Is it ever worth purchasing an extended warranty for a vehicle?

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phxjcc
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by phxjcc » Mon Jan 21, 2019 9:59 pm

For used....Yes, buy one.

Despite the Toyota fan boys protestations, things break on these finely designed machines (ahem) as well.

E.g. On the ubiquitous mid 2000's RX3x0 platform the steering rack will only last ~60K.
Ask any Lexus or Toy mechanic.
Over $ 1,000 R&R, dealer will be closer to $2,000.

10 year 100k warranty $650.

However, find an independent insurance agent and they can write one for 50% what a dealer charges.
We just did it on our 6 year old Lexus.

Also, if buying an "exotic" through CarMax, their after market warranty gets good reviews.

Goggle /Range Rover carmax extended warranty/ for a great story on Jalopnik.

Cheers.

phxjcc
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by phxjcc » Mon Jan 21, 2019 10:08 pm

Forgot to add....a great deal of the profit from these and home warranties, as well, derives from the behavior of the consumer.
Many, many, many people buy the coverage, call the claim number, hear that they are going to wait 10 minutes and hang up in frustration. And don't use what they have paid for.

[Deleted - mod oldcomputerguy]

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cheese_breath
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by cheese_breath » Mon Jan 21, 2019 10:37 pm

I suppose you might want to consider it if you're buying a Chrysler product. :wink:
The surest way to know the future is when it becomes the past.

bryansmile
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by bryansmile » Mon Jan 21, 2019 10:59 pm

Once I really wish I had bought it for my Honda, right after our factory warranty expired. It was because of some faulty part Honda used. Car got towed 5 times in 2 weeks and the dealer refused to pay for the expensive fix (taking 2-3 days to fix) as "there's no recall".

The next time we went in, we happened to mention a class action lawsuit going on which we just learned, to our surprise they immediately agreed to pay for the repair.

ralph124cf
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by ralph124cf » Tue Jan 22, 2019 1:30 am

One thing that seems to be missing in this discussion is the difference between the list price that you would have to pay without the warranty and the actual dealer's cost of doing the repair.

The dealer has a hefty markup on parts, and an even greater markup on the cost of labor, plus the service writer would not get a commission on this work.

In this situation it is possible for both the customer and the dealer to come out ahead on a fairly priced extended warranty. Yes, this may take some tough negotiating to get a fair price.

Ralph

msk
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by msk » Tue Jan 22, 2019 4:05 am

Depends... You can get very serious repair bills on cars costing more than $100k. My Mercedes S560 cost me $164k, bought outside the US. It comes with the manufacturer's 2-year bumper to bumper warranty plus a dealer's 3rd year. So I added 4th and 5th years for $2k. Sounded reasonable enough. Until I checked the fine print. Absolutely disgusting for a Mercedes-authored warranty/insurance policy! Basically it does not cover any electronics, like navigation, sound system, driving aids (cruise control/proximity sensors, lane keeping, etc.). I think this is absolutely disgusting and made me regret going back to their brand after an absence of 20+ years. Compare that to DW's Lexus LS500. 6 years bumper to bumper right off the dealer's lot. Lexus already had to replace a headlight fixture (why do they make headlights have any function more than OFF/ON?! Needed replacing because the Lexus occasionally gave the message that auto-dimming is inoperative even though it seemed to always work fine.). Apparently that headlight module costs >$1000 if we had to pay for it... Mercedes called me to ask about my experience with the dealer in the purchasing process. I gave them an earful regarding their disgusting warranty extension policy. I doubt it'll make any difference. They should just have charged me $170k for the car and include a bumper-to-bumper 7 year warranty up front. Frankly at the ultra luxe market your purchasing decision is not made on whether the car costs $165k or $175k but it does make a huge difference as to whether you or your buddies were happy the last time they owned that brand. My last Mercedes was made in 1981 and it had next to nil fancy electronics. I never needed any warranty repairs over 13 years of ownership. But with all these computer-on-wheels toys? Read the fine print...

TLC1957
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by TLC1957 » Tue Jan 22, 2019 6:34 am

Buy a Honda very reliable vehicle ....read this thread with 800 plus posts read by some 120k of you.....

viewtopic.php?f=11&t=244271

2017-2019 CRV with the turbo engine Consumer Reports loves the vehicle until gas started to get into the oil. Yea so I am happy I purchased a HondaCare 8 year, 120 K miles , 0$ deductible extended warranty for $1100 not to mention all the electronics......yep.

obgraham
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by obgraham » Tue Jan 22, 2019 7:06 am

The whole logic of the Extended Warranty pitch has always escaped me.

First they sell you a car, during which the friendly salesman emphasizes over and over how reliable and trouble free his cars are, and what a wonderful product it is compared to the competition.

Then you get sent into the Finance Office, where a guy with oily skin and slicked-back hair spends time telling you how complicated and difficult the product you just bought is, and how expensive it will be when the unreliable parts break down, as they all inevitably will.

The solution to which, of course is to tack several thousand onto the purchase price to get "insurance" hopefully to fix it. But not for "wear and tear" or any other broken bit they deem not their fault.

It a sleazy scam, all of it.

retiringwhen
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by retiringwhen » Tue Jan 22, 2019 7:09 am

I bought one extended warranty, for a 1998 Windstar....

The reviews were horrible on reliability for the car (and i had just gone through a mess with a Mercury Sable with similar drive train.)

Well I wanted a Honda Odyssey, but they were 6 mos. back-ordered and Ford was selling the Windstar for $8,000 less than the Honda. So I held my nose, bought the Windstar and an extended warranty for it.

Long-story short, the TCO was definitely less than the Odyssey, I used the warranty twice for drive-train issues, but it is also the only car I sold with less than 150,000 miles since 1990.

In other words, if you are going to buy a lemon, buy lemon protection....... We truly hated that vehicle. It was the last Ford I ever bought and I have no temptations to buy one ever again. I don’t think I’d even take one as a gift.

As someone else above mentioned, if you are set on buying an unreliable car, the extended warranty may have some value.....

These days, we buy Honda(2), Toyota and Subaru although Honda aint’ what they used to be....

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Tamarind
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Tamarind » Tue Jan 22, 2019 7:18 am

I got an exceedingly good deal on an extended warranty the first time I bought a new car (Hyundai). I am now coming up on the end of that warranty (10 years/100k mi) and it has returned less than 50% of its purchase price. On the other hand, I apparently have a very reliable car, so far.

My father loves extended warranties. He bought one with a previous car (Honda Fit), and felt it was well worth it because it paid for a recurring cylinder issue. However when the warranty expired he immediately sold the car because he did not trust its reliability anymore.

I have concluded the money one might be willing to lay out on an extended warranty would be better spent buying a car with a good history of reliability, and/or on maintaining a robust emergency fund such that it would not be a hardship to repair or replace the car if a major issue did arise.

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BoglePaul
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by BoglePaul » Tue Jan 22, 2019 7:28 am

Depends on the car. For an Accord or Camry, probably not worth getting an extended warranty. For something exotic it might be difficult to locate a mechanic that specializes in repairing the car so it might be a good idea. Then there is the grey area: owners that have high value time (Lawyers, Doctors, etc) and owners that have little automotive knowledge. For a busy lawyer, it might make sense to take their BMW to the dealer, without appointment and have their car fixed on the spot under warranty (or they can get the free loaner). That is a nice luxury that will enable them to earn more by working vs (searching for a mechanic, diagnosing the problem, locating the parts of best price). For someone without automotive knowledge, it might make sense to have the car repaired at a reasonable price and let the warranty cover the expenses vs their lack of knowledge letting them fall into the trap of getting unnecessary repairs. On a pure dollar basis for a middle ground car with a knowledgeable owner, they will likely more often that not save without the warranty. However, there is more to "worth it" than a pure dollar basis.

rigoodma
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by rigoodma » Tue Jan 22, 2019 7:34 am

I have a F150 and I did get an extended warranty. I am less concerned with mechanical failures and more concerned with electronic failures in the future.

Go to https://factoryplans.com/default.aspx and you can get actual Ford warranties for cheap. They do it by volume and prices them way lower than you would get at any dealer

researcher
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by researcher » Tue Jan 22, 2019 10:11 am

It is very simple…
Don’t buy an extended warranty! Just self-insure instead!
Keeping that $1500 in the bank and paying out of pocket IF a repair is needed is the way to go.

Many people here seem deathly afraid of having a $1500 repair several years after buying a new car, but don’t think twice about forfeiting $1500 upfront on an extended warranty. Why pay a guaranteed $1500 upfront in order to cover the small possibility of a covered part going bad during a narrow window of time?

Many people state “it worked out,” “I came out ahead” or “I got my money’s worth.” So you spend your ownership period HOPING your new car has expensive problems in order to justify the warranty cost.

As another poster said, between the exclusions and what is covered by the factory warranties, you are not getting much extra coverage, and it only applies to a narrow time frame towards the end of the extended warranty.

Patzer
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Patzer » Tue Jan 22, 2019 11:55 am

All insurance and warranties should be assumed to have a net negative expected value, or why would they sell them.
The question of whether or not to buy them has to do with the risk associated with you having to absorb the cost of the potential issue that is insured against. If you could pay said cost, without much impact to your life, than it is probably not worth having.

Medical Insurance and Home Insurance are the only expenses I don't want to risk having to pay at this point, so they are the only warranties/insurance that I use, but earlier in my life I used to pay for full coverage insurance on my car(just liability now), and a car extended warranty, because those costs would have been disruptive at that time.

researcher
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by researcher » Tue Jan 22, 2019 12:05 pm

Patzer wrote:
Tue Jan 22, 2019 11:55 am
earlier in my life I used to pay for full coverage insurance on my car(just liability now), and a car extended warranty, because those costs would have been disruptive at that time.
Why is the slight possibility of a $1500 repair during a narrow timeframe considered "disruptive," but forking over the same $1500 upfront for an extended warranty not disruptive?

Patzer
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Patzer » Tue Jan 22, 2019 12:21 pm

researcher wrote:
Tue Jan 22, 2019 12:05 pm
Patzer wrote:
Tue Jan 22, 2019 11:55 am
earlier in my life I used to pay for full coverage insurance on my car(just liability now), and a car extended warranty, because those costs would have been disruptive at that time.
Why is the slight possibility of a $1500 repair during a narrow timeframe considered "disruptive," but forking over the same $1500 upfront for an extended warranty not disruptive?
I bought it after the purchase for $1085 for 5 additional years, a substantial discount off the original offer, which I think was around $1600.
I had spent $3423 on repairs in a single year with my previous car, so in my mind $1500 was not the upper limit.
I wanted peace of mind to focus on paying off my mortgage as quickly as possible, without carrying an extra $3000 in cash on hand in case of car repairs.

mancich
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by mancich » Tue Jan 22, 2019 12:32 pm

Personally I wouldn't. Put the cost of the extended warranty in your emergency fund for future repairs.

andypanda
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by andypanda » Tue Jan 22, 2019 4:06 pm

I didn't think much of extended warranties, until I found out how little they really cost if I leaned on the dealer in a friendly manner and mentioned the dealers who would sell them for quite a bit less. I didn't know that a zero-deductible Toyota gold warranty for 6 year/75k miles could be had for a little over $500. That certainly wasn't the first price they stated. Or the second or the third. Probably not the fourth either.

My $42k sticker new 2016 4Runner - $38k cash - cost a little more than my wife's new 2016 Avalon Touring because the sticker on her car was only $39-something sticker ($32k cash.) And I figure they knew I would be driving the 4Runner on the beach and also towing my boat. Mine was $545 and the Avalon was $525.

I later learned on the 4Runner forum that by purchasing the extended policy out of state I could have saved maybe $20 or $30.

I'm 6 years into retirement and have an emergency stash, etc., etc., etc. Fwiw. I have to start taking my RMDs in 2021 so what the heck, I bought the policies.

Now, back to shopping for a second boat. You want to talk expensive waste of money. :mrgreen:

GW208
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by GW208 » Tue Jan 22, 2019 4:12 pm

andypanda wrote:
Tue Jan 22, 2019 4:06 pm

I'm 6 years into retirement and have an emergency stash, etc., etc., etc. Fwiw. I have to start taking my RMDs in 2021 so what the heck, I bought the policies.

Now, back to shopping for a second boat. You want to talk expensive waste of money. :mrgreen:
I like your way of looking at things.👍

NewOldGuy
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by NewOldGuy » Tue Jan 22, 2019 4:17 pm

Add this one when comparing quotes. It's been 2.5 years when I shopped best price, but this dealer was best at the time. Once you get away from your local dealers, these extended factory warranties are affordable.

https://andersonandkoch-ford-warranty.com/

CobraKai wrote:
Mon Jan 21, 2019 12:57 pm
certifiedfordtec wrote:
Mon Jan 21, 2019 12:54 pm
Yes, one module or transmission can cost you over $1000. Shop online for best deals on factory warranties. Flood Ford or Zeigler usually have best pricing.
Those are actually the top two dealers I was considering. Another concerns is the electronics, these newer vehicles have a lot of electronics.

FoolMeOnce
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by FoolMeOnce » Tue Jan 22, 2019 5:17 pm

mancich wrote:
Tue Jan 22, 2019 12:32 pm
Personally I wouldn't. Put the cost of the extended warranty in your emergency fund for future repairs.
This makes me think that perhaps extended warranties are a decent idea for someone who can't be trusted to save for future repairs. Force the spending up front. On average, the person will come out behind, but not compared to blowing the money on useless frivolities.

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CobraKai
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by CobraKai » Wed Jan 23, 2019 12:23 am

Thanks for the replies. Too many to respond to each one but I appreciate the feedback.

Many of the posts against it are really short and don't really list any reasons other than the "making money" angle. Of course they're going to make money, why else would they offer it? I must admit that the Ford PremiumCare warranty looks pretty comprehensive and covers just about everything other than wear and tear items.

One can buy the vehicle with a "solid reliable record" based on Consumer Reports or whatever. Most vehicles made today are pretty reliable. The odds are in one's favor but that doesn't eliminate the chance of problems.

With that being said, the first two cars that I had long term, I did not buy an extended warranty nor did I need one. They were economy cars with no bells or whistles. The only issues I had prior to 100k miles were wheel bearing issues and a window motor or two and the cost to repair would have been much less than what the extended warranty would have cost.

With my last car, I had some problems before the odometer hit 100k and probably would have broken even money-wise if I went with a warranty, although I would have had more piece of mind since I was ripped off by one shop and spent weeks dealing with the fallout from that situation (makeing a case with the credit card company for a chargeback, taking the car back and forth to this shop several times, taking the car to another shop, etc). It was a time consuming and stressful ordeal. If I had a warranty, all I would have had to do was have the car towed to the dealer and they would likely have had it repaired the same day and I would have gotten a loaner car to drive to work.

There have been other instances where I have been ripped off by mechanics. You might say "find one you can trust". You can trust one until they give you a reason not to.

There are a lot more that can go bad in these newer vehicles (i.e. electronics) that did not exist 15-20 years ago.

Based on odds, those of you against it bring up a good point. However, because of the above reasons, I haven't completely ruled it out.

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tadamsmar
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by tadamsmar » Wed Jan 23, 2019 5:47 am

Insurance has to pay off in terms of utility.

The idea is that normal math doesn’t apply to a large financial loss compared to a modest insurance premium. A million dollars is worth more than a million times one dollar in terms of utility. So insuring a large loss is worth it even if does not pay off on average.

But car repairs are not devastating losses so the utility math does not favor the insurance,

ShadowRegent
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by ShadowRegent » Wed Jan 23, 2019 6:04 am

There are two times when extended warranties and insurance make sense: 1) to protect against a loss that would otherwise be unacceptable to you if it occurs, or 2) you know something that the insurance company has not baked into their model.

#2 rarely happens, but it can. Here is a great example https://www.autotrader.com/car-news/vid ... 4979901455. Unsurprisingly, CarMax no longer offers that bargain of a warranty for such an unreliable vehicle.

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blaugranamd
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by blaugranamd » Wed Jan 23, 2019 6:28 am

Paying for a warranty is essentially prepaying for repairs. You are betting you'll have at least $1200 in repairs over the next 3 years. I paid like $800 for one on my Subaru a while back. Actually got the starter replaced under that warranty but it only cost about $500. So I still technically spent $300 more than I needed. YMMV
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motorcyclesarecool
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by motorcyclesarecool » Wed Jan 23, 2019 7:07 am

phxjcc wrote:
Mon Jan 21, 2019 9:59 pm
Goggle /Range Rover carmax extended warranty/ for a great story on Jalopnik.

Cheers.
Doug DeMuro’s Range Rover finally outlived its Carmax extended warranty. A long financial nightmare for the underwriter is now over. He announced it on Twitter and in his new home at Autotrader.com
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

motorcyclesarecool
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by motorcyclesarecool » Wed Jan 23, 2019 7:16 am

obgraham wrote:
Tue Jan 22, 2019 7:06 am
(....)Then you get sent into the Finance Office, where a guy with oily skin and slicked-back hair spends time telling you how complicated and difficult the product you just bought is, and how expensive it will be when the unreliable parts break down, as they all inevitably will.

The solution to which, of course is to tack several thousand onto the purchase price to get "insurance" hopefully to fix it. But not for "wear and tear" or any other broken bit they deem not their fault.

It a sleazy scam, all of it.
When we bought our new Nissan, the “finance” guy gave us a menu of extended warranty options and asked us which one we wanted. “None” wasn’t listed as an option. They sneakily turned what should have been an “opt in” transaction into an “opt out” transaction where the “opt out” was hidden. We chose, “none of the above.”
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

andypanda
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by andypanda » Wed Jan 23, 2019 8:16 am

Here's a recent list of 4Runner extended warranty prices from an ongoing thread run by a forum member who provides contact info for getting a warranty at a great price. The prices appear to have increased since I bought mine in 12/16, but are still a heck of lot cheaper than what I was offered back then.

It's his comment at the bottom that "some can be a bit cheaper". He doesn't publish the lower prices. He only provides the contact info of the warranty seller in a personal message upon request.

Remember, these prices are for a made-in-Japan 4WD truck that they expect may see some time offroad and quite likely suffer some substantial modifications to the suspensions in many cases and/or the installation of oversized wheels and tires. Not my thing, but it happens. In addition to the dual-range 4WD on mine there's the locking rear differential, electronic Crawl Control, ATRAC, and a bunch of other stuff to break. And mine has the optional $1750 KDSS - Kinetic Dynamic Suspension System. :)
____________________________________

"Originally Posted by xxxxxx View Post
Checked the year limit, it's definitely 10 yr / 100K. Seems like the 9 and 10 year terms are relatively new.
Here's what I was offered:
6 yr / 75K - $645.00
6 yr / 100K - $895.00
6 yr / 125K - $1140.00
7 yr / 75K - $715.00
7 yr / 100K - $1025.00
7 yr / 125K - $1250.00
8 yr / 75K - $835.00
8 yr / 100K - $1145.00
8 yr / 125K - $1505.00
9 yr / 100K - $1265.00
9 yr / 125K - $1665.00
10 yr / 100K - $1360.00
10 yr / 125K - $1795.00"

"Most of those are right on the money, some can be a bit cheaper. :-) "
_________________________________

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bottlecap
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by bottlecap » Wed Jan 23, 2019 8:29 am

Math is hard. Even for Bogleheads.

JT

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CobraKai
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by CobraKai » Wed Jan 23, 2019 12:25 pm

blaugranamd wrote:
Wed Jan 23, 2019 6:28 am
Paying for a warranty is essentially prepaying for repairs. You are betting you'll have at least $1200 in repairs over the next 3 years. I paid like $800 for one on my Subaru a while back. Actually got the starter replaced under that warranty but it only cost about $500. So I still technically spent $300 more than I needed. YMMV
Is it all that unusual to have a couple $700-800 type repairs over a 3 or 4 year timeframe?

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CobraKai
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by CobraKai » Wed Jan 23, 2019 12:39 pm

I was leaning toward getting it. I looked into the warranty and it pretty much covers everything that isn't a wear item (i.e. brake pads). The extended warranty would cost approx $35 per month if I were to divided the total cost of the warranty by the # of months I would be covered, which isn't an outrageous monthly fee.

OTOH I started thinking about the esp warranty plan with my utility that I have (to cover furnace, gas lines, etc), which I have paid every month for about 15 years, without even thinking about it. If you have a problem with your furnace, gas line, etc....the utility sends someone out to fix it without charge. It's the only warranty/insurance I pay for other than homeowners insurance, auto insurance, etc.

It costs me $25 per month. That's $300 per year and $4500 over 15 years.

I've used it three times. Twice was due to a dirty sensor that I eventually learned how to clean myself. One problem required a part to be replaced. Not sure how much it would have cost me to fix but let's say it was $500-600 and all repairs were $1000 total. I'm about $3500 in the hole! Perhaps I should cancel this. With my luck, I'll probably have extensive repairs as soon as I do that (especially with the furnace aging.)

researcher
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by researcher » Wed Jan 23, 2019 2:29 pm

CobraKai wrote:
Wed Jan 23, 2019 12:39 pm
I was leaning toward getting it. I looked into the warranty and it pretty much covers everything that isn't a wear item (i.e. brake pads). The extended warranty would cost approx $35 per month if I were to divided the total cost of the warranty by the # of months I would be covered, which isn't an outrageous monthly fee.
Where are you coming up with those numbers?

You said your drive 25K miles/year.
The extended warranty: 6yr/100K = $1200, the 7/125K = $1800
Factory warranty: 3yr/36K B2B, 5yr/60K powertrain

So the extended warranty coverage would cost you...
- Around $60/mo for powertrain related coverage
- Around $40/mo for bumper to bumper coverage

You are going to burn through the 100K extended warranty coverage in 4 years.
You would need to have a $1200 repair during a narrow time period of years 2-4 (no sooner, no later) to break even.

No way would I spend $1200 to insure against that possibility.

andypanda
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by andypanda » Wed Jan 23, 2019 2:59 pm

After paying $433.40 to Medicare for this month and $297 to the state this month for supplemental insurance as a retiree, $545 for a few years of extended warranty seems like a screaming deal. And it’s transferable one time for $50 if you sell the vehicle or give it to the kids.

My wife is 5 years younger and still working, so she has her own health insurance. She’ll be 65 in 15 months and then I’ll really be whining and crying. 😩

DaftInvestor
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by DaftInvestor » Wed Jan 23, 2019 3:03 pm

I buy Toyotas, Hondas, and Subarus - been doing so for 30 yeas and I've never bought an extended warranty and have never regretted it (since the need was never there - any money spent would have been wasted). I have an emergency account in case the need arises and something does go wrong - don't need an insurance policy on my car breaking down.
I suppose if I was looking at brands with less-reliable vehicles, like someone up-thread mentioned, I might consider it.

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by neilpilot » Wed Jan 23, 2019 3:11 pm

It may be worth it, but typically not.

I have never seriously considered an extended warranty. I can't verify the count, but I've owned at least 2 dozen vehicles since 1971. Maybe 10 were bought new, and another 2-4 nearly new. My current cars are a 2008 Saturn VUE bought new, at 160k miles, and a 2016 Mercedes GLC300 bought slightly used.

Of all those cars I can recall only one where a warranty might have come close to making sense. Even for that 1 (out of 24+) I'm not sure I would have come out ahead had a warranty been in place. Maybe if I went to the dealer for all maintenance, I could have come closer to it making sense, but that's doubtful.

EnjoyIt
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by EnjoyIt » Wed Jan 23, 2019 3:19 pm

My thinking is:
Insurance is designed to be profitable which means that over long term buying insurance will on average make money for the insurance company and lose money for the consumer. The next question, do you need insurance, or is it possible for you to self insure? I figure as a boglehead you have been wise enough to start amassing a small fortune where a $5k repair won't be the end of the world. If that is the case, over long term of multiple cars throughout your lifetime, you should be ahead never buying insurance vs buying it for every car.

ndlex
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by ndlex » Thu Jan 24, 2019 10:53 am

Normally I never buy extended warranties for the reasons many already said. It's a profit source for the seller.

That said, I did buy a Toyota Extended Warranty to 8 Years/125,000 miles on a new 2014 Toyota Highlander as it was the first model year of a significant design change. I paid $1,495 for the extended warranty, and we are now 5 years/70,000 miles into the warranty and I'm already ahead.

These are the items that were repaired under the extended warranty:
All four door lock actuators failed and were replaced $1,740 ($435 each)
Rear trailing arms $629
Total $2,369

I'm pretty confident both of the above issues were due to the vehicle being a new design. With all four lock actuators failing, it looks like a bad batch of those. The rear trailing arms were actually replaced under the original factory warranty, and again under the extended warranty. The part number had changed when they were replaced the second time, so that most likely indicates a redesign or change had taken place in the part itself.

I also had a pretty significant sunroof leak in the Highlander that was not covered by extended warranty. So definitely be aware that any extended warranty is not just an extension of the original bumper to bumper warranty included with the vehicle. That is generally NOT how these extended warranties are positioned by the sales people.

My strategy going forward will be to not buy vehicles in the first model year of a new design, and not buy an extended warranty. That will give them a year or two to get the kinks worked out in the new design.

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CobraKai
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by CobraKai » Thu Jan 24, 2019 11:29 am

researcher wrote:
Wed Jan 23, 2019 2:29 pm
Where are you coming up with those numbers?

You said your drive 25K miles/year.
The extended warranty: 6yr/100K = $1200, the 7/125K = $1800
Factory warranty: 3yr/36K B2B, 5yr/60K powertrain

So the extended warranty coverage would cost you...
- Around $60/mo for powertrain related coverage
- Around $40/mo for bumper to bumper coverage
I was going to ask you the same question.
6 years is actually 3 years since 6 years is the length of time since the vehicle was sold brand new. It is 3 years old.
It's $36 per month if I went with the 6 year/100k/1200 or $39 per month if I went with the 7 year/125k/1800.
researcher wrote:
Wed Jan 23, 2019 2:29 pm
You are going to burn through the 100K extended warranty coverage in 4 years.
You would need to have a $1200 repair during a narrow time period of years 2-4 (no sooner, no later) to break even.

No way would I spend $1200 to insure against that possibility.
If I went with the first warranty, the car would be covered three years from today. The second would cover the car form now until four years from now.

Topic Author
CobraKai
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by CobraKai » Thu Jan 24, 2019 11:34 am

EnjoyIt wrote:
Wed Jan 23, 2019 3:19 pm
My thinking is:
Insurance is designed to be profitable which means that over long term buying insurance will on average make money for the insurance company and lose money for the consumer. The next question, do you need insurance, or is it possible for you to self insure? I figure as a boglehead you have been wise enough to start amassing a small fortune where a $5k repair won't be the end of the world. If that is the case, over long term of multiple cars throughout your lifetime, you should be ahead never buying insurance vs buying it for every car.
Of course they are looking to make a profit. Why else would they offer it?

I haven't had a 5k repair but I know two family members who have in the recent past. It wouldn't be the end of the world. I'm more concerned about an 800 dollar repair here, 1200 repair there, and the hassle of dealing with mechanics that rip you off or do a poor job. I know not all are like that but a shop/mechanic can be trustworthy and reliable until they're not.

EnjoyIt
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by EnjoyIt » Thu Jan 24, 2019 5:16 pm

CobraKai wrote:
Thu Jan 24, 2019 11:34 am
EnjoyIt wrote:
Wed Jan 23, 2019 3:19 pm
My thinking is:
Insurance is designed to be profitable which means that over long term buying insurance will on average make money for the insurance company and lose money for the consumer. The next question, do you need insurance, or is it possible for you to self insure? I figure as a boglehead you have been wise enough to start amassing a small fortune where a $5k repair won't be the end of the world. If that is the case, over long term of multiple cars throughout your lifetime, you should be ahead never buying insurance vs buying it for every car.
Of course they are looking to make a profit. Why else would they offer it?

I haven't had a 5k repair but I know two family members who have in the recent past. It wouldn't be the end of the world. I'm more concerned about an 800 dollar repair here, 1200 repair there, and the hassle of dealing with mechanics that rip you off or do a poor job. I know not all are like that but a shop/mechanic can be trustworthy and reliable until they're not.
I’m sorry, I don’t understand your point. Of course some cars will require expensive repairs. That’s how insurance works. I would think as a Boglehead one should be able to comfortably self insure car repairs. Over the long run of decades and multiple cars you will likely find yourself financially ahead self insuring. This is in my opinion what an emergency fund is for.

Also, just because you have an extended warranty doesn’t meen the job will be done well or done right. You are still responsible.

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by tadamsmar » Fri Jan 25, 2019 7:18 pm

CobraKai wrote:
Wed Jan 23, 2019 12:23 am

There have been other instances where I have been ripped off by mechanics. You might say "find one you can trust". You can trust one until they give you a reason not to.
You don't need to find one you can trust, just take it to the dealer who would have done the repair if you had insurance.

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by hameshatumkochaha » Wed Mar 25, 2020 10:27 pm

Ben Mathew wrote:
Mon Jan 21, 2019 12:58 pm
We typically don't buy the extended warranty. But for our last car (2015 Subaru Forester), when we said no, they just kept reducing the price to some very low number, until we said yes. I can't remember what the final amount was was. But I would guess something like half the original price. Still don't know if it was a good deal (didn't try to calculate odds of needing it etc.), but it was at a price much below sticker. That makes me think the sticker price is way overpriced, if they have that much room to cut.

Was this negotiation during the car purchase or after purchasing the car?

I ask because I purchased my car (2017 Kia Sedona) 2-3 years ago and I am exploring purchasing an extended warranty with a medium level deductible and use it like insurance i.e. if $4-5k expense pops up in the coming 7 years, then I will pay $250 and they will cover the rest. If one such instance happens in the 7 years, the $2k I paid for the warranty would be good. If not, I paid $2k more. I am considering because the car already got 1-2 repairs that were $1+k each and the original warranty covered it. Maybe other Sedonas are good and I got a not-so-reliable piece???

smectym
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by smectym » Thu Mar 26, 2020 12:11 am

Ben Mathew wrote:
Mon Jan 21, 2019 12:58 pm
We typically don't buy the extended warranty. But for our last car (2015 Subaru Forester), when we said no, they just kept reducing the price to some very low number, until we said yes. I can't remember what the final amount was was. But I would guess something like half the original price. Still don't know if it was a good deal (didn't try to calculate odds of needing it etc.), but it was at a price much below sticker. That makes me think the sticker price is way overpriced, if they have that much room to cut.
That is interesting I had a sort of the same experience at a Honda dealership but he never went low enough. But he was in a bad mood during the rest of the paperwork.

The warranty is almost pure profit for the dealers and the salesman or the finance guy, whoever is tasked with selling it, are under great pressure to deliver and to get the consumer to buy the warranty and if they don’t succeed that’s a kind of a black mark on their record. During one transaction, when I said we weren’t buying the warranty, the salesman acted like I’d slapped him in the face.

beastykato
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by beastykato » Thu Mar 26, 2020 4:01 am

I bought a 7 year / 100k warranty on my Honda Accord. The list price in these things are like $1500-2000. I paid only $750.


$750 for bumper to bumper 100k/7 with $0 deductible. Yes, it's well worth it. That's such a small amount of money I easily got my value out of that over 7 years.

I would have got even more value from it during major engine failure on my 3.5l V6 at ~90k, but there was already a class action lawsuit against them by the time mine failed.

dcabler
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by dcabler » Thu Mar 26, 2020 6:24 am

Never have. If the manufacturer won't stand behind their product, why should I?

researcher
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by researcher » Thu Mar 26, 2020 8:12 am

CobraKai wrote:
Thu Jan 24, 2019 11:29 am
I was going to ask you the same question.
6 years is actually 3 years since 6 years is the length of time since the vehicle was sold brand new. It is 3 years old.
It's $36 per month if I went with the 6 year/100k/1200 or $39 per month if I went with the 7 year/125k/1800.

If I went with the first warranty, the car would be covered three years from today. The second would cover the car form now until four years from now.
OP -
So what did you end up doing? Did you purchase the extended warranty?

I didn't see your reply to my post, so I'm just now responding...
- The extended warranty coverage is 100K or 125K miles from when the car was sold new.
- But you already have 35K miles on the car, so your actual extended warranty coverage is 65K or 90K miles.
- And you still have 25K miles remaining on the factory powertrain warranty.

Since you drive 25K miles/yr, you will get...
- "Bumer-2-Bumper" coverage of 2.5 years from the 100K warranty and 3.5 years from the 125K warranty.
- Powertrain coverage of 1.5 years from the 100K warranty and 2.5 years from the 125K warranty.
I just don't see spending that kind of money for such short coverage.

Did you happen to read the fine print of the extended warranty? Here are just some of the items NOT covered...
Costs or expenses for the teardown, rental expense, inspection or diagnosis of failures not covered by this Agreement.
Repairs caused by improper unreasonable use and repairs caused by lack of required or recommended maintenance.
Paint, rust, sheet metal, structural underbody framework, side and rearview mirrors (glass and housing). Batteries of all types, brakes, exhaust system (includes catalytic converter), spark plugs, all lamps and lights (LED and HID lights, bulbs, sealed beam and lenses), fogging of lamp assemblies, shock absorbers.

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Sandtrap
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Sandtrap » Thu Mar 26, 2020 8:26 am

Depends on the car.
Toyota Corolla: no
Honda Civic: no
Geo Metro: yes
Chevrolet Vega: yes

j🌺
Wiki Bogleheads Wiki: Everything You Need to Know

researcher
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by researcher » Thu Mar 26, 2020 8:44 am

beastykato wrote:
Thu Mar 26, 2020 4:01 am
$750 for bumper to bumper 100k/7 with $0 deductible. Yes, it's well worth it. That's such a small amount of money I easily got my value out of that over 7 years.
You didn't get anywhere close to 7 years of coverage from your extended warranty...
- Your Honda came with a 5yr/60K mile powertrain and 3yr/36K mile B2B warranty.
- So what you got was 2yr/40K powertrain and 4yr/64K mile B2B coverage.

What types of covered repairs did you have during the relatively small window of time (after the factory warranty & before the extended warranty expiration)?

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Jack FFR1846 » Thu Mar 26, 2020 8:45 am

andypanda wrote:
Wed Jan 23, 2019 8:16 am


"Originally Posted by xxxxxx View Post
Checked the year limit, it's definitely 10 yr / 100K. Seems like the 9 and 10 year terms are relatively new.
Here's what I was offered:
6 yr / 75K - $645.00
6 yr / 100K - $895.00
6 yr / 125K - $1140.00
7 yr / 75K - $715.00
7 yr / 100K - $1025.00
7 yr / 125K - $1250.00
8 yr / 75K - $835.00
8 yr / 100K - $1145.00
8 yr / 125K - $1505.00
9 yr / 100K - $1265.00
9 yr / 125K - $1665.00
10 yr / 100K - $1360.00
10 yr / 125K - $1795.00"

"Most of those are right on the money, some can be a bit cheaper. :-) "
_________________________________
Every marque has a dealer who specializes in selling the warranty for cheap. I know the Subaru one (Mastria Subaru) and when recently looking into getting a used Impreza, I decided to call to get a quote on the matrix of options. The business manager (I think it was Sean) pointed out that it's best to do some calculation on the cost/mile, cost/year based on the fact that the years and miles are total, but really isn't of value until the factory warranty is gone. So a 6 year, 75k mile warranty with a 3/36 bumper to bumper and 5/60 power train is really only a 3yr/39k mile bumper to bumper or a 1yr/15k mile power train warranty. In that case, if an emissions problem occurs, you've gained nothing because the emissions warranty on all cars is 8 years, 80k miles. Many companies offer high miles, low years and low miles, high years coverages so you can tailor the coverage to what you need. So you would want to do some math to figure out what works for you.
Bogle: Smart Beta is stupid

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CobraKai
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by CobraKai » Thu Mar 26, 2020 12:05 pm

researcher wrote:
Thu Mar 26, 2020 8:12 am
CobraKai wrote:
Thu Jan 24, 2019 11:29 am
I was going to ask you the same question.
6 years is actually 3 years since 6 years is the length of time since the vehicle was sold brand new. It is 3 years old.
It's $36 per month if I went with the 6 year/100k/1200 or $39 per month if I went with the 7 year/125k/1800.

If I went with the first warranty, the car would be covered three years from today. The second would cover the car form now until four years from now.
OP -
So what did you end up doing? Did you purchase the extended warranty?

I didn't see your reply to my post, so I'm just now responding...
- The extended warranty coverage is 100K or 125K miles from when the car was sold new.
- But you already have 35K miles on the car, so your actual extended warranty coverage is 65K or 90K miles.
- And you still have 25K miles remaining on the factory powertrain warranty.

Since you drive 25K miles/yr, you will get...
- "Bumer-2-Bumper" coverage of 2.5 years from the 100K warranty and 3.5 years from the 125K warranty.
- Powertrain coverage of 1.5 years from the 100K warranty and 2.5 years from the 125K warranty.
I just don't see spending that kind of money for such short coverage.

Did you happen to read the fine print of the extended warranty? Here are just some of the items NOT covered...
Costs or expenses for the teardown, rental expense, inspection or diagnosis of failures not covered by this Agreement.
Repairs caused by improper unreasonable use and repairs caused by lack of required or recommended maintenance.
Paint, rust, sheet metal, structural underbody framework, side and rearview mirrors (glass and housing). Batteries of all types, brakes, exhaust system (includes catalytic converter), spark plugs, all lamps and lights (LED and HID lights, bulbs, sealed beam and lenses), fogging of lamp assemblies, shock absorbers.
Surprised to see this old thread back. :)

To answer your question, I did purchase it. To answer what would likely be your next question, I haven't had to use it yet. I did read the fine print. The warranty didn't cover an oil pan gasket issue that the dealer found when I went in for an oil change, which cost me $400 to fix.

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