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Is it worth it? Extended Warranty on used car.


bonnie2008's Avatar
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09-12-11, 08:43 PM   #1  
Is it worth it? Extended Warranty on used car.

Hi,

I am planning on purchasing a used car from a private owner. I am on a tight budget so probably thinking of purchasing a car with 60-100k on it. Any advice on purchasing a warranty and what are the names of reputable companies that sell the warranties?

Thank for your help,

Bonnie

 
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09-13-11, 05:12 AM   #2  
I don't think we'll get into individual company names. The biggest issue would be cost versus covered items versus overall value of the car and also what make/model. If you're looking at an early-mid 90's Taurus or Sable with a 3.8L engine, for example, you'd better buy the warranty because you have a high probability of blowing a head gasket and/or blowing the transmission. If you find the kind of buy I did with daughter's Corolla that I mentioned in your other thread, then the warranty would probably be a waste of money. So what you'll need to do is shop around and when you find something that will cover what your main concerns are, compare that against the likelihood you'll have a failure and what the failure would cost you out of pocket without a warranty. A big factor in the mix is how difficult it would be to get service, i.e. file a claim, with a covered repair. Just because a company claims easy claims and that it's easy for your mechanic to be paid, doesn't mean you won't have to shell out for the repair and wait to be reimbursed, if you are. The most expensive items will be major engine or transmission failure, but you need to weigh those against whatever an extended warranty would cost. Extended warranties, like any form of insurance, is a gamble; the issuer is gambling you won't need it (or at least will need less than what the policy cost you) and you are gambling you will have a failure. Generally speaking, like at casinos, the house usually wins otherwise they wouldn't be in business. It's all 20/20 hindsight, of course; you're either someday going to say, "I wasted my money on that" or "I'm glad I bought that". One option is to write yourself a check for what the warranty would have cost and put it somewhere untouchable; it may not completely cover a catastophic failure, but if you never use it, you get it all back.

Here's another wrinkle; Are you planning on putting full coverage insurance on it? Like an extended warranty this is throw-the-dice coverage on an older vehicle.


Measure it with a micrometer; cut it with an ax.

 
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09-13-11, 05:42 AM   #3  
Here's some additional reading, too. Generally echoes what I said:

Understanding Extended Warranties - Edmunds.com

And some really interesting stuff here; be sure to browse some of the specific company complaints/comments:

Consumer complaints about Extended Warranties - Cars and Trucks

One thing I should have added and my memory was jogged by one of these articles: I would NEVER buy an extended warranty on a used car where I had to pay the entire premium up front; I would opt to pay monthly. If you pay lump sum up front and the company goes bankrupt (or if you wreck the car and the policy is non-transferrable), there goes your money.


Measure it with a micrometer; cut it with an ax.


Last edited by the_tow_guy; 09-13-11 at 05:58 AM.
 
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09-13-11, 07:05 AM   #4  
I tend to be more concerned with what's wrong with the car now than what could go wrong down the road. To that end, I pony up a few extra bucks and buy from a dealer so I get them to cover everything for a month after I drive off the lot.

 
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09-14-11, 08:44 PM   #5  
Thanks again for all your advice!

Bonnie

 
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09-15-11, 04:56 AM   #6  
Or an alternate to mitch's suggestion, pony up some money for a comprehensive inspection at a reputable independent garage.


Measure it with a micrometer; cut it with an ax.

 
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09-15-11, 08:19 AM   #7  
Tow Guy with an excellent call-out: I assumed you would take a private party car to a mechanic for a once-over before buying it but should not have left that unsaid.


Last edited by stickshift; 10-26-11 at 08:01 AM. Reason: typo
 
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09-18-11, 11:11 PM   #8  
I bought a used van, this van was loaded, electric power everything, with all kinds of computers and senors for everything. I use to work on my own cars, but one look under the hood, I knew I was in way over my head. I bought the extended warranty, five days after the deals 30 day warranty ran out, I started have trouble. I paid $900.00 for the extended warranty, three years coverage. And over those three years of coverage, and they paid almost $6,000.00 in repairs. My only out of pocket, for some reason was the tax on the labor charge.

 
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09-19-11, 04:15 AM   #9  
You did well; from what I can tell, $900 for a three year policy is pretty cheap. Unfortunately after reading some of the volumes of complaints about extended warranty comnpanies. I'm thinking you had about a 50/50 chance that either those repairs would have been denied or the company would have gone bankrupt.

If the used vehicle I bought needed $6000 in repairs over a three year period I would seriously consider (a) never buying that make/model again, and (b) maybe buying from another seller.


Measure it with a micrometer; cut it with an ax.

 
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10-26-11, 07:22 AM   #10  
This is really a tough call for an individual but realize this is a money making machine for companies that provide extended warranties! Consumer Reports "extended warranties are a poor deal for almost every product..."

Why? Because the vast majority of people will never have to have a MAJOR AND COSTLY repair to their vehicle over its' lifetime. How many cars have you owned that you have had to have a motor or transmission replaced in? In fact the vast majority of required repairs are well below the average cost of the extended warranty. In addition, there are so many exclusions built into many warranties that you might discover you're not covered after all.

I'd love to know who and what type of coverage Edward074 had that he didn't have to pay any deductible and the warranty covered electronics as well as powertrain/drivetrain at a steal of a bargain? The main lesson here is, he knew the risk of what he was buying but did so anyhow. I worked at a dealer only Auto Auction for 14 years so you BETTER know what you are getting into first off......

Most third party extended warranties are just flat ripoffs so do your homework but consider this.

Most people will be better served by just accepting they will have to make some repairs and just make an allowance for that. It's still comes down to your individual situation though: What type of car? How old? How many miles? How long will you keep it? Can or do you maintain it?

Good luck

 
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10-27-11, 08:46 PM   #11  
Posted By: Ralph III This is really a tough call for an individual but realize this is a money making machine for companies that provide extended warranties! Consumer Reports "extended warranties are a poor deal for almost every product..."

Why? Because the vast majority of people will never have to have a MAJOR AND COSTLY repair to their vehicle over its' lifetime. How many cars have you owned that you have had to have a motor or transmission replaced in? In fact the vast majority of required repairs are well below the average cost of the extended warranty. In addition, there are so many exclusions built into many warranties that you might discover you're not covered after all.

I'd love to know who and what type of coverage Edward074 had that he didn't have to pay any deductible and the warranty covered electronics as well as powertrain/drivetrain at a steal of a bargain? The main lesson here is, he knew the risk of what he was buying but did so anyhow. I worked at a dealer only Auto Auction for 14 years so you BETTER know what you are getting into first off......

Most third party extended warranties are just flat ripoffs so do your homework but consider this.

Most people will be better served by just accepting they will have to make some repairs and just make an allowance for that. It's still comes down to your individual situation though: What type of car? How old? How many miles? How long will you keep it? Can or do you maintain it?

Good luck
I looked for the card, but couldn't find it. But this was almost six years ago. But if it is any help, they sent me a welcome kit, engine oil additive, a/c oil, tranny oil, and as few other things that I was suppose to add, or use. For $900.00 over the next 3 years, I got 2 trannies, starter, fuel pump, and a/c work done, all for a total of $100.00 out of pocket. And when I got rid of it, the third tranny was going. I found out later they knew there was a tranny problem with this make and model, they would quit around 30,000 to 40,000 miles.

 
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10-28-11, 03:48 AM   #12  
Sounds like a Taurus/Sable on the tranny issue, except you said "van". Windstar?


Measure it with a micrometer; cut it with an ax.

 
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11-24-11, 06:49 PM   #13  
tow guy why are you picking on taurus.sables? I driving a 2002 taurus with 200k miles on the odo, original motor and yes OEM tranny. let's not forget every single car company has problems. for instance your beloved toyota. Just at thanksgiving dinner a toyota camry owner said her belt came off the pulley twice while she has owned it for a year. Toyota dealer's answer to the problem. Do not go through puddles. WTF kind of answer is that? I told her togo back to the same dealer and then ask for their answer in writing on the work order, then fax it to corp and see their stance on that issue. Every car in this world will only last if it was well maintained, that is factory recommended in your owners manual. can't blame a car for blowing through transmissions when the ownwr never changed the fluid or is blowing gears.

 
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11-27-11, 05:42 PM   #14  
risoworker, I was taking very good care of my vehicle. I wasn't blowing gears, or not changing the transmission fluid. As far as changing the fluid, they didn't last long enough to need the oil changed. After I final got rid of it, I found out the transmission just wasn't made heavy enough for the size of the motor, and the vehicle it was pulling. And it wasn't like I was making jack rabbit starts, or pulling a heavy trailer. Just 5 miles back and forth to work, and shopping 2 or 3 times a month. And if it hadn't of been for the extended warranty, I would have gotten rid of long ago.

 
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11-28-11, 06:05 PM   #15  
On the contrary, professionally I love Taurus/Sable!

The older Taurus/Sables - early to mid 90's - were notorious for blowing trannies with as few as 40,000 miles on them (I have firsthand experience; my Dad's '93 Sable blew the tranny at 38,000 miles) and if you were unlucky enough to have one with a 3.8L engine in it, you were almost guaranteed the car would never see 100,000 miles. The trannies went south or the 3.8L motor blew the head gasket at a very high rate. My Dad's car had both and failed the tranny and head gaskets before it reached 60,000 even with regular maintenance. The guys in the tranny shops could swap out a Taurus/Sable tranny with their eyes closed they did so many of them. Hard to blame failures on lack of preventive maintenance when they fail before even reaching the recommended service interval. You mention that era of Sable/Taurus around a tranny shop and you'll likely get a lot of knowing nods and smiles.

Newer model Taurus/Sables were better and even the earlier models weren't all bad - I loved my Dad's Sable, warts and all - but the incidence of premature failure of trannies was higher than any other make/model of the era.


Measure it with a micrometer; cut it with an ax.

 
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12-03-11, 08:09 PM   #16  
For some reason, there are a lot of people who think I had a Taurus/Sable, but it was a Plymouth grand voyager, 1990. I bought it with 64,000 in 95. A week later the first trannie went, the dealer ate that one. Then every 2 years or so, they would go again, since I didn't drive very much. When I finally got rid of it at 127,000 it was on it 4th trannie and the 5th one was in the trunk. I was just feed up with it, and the extended warranty had expired.

 
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