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Should I cancel extended warranty?
I bought the 3rd party extended warranty the dealer was pitching, mostly because they were doing a hard sale and offering a lower price on the car if I bought it, and when I asked to see the contract I saw that I had 30 days to cancel with a full refund, so I figured that gave me time to research and think it over.
So now I'm debating it. I know that despite Subaru's claims otherwise, the 2003 and up models still seem to exhibit a higher rate of head gasket failure. The dealer claimed that this could cost up to $3600 to repair which made the warranty a good deal, but from the searching I've done it seems like if this costs more than $1200 I'm getting ripped off...
The actual warranty I purchased is surprisingly good coverage. Full powertrain and electrical with wear and tear. The wear and tear means that should the headgasket start leaking I don't have to wait until it breaks down for repair. The starter and alternator are covered as well as A/C, ABS, etc etc.
The warranty was $2200, for 3 years/36,000 miles. It is through National Warranty Corporation who, amazingly, is based in my town. They have a B- with the BBB, 17 complaints, one unresolved. The policy is backed by an insurance company so theoretically has some protection from them defaulting.
Overall the policy seems solid, except the price. The car has 85,000 miles on it and I drive about 6,000 miles a year. So at the time the warranty expires I'm going to be just ready for the 105,000 timing belt service.
My gut feeling is, there is very little chance I would spend more than $2,200 on repairs over the next 3 years/18,000 miles. Sure, the starter or alternator could go, but either of those would be < $1,000 (and probably significantly less, since I'd probably replace it myself). If the head gaskets start to leak, $1,200 if the information I have about that repair cost is accurate. The only thing I can think that would be likely to cause over $2,200 of repairs in the next 3 years would be the timing belt breaking prematurely, but really if I'm worried about that it'd be cheaper to just replace the timing belt now.
Overall I'm pretty sure I'm going to cancel it, but I just want to verify that I'm probably correct in assuming that it's very unlikely to have more than $2,200 worth of repairs in the next 3 years. Oh, and for the record, I have shopped around and for similar coverage levels this one is actually cheaper than any other warranty I can find independently.
Also, anyone know how much I'm going to get beat up trying to cancel if I do? Can I just send a certified letter and then ignore the phone calls? I'm pretty sure the dealer is going to pressure me to not cancel it, giving me the good old we lowered the price of the car for you to get it bit, which I'd rather not deal with. I don't know how it all works, if I cancel presumably the dealer loses their cut.