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Extended Warranties?


Klute's Avatar
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02-09-04, 09:29 AM   #1  
Extended Warranties?

I have read consumer reports, and they say it is a 50/50 gamble with extended warranties. I have not decided if I will go that or not.

Does anyone have a name of a good warranty company?

Any horror stories?

 
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Mike Swearingen's Avatar
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02-09-04, 09:50 AM   #2  
My experience.
I bought a new 1999 Silverado pickup with the maximum extended GM warranty at the dealership. I think that it cost about $1,400-$1,500. I have far surpassed that in warranty work, so it's worth every penny if you need it.
Things are so expensive on new vehicles that it doesn't take long to pay for itself if you have trouble, and you will.
Recently, I had a dead starter out of the blue, and it paid 100% of the tow charge, starter replacement, etc. ($400 + bucks), for instance.
I've never believed in extended warranties, but with a vehicle these days, I think that it's a good investment.
Good Luck!
Mike

 
Money Pitt's Avatar
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02-10-04, 10:14 AM   #3  
back in the days

I don't consider myself old, but back in 68 I bought a used 63 Impala SS 283 2 spd auto with 22k miles. It was driven daily for 30 years and all that was replaced was normal wear items, belts hoses, tires, brakes etc. When I sold it there was over 300k in miles on it. The new owner restored it to like new and still shows it today. The new chevy I bought to replace it was a lemon and I recovered my full value through the lemon laws. Being an avid GM man I bought another GM product. After the 36k or 3 yr warranty everything started going wrong. I traded it for another GM badged car but this time bought the $1800.00 complete bumper to bumper extended warranty. I have gotten my monies worth because again at about 40k miles everything starts acting up. In the old days a warranty was in place just in case something was wrong, today it is usually the life of the unit. I have friends that have the other American built autos and they have experienced the same thing so GM is not alone. Get the warranty.

 
stereoguy's Avatar
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02-17-04, 07:31 PM   #4  
I bought a 98 Nissan just out of warranty with 62k miles on it a couple years ago. It has 85k on it now. I've given it oil changes, one brake job and an alignment, that's it.

Just another perspective on the extended warranty issue.

 
John Dillinger's Avatar
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02-25-04, 12:55 PM   #5  
I would look at it like this. The company selling the warranty is betting more cars will last longer than the warranty they sell then will not. They figure that based on the MTBF (Mean time before failure). They sell them to make money on them. Statistically over the long run the warranties will cost you more than you will recieve. Now there may be exceptions to this but over all that is how it has to work because the people who make the money on the warranties will not be that far off or they will not be around long. Also always ask who will honor the warranty. If it is a third party you may be in for trouble. My sister had an extended warrantyy she had to take them to court for them to pay the bill.

Also on a side note the offers of zero percent fianacing are not zero %. ( I have not seen any maybe there are some) I say this because they offer 0 percent or a sum of money back. So if the ad is 0 % fianacing or $5000 cash back what they have done is charged 5000 in pre paid interest.

Just some other angles

 
michael van's Avatar
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02-25-04, 03:25 PM   #6  
My 2 cents

I would look at the reliability record of the car you are buying lets take a Toyota for example they are pretty well known as going the distance before any problems I would skip the warranty on that.
Ok on the other hand a GM car is more then likley going to start going south after 60 thousand miles I would buy one for that.You just need to do your home work and see what cars see the service center more then the road.

 
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02-26-04, 05:17 AM   #7  
slider
I have to smile when someone tries to sell me a '5 year extended warranty' on a new truck. In actuality it's a 2 yr extension since 3 years are factory warranty. When I look at it that way, it's pretty expensive for those two additional years.

On used vehicles, it's a gamble. My advice would be to put a little money each month into a 'repair fund' and save yourself the cash. If you need it--it's there. If not, at least you've still got it.

 
Klute's Avatar
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02-26-04, 06:08 AM   #8  
I know

Maybe I don't understand how warranties work, but thats kinda what I was thinking.

I thought of it as being double insured for the MFG warranty.

 
Rich32's Avatar
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02-26-04, 06:52 AM   #9  
Bought a used 95 Geo Prism (cousin to Corolla) a few years ago. The only reason we went for the warranty was because the dealer kept lowering the price of it til we capitulated. Of course we never needed it. Just changed the oil, and this year replaced the original battery.

 
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02-26-04, 03:36 PM   #10  
Paul A

I bought a 99 GM in 10/2000 with 15k on it it now has 79k the biggest Expense I had outside of regular maintiance is replace a wire in the steering column to the horn $200 and I bought a 98 Exploder 2 1/2 yrs ago with 40k has 124k besides regular maintiance replaced the upper ball jiots @ $275. I feel the put some money away and forgo the warranty. Diffenently do not get a third party one!!!

 
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02-28-04, 02:09 AM   #11  
Re: I know

Originally posted by Klute

I thought of it as being double insured for the MFG warranty.
since your dealer will fix any problems under the manufaturer's warranty, there is no need for extra "insurance". i'd bet if you tried to get help via the warranty co while you were still under the manufacturer's warranty, they'd tell you to talk to your dealer.

 
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02-28-04, 09:00 AM   #12  
slvrnmph
It it is a brand new vehicle, I would not bother with an extended warrenty. If it is a used vehicle, I would consider it. Best bet would be to talk to someone who has bought the same warrenty that you are considering. I recently bought a used vehicle and I went with the exended warrenty. I chose that because my brother - in -law had recently purchased a used vehicle from the same dealership with the same extended warrenty. The warrenty has been good to him. Things that went wrong with his vehicle that he knew were his fault were still fixed under the warrenty. Sure, I may never use the warrenty. But having bought used before and had things go wrong with it, I like the added security of the warrenty. If something comes up, I don't have to worry about it.
If you hold out on buyinh the warrenty, often the dealership will lower the price. Dealerships with a seperate finance manager will do this because the extended warrenty is how the finance manager makes his money. He'd rather make a little money on the deal than nothing at all, so he'll lower the price so he still gets something.

 
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03-06-04, 03:27 PM   #13  
Originally posted by John Dillinger

Also on a side note the offers of zero percent fianacing are not zero %. ( I have not seen any maybe there are some) I say this because they offer 0 percent or a sum of money back. So if the ad is 0 % fianacing or $5000 cash back what they have done is charged 5000 in pre paid interest.

Just some other angles
Great post. Folks need to look at these either/or situations a little closer before jumping on the 0% financing.

Edit: I did want to point out that someone (Chrysler, I think) is now offering both the rebate and zero financing.

I used to sell cars. One customer came in wanting to buy a car that had 0% or a pretty nice rebate. He wanted to keep his payments at a certain level, but with the zero financing they were going to be higher.

The guy had great credit, and could have gotten 2.9% if he had gone with the rebate; this would have put his payments right where he wanted them, but he was adament that he get the zero financing. He told us we were trying to steal his trade and said he would go elsewhere. Six months later I saw him still driving the same car he wanted to trade.

As far as extended warranties go, my opinion is that extensions of factory warranties are okay if you plan to keep the car for a long time; and if you do wind up trading it in, you can get a prorated refund! Chances are the salesman won't tell you that.

Third-party warranties for used cars are typically ripoffs, though. They don't really cover too much. You're still going to pay out-of-pocket for most of the repairs that you know your car is going to need (brakes, shocks/struts, etc.). And there's a huge markup in them, too. If you feel the need to buy one, offer them about 75% of what they quote you for it. They'll still make a nice profit.

 
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04-25-04, 04:27 PM   #14  
I am extremely hesitant to purchase an extended warranty either from the dealer or third party. If you read the fine print you will find out that alot of the things that require replacement are not covered. Additionally with the third party companies you have to be careful, Warranty gold left a lot of people holding worthless warranties. Some dealers in my area sold the extended warranty and it was through a third party and not the manufacturer. When the underwriter who went out of business those people were left high and dry. That is what happened with warranty gold. My 1996 dodge grand caravan has 130,00 0 miles on it and I have not had to have any major repairs done. I say take the money you would pay to a warranty company and invest it. Pull it out if you need it, and if not let it ride.

 
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04-26-04, 08:33 AM   #15  
Former Salesman... :)

Ok, here's the deal. Extnded warranties are a math game.

There are two things that make it worthwhile for a COMPANY to sell you an extended warranty.

1. They hope that the buyer will basically fail to even remember that they bought the warranty, or they hope that the buyer will not live up to the warranty "rules". Basically, almost all warranties require certain concessions to be made on the part of the buyer. Say, for instance the warranty states that the car can't be "fooled with" (for lack of a better term). A year later, you install a CD player in the car. Warranty voided, sorry. You're outta luck. You have to watch out for shadiness like that.

2. They sell warranties under the assumption that whatever repairs have to be done (which the warranty will cover) will cost LESS for them thean what the warranty brought them.

Let's look at an mathematical example to see this in action.

Say you have a warranty that cost you $1000. In that time period, your car only has one problem that the warranty covers. Now, IF that repair would have cost you $1200, you would say that the warranty saved you $200. Right. It did. Then, you might ask yourself, "How can companies do this if they lost $200?" Even if not all, but certainly many people had repairs done that cost the company MORE than the warranty brought in, wouldn't the manufacturers LOSE money and eventually stop selling warranties? No. Because although the cost of your repair was $1200, it only cost the company, let's say $600. Thus, even though you saved $200, they still MADE $400!

The reason for this is that while you might pay $75 an hour for labor, the company is only paying that same tech $30 an hour, pocketing the $45 an hour difference. Same goes for parts. What you pay vs. what they pay is different.

Buying an extended warranty depends on a few things:

1. Your past experience. That will usually tell you all you'll ever need to know.
2. The product in question.
3. The environment the product will be used in.
4. The time you plan on keeping the product.
5. Resale value of the warranty. Can you transfer it to a new buyer, therefore increasing resale value of the product?

Basically, evaluate all those things, make a decision, and go.

Chris

 
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