Extended car warranty - worth it?

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MP173
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Extended car warranty - worth it?

Post by MP173 »

Received a call from a company called Solace regarding extended warranty covering another 3 years/100,000.

Currently the Chevy Equinox is at 112,000 miles. I have never purchased a warranty either from outside source or dealer.

What are your experiences? Is this something worth considering? Cost is $59 per month with a maximum of $10,000 payout.

Ed
livesoft
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Re: Extended car warranty - worth it?

Post by livesoft »

Not worth it.
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TheGreyingDuke
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Re: Extended car warranty - worth it?

Post by TheGreyingDuke »

I agree that these are written for the benefit of the issuer or else how would they stay in business. On some level, the same could be said about any sort of insurance, but insurance is regulated, it is more transparent as to what is covered and what is not, and there is some competition.

One example I am aware of from a friend who had one of these products. He is driving along, a spark plug is destroyed, causing serious engine damage. The service contract paid for a new spark plug, saying the rest was incidental or something to that effect.

BTW, you are being sold a "service contract" not a warranty; the usual protections around warranties do not apply.
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Triple digit golfer
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Re: Extended car warranty - worth it?

Post by Triple digit golfer »

TheGreyingDuke wrote:I agree that these are written for the benefit of the issuer or else how would they stay in business.
I bought a Honda Accord and purchased an extended warranty for 8 years/120,000 miles. Before deciding, I asked the sales person, "If this is worth it to me as you claim it is, how do you guys make any money on these?" She said that the extended warranties are only good for the first owner of the vehicle. If I trade my car in at 40,000 miles, the warranty is void for the new owner. Most new cars are sold or traded in after just 3-5 years, so they make money because most problems that occur happen long after that.

Who knows if that's true or not, but it does make some sense to me. Generally I don't believe in insuring things that I could pay for to repair myself, but I made an exception here.
wander
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Re: Extended car warranty - worth it?

Post by wander »

No, it's not worth it. You can put that $59 aside for future car repair.
playtothebeat
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Re: Extended car warranty - worth it?

Post by playtothebeat »

I purchased an extended warranty, as well as a service plan (for all the maintenance, etc) for our BMW. It was something like $5k out of pocket total - huge sum. Financially, it may not be the best use of the money; however, it bought me a piece of mind knowing that I did not have to worry about any repairs or maintenance (other than brakes and tires) while I still had a car payment. Once the car payment is done, i'll simply be taking the same amount and putting it into a "car fund" for future repairs and/or purchases.

I also purchased an extended warranty on a recently purchased Volt, mainly due to the fact that on a monthly basis, the cost was only about $15/month more than not having it (i rolled it into the car payment), and because I'm still not sure how the reliable the technology for electric cars is (this is my first electric).

Worth it to me, personally, in both cases.
anil686
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Re: Extended car warranty - worth it?

Post by anil686 »

I generally would say not worth it with a 3rd party extended warranty especially. Some of the extended service plans (from the factory) are useful since they are valid at all dealerships and the dealers (my experience) work hard to fix issues related to the car with no questions asked (understanding they will be paid from the "factory" for the work). I have bought two factory extended service plans and were happy with both although one was a waste (but bought piece of mind) and the other actually saved about $4000 with a GMC Envoy whose windows did not roll up , speedometer that stopped working, cruise control that stopped working and power seats that stopped working. Oh, and the transmission was replaced - while those were done "free" with the extended service plan, the time in the shop was considerable and frankly disappointing in terms of the car purchase...
NYPhD
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Re: Extended car warranty - worth it?

Post by NYPhD »

What do people think of Geico's Mechanical Breakdown Insurance.

It's sort of like an extended warranty with a $250 deductible.
Frugal Disciple
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Re: Extended car warranty - worth it?

Post by Frugal Disciple »

RUN AWAY

This is a very bad deal for you. These aftermarket service plans rarely pay out when you expect them to and will do anything to avoid paying a claim. Even most factory extended warranties are not a good deal. These companies make a lot of money off these products. That's why most manufacturers sell them now.
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choices
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Re: Extended car warranty - worth it?

Post by choices »

We just went through this exercise this weekend and purchased the extended warranty from Toyota on our "new" Prius. We buy new and keep cars a long time and make sure to follow the maintenance schedules. We figured it was about a wash for oil changes, etc. but would save us if any of the big bad ugly stuff happened.

We do not buy extended warranties for refrigerators or vacs or anything else.
new2bogle
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Re: Extended car warranty - worth it?

Post by new2bogle »

I had an extended warranty for my RX 350, I believe it cost $1800 and I believe in the end I used about $1800 worth of the "insurance".
smackboy1
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Re: Extended car warranty - worth it?

Post by smackboy1 »

MP173 wrote:Received a call from a company called Solace regarding extended warranty covering another 3 years/100,000. . .

What are your experiences? Is this something worth considering?
If they are hunting you down, it's probably not a good deal for you.

This "extended warranty" is probably in reality an insurance policy. This is generally the rule for almost all 3rd party extended warranties. The contracts are very specific and like insurance policies, they only cover specific circumstances with many exclusions and exceptions. Often there are high deductibles and payment limitations. I've had 2 such plans on European cars and it's a pain to deal with. The insurer's adjuster does not always agree with the mechanic. Getting a repair approved can be a real fight. Also, pay outs may be limited to a rate schedule which is less than what the shop may charge. Not surprisingly, car dealers earn nice commissions selling these thing.

The only extended warranty I would consider is one offered by the car manufacturer e.g. certified pre-owned program. Those generally cover all components, except specifically excluded items.
Disclaimer: nothing written here should be taken as legal advice, but I did stay at a Holiday Inn Express last night.
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Watty
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Re: Extended car warranty - worth it?

Post by Watty »

Frugal Disciple wrote:RUN AWAY

This is a very bad deal for you. These aftermarket service plans rarely pay out when you expect them to and will do anything to avoid paying a claim. Even most factory extended warranties are not a good deal. These companies make a lot of money off these products. That's why most manufacturers sell them now.

+1 on not getting any warranty except for the manufactures. The manufactures may or may not be worth it but some of the third party ones are little better than a scam.

Before you buy a manufactures warranty be sure to know all the details of what power train warranty and emission warranty come with the car. A lot of the big ticket items may be covered under these after the full warranty runs out.
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bottlecap
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Re: Extended car warranty - worth it?

Post by bottlecap »

$60 a month? I'm guessing this is a joke?

JT
kjvmartin
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Re: Extended car warranty - worth it?

Post by kjvmartin »

I've had now two Mazdas in a row up to almost 70k on my second one with not one issue. I trust Mazda. I'm unlikely to buy an extended warranty for any Mazda product. I generally agree that these are bad ideas, but....

When we got married, my wife asked me to find her an inexpensive compact car. I found a great deal on a clean 2009 Ford Focus (in 2012). Her family is pretty big on "buy American." I'd heard of more issues with Ford, so I purchased the Ford dealer extended service plan. The plan was around $500. It has covered 2 break downs due to the throttle body assembly (towing and rental covered), a battery related towing, and some other miscellaneous items found during routine service inspections since 2012. I want to say the CV joint was the last repair we got free.

I also wanted the wife to have a way to deal with any issues if I was unavailable to help at the time. The Ford roadside number has been a one stop help - towing, repair, rental.

My 2 cents: Go with your gut.

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ginmqi
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Re: Extended car warranty - worth it?

Post by ginmqi »

bottlecap wrote:$60 a month? I'm guessing this is a joke?

JT
My thoughts.

$2100 to cover for the next 3 years...lol

Extended warranties are pretty much scams and you'll need to read the fine print. Yeah they say coverage up to 10k, but what is the deductible and what are all the conditions and criteria that needs to be met for them to actually pay out any repairs?
Bidwell
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Re: Extended car warranty - worth it?

Post by Bidwell »

Frugal Disciple wrote:RUN AWAY

This is a very bad deal for you. These aftermarket service plans rarely pay out when you expect them to and will do anything to avoid paying a claim. Even most factory extended warranties are not a good deal. These companies make a lot of money off these products. That's why most manufacturers sell them now.
Beautifully said. I agree 100%.
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Re: Extended car warranty - worth it?

Post by Jack FFR1846 »

The first rule with extended warrantees: If it is not provided directly from the car manufacturer, you can pretty much assume that when you go to make a claim, they will have long ago gone out of business.....only to reopen with a new name but with no liability to pay your claim.

Next: With new cars, they always offer the warrantee. What they don't tell you is that up until the last day of the new car warrantee, you can buy this. I considered this with an Audi I owned when they had a 50k mile/5 year bumper to bumper. When I was hitting 50k miles, I had already used up about $15k worth of free service from Audi and driven their loaner car several thousand miles. I sold the car instead and bought a Subaru which saw the dealer exactly once for a connector that was loose and fixed by the service writer in 15 seconds.

Remember that these companies (even manufacturer based) have to make money. So for you to do well, your car has to be a real lemon, in which case, why are you keeping it?
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stoptothink
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Re: Extended car warranty - worth it?

Post by stoptothink »

When have you ever received a call to offer a product that is worth it? Those speakers that guy is selling out of the back of his truck in the parking lot are worth it too.
madbrain
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Re: Extended car warranty - worth it?

Post by madbrain »

MP173 wrote:Received a call from a company called Solace regarding extended warranty covering another 3 years/100,000.

Currently the Chevy Equinox is at 112,000 miles. I have never purchased a warranty either from outside source or dealer.

What are your experiences? Is this something worth considering? Cost is $59 per month with a maximum of $10,000 payout.

Ed
Definitely not at this price and with this max payout. I bet there are tons of exclusions too. This is usually the case for extended warranties on vehicles that aren't brand new.
Trader Joe
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Re: Extended car warranty - worth it?

Post by Trader Joe »

No, absolutely not worth it. Complete waste of money.
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6miths
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Re: Extended car warranty - worth it?

Post by 6miths »

I'm with the not worth it crowd. Consumer Reports says the same thing.
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HIinvestor
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Re: Extended car warranty - worth it?

Post by HIinvestor »

Agree that I'd only consider purchasing an auto warranty directly from the auto manufacturer. I did have an extended warranty on a Caddilac--was able to get a replacement on transmission just before extended warranty expired. Also bought an extended warranty on my Toyota van and got a new transmission just before it expired. Got Oldsmobile to give me an extended warranty on my Sierra and they replaced the transmission just before that warranty expired. Don't know what's up with the transmissions. The cars we didn't get extended warranties on needed NO work on transmissons.

All our other vehicles, we have never bought any extended warranties and never had expensive repairs. I'd save the money in an account dedicated for auto repairs and maintenance and be sure to change the oil, filter, and air filters regularly. That's the best insurance policy you can have for your car to work as well as possible!
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dm200
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Re: Extended car warranty - worth it?

Post by dm200 »

My opinion is that extended warranties are not a good deal financially. Better to put something away each month for such items if the car has problems.

You are (usually) restricted where the repairs can be done, and there is almost always a deductible. There are usually certain items excluded. Depending on the issuer of the warranty, the company may go out of business (which has happened to many such issuers).

One clue (in my opinion) as to the value is that the dealers really push these things (pusing done by commissioned F&I folks) - so they must be very profitable to the dealers.
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MP173
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Re: Extended car warranty - worth it?

Post by MP173 »

Thanks for suggestions and advise.

I will not purchase this product. I have never purchased an extended warranty on any product other than Iphones for my sons (they tend to damage those).

My thoughts were that typically vehicles begin to see repairs after about 150,000 miles.

Ed
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dm200
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Re: Extended car warranty - worth it?

Post by dm200 »

It has been a few years, but I recall a conversation I had with a young man (close relative) who, at that time, was a new car salesman for a few years. He had a good year, so he bought and financed a nice car - and he showed me the "deal" he received. I recall that the prices he paid for extended warranty and GAP coverage were very much lower than anything I had seen. He told me he got those "at cost" because he was an employee. I know the "extended warranty" had a big markup and the GAP was about 1/4 or 1/5 of what many customers get charged.

While a large markup on a product or service is not necessarily a reason to avoid buying, it is, I believe, an indicator that the "value" may not be worth it.

It is my understanding (no first hand experience) that sometimes (because of the high markup) dealers may be willing to negotiate a lower (or much lower) price for such coverage.
squirm
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Re: Extended car warranty - worth it?

Post by squirm »

Some factory extended warranties you can buy from another dealer outside of your state for lower prices.
It just depends on the individual. If you get a decent deal on a warranty and like a piece of mind, then perhaps it's worth it.
KyleAAA
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Re: Extended car warranty - worth it?

Post by KyleAAA »

My understanding is that extended warranties not backed by the manufacturer often have so many loopholes as to be useless.
squirm
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Re: Extended car warranty - worth it?

Post by squirm »

KyleAAA wrote:My understanding is that extended warranties not backed by the manufacturer often have so many loopholes as to be useless.
I have heard the same thing. If I did a warranty it would only be a factory one.
jealkon
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Re: Extended car warranty - worth it?

Post by jealkon »

Check out AAA - the warranty they sell is good and they stand behind it
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dm200
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Re: Extended car warranty - worth it?

Post by dm200 »

KyleAAA wrote:My understanding is that extended warranties not backed by the manufacturer often have so many loopholes as to be useless.
There is also a much bigger risk with some of these (not all) that the issuer may go belly up. If the issuer is a large, reputable insurance company, though, I believe you are probably safe on this risk.
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