person to run a four-minute mile in car warranty terms. I would rather buy a dependable car and invest the $3000 for repairs that might come up. If after a few years no such repair needs come up, you have $3-4,000 for a down payment on your next car. Good luck.