Extended Warranties?

[bryanthompson]

How many of you guys have bought the extended warranty on any of your cars? I just got a postcard from the warranty service place and extended it on my 01 Stratus. It seems damn expensive upfront ($500 first payment, $200/month after that), but I'm hoping it will pay off. Hopefully I never have a problem with the car, but I'm thinking maintainence alone will at least make the investment worth it.

Any thoughts here?

[id10t]

Just that first 700 alone will cover a lot of repairs...

[RickM]

The warranty is $200 a month on an ongoing basis? Wow.

[Groesbeck Hurricane]

warranties from other than the original manufacturer are very risky. What happens if the seller goes out of business or the repair facilities refuse to take their offers for payment?

Seems very expensive to me as most of these warranties do not go beyond 100,000 miles. You are likely paying alot of money for a short time of coverage.

That said, I've bought two extended warranties on new vehicles, used the heck out of both of them. Didn't buy one on the Diesel or the Suby and have not had any problems. I'm over 140K on the Diesel.

[bryanthompson]

Since making my hasty decision (hey, i'm young and dumb) I've been doing some reading and I think you guys are right... The total cost of that policy would be around $2800, and there is *no* way I would get use out of it uness I managed to blow an engine. A waterpump/belt job on the car is only $400, and I'd consider that to be one of the most major items that need to be done, and it looks like I can do most of the other work myself. So, I cancelled it and will be putting the $ I would have spent on the warranty in a separate account for medical and car expenses... it will probably turn into the Porsche fund

[legion]

Smart man Bryan.

Look at it this way: If those extended warranties usually worked out in the favor of the consumer, how could they be profitable?

[Moneyguy1]

Warranties are like insurance..A gamble between you and the provider. THey are betting nothing will happen and you are betting it will. The odds are in their favor since they have all the statistical information on their side and you do not.

[legion]

Extended warranties appear to me not to even use basic actuarial science. If they did, I would think they would cost more like $50 a month.

[Moneyguy1]

Legion

Like any business, they charge whatever the traffic will bear. In the case of autos and high end appliances ($2,500 televisions for example), part of the equation is fear.

[gr8fl4porsche]

They are a gamble like insurance - most are offered by divisions of insurance companies. When they sell thousands of warranties they usually make money in the long run. It depends on the vehicle. I did not buy one for the wife's Scubby and never needed it. I did not purchase one for my '02 Mountaineer and wish I did. Warrantied repairs will reach about $5000 before this year is over. All 4 wheel hubs and bearings have gone out and now the transfer case is shot. Thats about $3,200.00 just in parts.

So it really depends on the vehicle and how you use it. I pulled a trailer with this Mountaineer quite a bit (more than I thought I would) and it has taken a toll on the drive train.

I just purchased an '06 Honda Odyssey and will take the warranty thru Honda for 8 years/120,000 miles for about $1,200.00. I have the first 6,000 miles to decide.

[sammyg2]

SCAM SCAM SCAM SCAM SCAM!
Here's a little test: get a quote for an extended warranty from the dealer, then go to your neighborhood credit union and get a quote for the exact same warranty.
(I actually did this).
Result: $1550 from dealer, $395 from credit union.
Buying an extended warranty from the dealer is as smart as buying $300 worth of special flat resistant stuff in the tires or $500 worth of special sealant for the paint (also known as wax).

[bryanthompson]

Originally posted by sammyg2
Result: $1550 from dealer, $395 from credit union.

holy crap! New rule, I don't get to spend money without asking you guys first! It sounded like a good deal at the time... I'm sure I sound like a clueless chick right about now.

Thank you all for the advice.

[Groesbeck Hurricane]

Some extended warranties are worth it: 1990 Laser (same as Eclipse), $800.00 special extended warranty from Chrysler, six transmission re-builds, almost 13 months in a rental car paid by Chrysler, they bought the car back with no further questions asked. Bumper to bumper would not have done the same...

I never bought a warranty on the Ford, 140,000 miles and I've had to pay for nothing but normal maintenance (tyres, oil, filters, cam speed sensor). Why fork out extended warranty money when the entire drive train has a factory 100K warranty as a baseline?

[HardDrive]

Everyone bad mouths warrantys from the dealer, but at least you know who you are dealing with. My Boxster is a CPO car, so I get an extra 2 years of warranty.

If you want a dealer warranty, they can sell you a 'just engine/powertrain' warranty that is much less than a bumper to bumper. Do it before 35,000 miles because the cost are much lower.

You really need to read the fine print on any warranty.

[EdT82SC]

Extended warranties are nearly pure profit. It's kind of the same as the way as fast food joints selling fries and drinks. They make a decent profit on the burger, but on the fries and coke it's like 90% profit. When in college I worked for an electronics store, and the salesmen pushed them because they got a high commission on them, but they all said it was a waste of money to get an extended warranty.

[HardDrive]

Originally posted by EdT82SC
Extended warranties are nearly pure profit. It's kind of the same as the way as fast food joints selling fries and drinks. They make a decent profit on the burger, but on the fries and coke it's like 90% profit. When in college I worked for an electronics store, and the salesmen pushed them because they got a high commission on them, but they all said it was a waste of money to get an extended warranty.

I don't think that I would make a blanket statement like that. My father bought a tread mill from Sears and got a warranty. The things would burn out after about a year of heavy use, and he would get a new on free. Best Buy has a replacement warranty that is pretty simple and they back it up.

Its easy to say they are a rip off, but talk to the guy thats had an RMS problem on their boxster at 51k.......

[EdT82SC]

Of course there are always examples like these that scare people into thinking they need to always get an extended warranty.