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Extended Warranties

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  • So what exactly are you trying to say, autoxpert? That third party extended warranties are better than manufacturer-backed plans? That definitely is not the case, it never was, and it is even more evident now that a major third party provider like Warranty Gold has ceased paying claims. Quite frankly, one would be much better off taking the money that they would have spend on their extended warranty ant putting it in a bank account. You mentioned that not everyone has $1,000 to just drop into a bank account. Well, if they don't have the money, how are they supposed to buy a $1,000 extended warranty? Sure they could bake it into their finance contract. If that is how they intend to pay for it, they could just take the difference in the payment that the ESP would add and put that aside every month, not only saving the interest that they would have had to pay, but also actually earning interest on it. If one really desires the peace of mind that an extended warranty provides, they should purchase one from a company that is definitely going to stick around, like their vehicle's manufacturer, and not some random unaffiliated company.

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  • jratcliffejratcliffe Posts: 233
    I think the key issue here is that, although manufacturers reinsure their warranties (i.e. pay Travelers/AIG/whomever $X per car, and then that insurance company reimburses the manufacturer for any warranty claims), the manufacturers _remain liable_ for those warranty costs. If the insurer goes out of business, that's unfortunate for the manufacturer (they're out $X a car, and the manufacturer has to pay the repair bills), but the consumer can still collect from the manufacturer. In the case of a third party "warranty" (not going to get into a semantic war here), if the company backing the warranty goes bust (a la Warranty Gold), the carowner is out of luck.
  • autoxpertautoxpert Posts: 4
    Not saying that all TPA's are better than the factory, but I know for a fact there are a few that are better and offer more benefit. Don't be fooled by the fact that "Mitsubishi, Kia, or Mazda" is at the top of the contract, 99% of the times, the administration and claims adjudication is done by a contracted 3rd party. They just answer the phones on behalf of the factory!

    Warranty Gold is backed by a Risk Retention Group. These companies are not regulated by any government agency....NONE. That is what NWIC is, a Risk Retention Company.

    The majority of dealers use Reputable companies, (CNA, JM&A, Protective, Universal Underwriters, APCO) these companies have Fully insured liability policies backing the obligations of the agreement. EXACTLY like the factory plans. These programs have to be filed and approved by each state department of insurance. They all have federally protected "Guaranty Funds" if they become insolvent, which pays all claims for the consumer. (Example, Reliance insurance 1998)

    You keep quoting the example of Warranty Gold/Capital Assurance, these companies have no liability policies backing performance, they have stop loss or excess of loss protection, which means the TPA not the insurance company is holding the funds for future claims. The bottom line, many manufacturer plans, and reputable insurance products exist, the customers should research these products and find out about the company they are being presented. The examples I used above all have AM BEST ratings of A- or Better, and are endorsed by GM,FORD, and Chrysler Financial Corporations. NWIC lost its endorsement in NOV because of it's insolvency.

    People who finance car loans and supplemental products are actually smart! Why would you not borrow 1000-$2000 at 0% interest rather than take $1000 of your hard earned money and set it aside for 5 years and ABSOLUTELY NOT TOUCH IT. Most people on a budget can't do it or afford to do it, that's why it makes sense! $1000 at 5% for 5 years is only $1276. Most major repairs occur past 36/36 (ie. A/C, engine, trans, or drive axles) and average $1800 - $2600, and that's using today's money! It doesn't make sense!

    You can make an argument that the "warranty gold's" of the world ruin this type of product and everyone should run for the hills. Truth is, the majority of people who buy New and Used cars need some form of protection when the Factory warranty runs out. Last year nearly 7 million service agreements/contracts were sold in the US. This is spread both between Factory and Independents.... If these products are so unscrupulous and always screw the customers, why has the federal/State/and local governments allowed them to be sold for nearly 30 years?

    My advice to a conusmer would be to research the company that backs/insures the product. Only buy coverage and terms that will suit your personal needs. Shop around to get the best deal! Most often, its at the dealer you buy from, they have millions of dollars riding on their reputation, and future viability because of CSI. The likelihood of a customer getting screwed is less and less because of resources like this chat room and websites....
  • hansiennahansienna Posts: 2,312
    Why not just buy Toyota quality and forget about extended warranties?
        Will the many lengthy extended warranties bankrupt Kia, Hyundai, Dodge, Jeep, and Chrysler when their vehicles fall apart long before the 100,000 or 70,000 miles?
        One possible scenario is that the disgruntled owners will get too annoyed with the frequent trips in to get one of these vehicles repaired that they will decide to dump the unreliable brand and get a Toyota where they do not need the extended warranty.
        Of what value is an extended warranty if a person is spending too many valuable hours taking their vehicle to the dealer to get it fixed?
  • zueslewiszueslewis Posts: 2,353
    your enthusiasm for Toyota products, and hope you've never had any trouble with yours, bear in mind that Toyota is the brand I see more (in my lemon law cases) than any other Japanese brand.

    autoxpert - my screen name is zueslewis, taken from my first e-mail address (ever), which was named after my German Shepard (now passed), my best buddy for 12 years. I, unlike you, have no "God" complex.

    I deal with warranty/manufacturer liabilty every day. I could care less if the GMPP CEO writes checks out of his own account to cover repairs, my issue is who is liable, not who is backing the money. Only the manufacturer can be held liable for any aspects of warranty (in legal terms) on a vehicle.

    With a private company sponsoring a service contract, they have NO liability under the law to honor the "warranty" of the actual vehicle, which is described as "warranty of merchantability" - that is the concept under which breach of warranty cases are prosecuted - as violations of both the Uniform Commercial Code and the Unfair Trade Practices Act.

    Aside from the legal issues pertaining to private service contracts, there are many more issues that should sway an educated consumer away from private companies, like pre-authorization requirements, pre-payment for repairs in many cases, a week or more waiting on a adjuster to inspect the vehicle before parts can even be ordered, etc.

    There are several more disadvantages, if you'd like me to explain further.

    If it is your sole purpose to come here a try to sell private warranties like a travelling vacuum cleaner salesman, this is not the place to do it. Also, there is no need to attempt to discredit me or anyone else. I've sold over 7,000 extended service contracts (factory and private), administered them as a service manager, and now I've investigated their breaches as a consumer fraud investigator.

    Your facts are very skewed, and your attitude is hostile - both are unnecessary.
  • hansiennahansienna Posts: 2,312
    Do you see more Toyotas than any other Japanese brands because there are so many more Toyota vehicles sold in the USA than any other Japanese brand?
        Which Toyota models seem to be more prone to have a lemon (Tundra, ECHO, Tacoma, etc )?
        Do Toyota problems tend to be major mechanical like engine / transmission or accessories like power windows, power door locks, radios, etc.?
        Thanks for your assistance.
  • zueslewiszueslewis Posts: 2,353
    Toyota definitely produces lots of vehicles, but so does Honda, and I very rarely see Honda vehicles at all. Most of the problems are not from trucks (I've only seen one Tundra, and that was owner neglect, case got nixed; 2 Tacomas for engine management issues; and 1 Rav4 for fuel system problems).

    Mostly, I see Camrys, Siennas and Previas (older, but lower-miled Previas) for engine management system problems, usually dealing with the engines acting up and multiple PCM and sensor replacements (usually causes drivability problems).
  • jonbgoodjonbgood Posts: 157
    I purchased a '99 Aurora last summer still under factory warranty. After researching that car, on Edmunds board, the consensus from the owners was that a good extended warranty would pay off for this vehicle. 30 days before my factory warranty expired I purchased an exclusionary plan that lists what is excluded - vs. one that lists what is included. I paid $1289 for this piece of mind. Two weeks ago, I encountered a $546 electrical problem that Warrantybynet promptly paid by credit card to the dealer without a hitch. The dealer service manager informed me that there were no problems with working with them. I think a warranty makes sense if the auto you are purchasing is prone to expensive repairs and if you plan on keeping the vehicle and "drive the wheels off it".
  • hansiennahansienna Posts: 2,312
    Good information. Guess I have been lucky with the Toyota brand although I have not owned a Camry, Sienna, or Previa. Perhaps my luck also is related to buying Toyota before the newer type engine fuel management systems were incorporated.
        Based on your information, other data in Town Hall, and a most distasteful experience the last time I went to look at 2004 Siennas, the Odyssey has moved ahead of the Sienna for my preference if I get a minivan.
  • zueslewiszueslewis Posts: 2,353
    I prefer the previous body style over the '04 - the '04 looks like a Camry with a glandular problem, no offense intended.

    I saw a few Odesseys ('99-00 models), but rarely see them now, if at all.
  • I came across an interesting article on extended warranties in this week's Automotive News. Apparently, more companies than just Warranty Gold were adversely affected by the current financial problems that National Warranty is having. This article talks about how a company named DeltaGroup that markets "Smart Choice" extended warranties through dealerships is currently not playing any claims either. Here is a link to the article: Dealers caught in warranty war - Insurer's problems force tough choices.

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  • pluto5pluto5 Posts: 618
    The smartest choice is to buy a car that doesn't need an extended warranty.
  • banks500banks500 Posts: 1
    i own a 99 cadillac deville with 33550 on the ododmeter, the factory warranty expired on Jan. 27, 2003. which after market warranty would be the best buy for that vechicle
  • zueslewiszueslewis Posts: 2,353
    but even bulletproof cars break, and a Honda Accord tranny still costs $3,000.
  • pgr1940pgr1940 Posts: 1
    What does TPA (type of plan) stand for?

    I have a WG on my wife's 99 Monte, have yet to use it. WG is still advertising on the net.

    Just bought a used 2000 Intrepid factory warranty just ran out,dealers extended costs too much for too little.

    Was looking into a bumper/bumper extended from Certified Car Care. They're located in FLA. Anybody know of them or did business with them?
  • jratcliffejratcliffe Posts: 233
    So, you complain about 1sourcewarranty.com spamming, and at the same time are spamming boards trying to drum up business for your law firm. Physician, heal thyself.
  • pluto5pluto5 Posts: 618
    A Honda trans may cost $3000 but everything you buy can break or suffer a casualty loss--are you going to insure or buy a warranty on everything? Buying an extended warranty for over $1,000 to protect against a $3,000 loss is not a good bet IMO, except for the warranty company.
  • C'mon guys, who do you think you're fooling with all this extended warranty bull. Dealers can't be counted on to honor their original 3/36. Anybody heard the "can't duplicate excuse". or how about the one about being "within specs" when your brake pedal sinks to the floor. This idea that dealers are so honorable, and just trying to make ends meet makes me want to hurl. The whole process of dealing with car people leaves a bad smell in the air. If a person doesn't realise what's going on at dealers, they just have been lucky with the product they bought. I hear and read stories at Edmunds and other sites about the problems of getting a warrantied item fixed, and they all sound too faniliar.
  • q45manq45man Posts: 416
    You should study the dealer sites and trade publications to see how many US new car manufacturers have been cheating the dealers and the technicans on warranty work......allowing only 60% of the book time to complete the warranty. Ford near bankruptcy seems to be the most notable. But all brands have been doing this to pay for the increased incentives.
    Technicans hate warranty work because it doesn't pay them enough to live as the reduced allowable time just get passed down to dealers who pass it down to techs. Worse the dealers don't get paid in full for sometimes 90 days and they are nickeled and dimed by regional manufactures agents.

    When a warranty ticket is placed in the work box they [techs] all run for cover hoping against hope that some out of warranty [customer paid] job will show up. Some body finally picks it up, the guy that needs the money the most........the best techs are usually not subjected to this process unless the mortgage is due.
  • cwadstercwadster Posts: 8
    This "book time" is the biggest bunch of BS out there. You know what happens when you go to get a water pump and a serpentine belt changed at the same time. You get charged "book time" for both a water pump replacement and a belt replacement, EVEN THOUGH THEY HAVE TO TAKE THE BELT OFF TO CHANGE THE WATER PUMP! Since they have to put a belt back on, you KNOW they are not putting the old one back on, then starting over to put the new belt on. Since they're doing the labor anyway, why not charge you just for the part. Basically, they're billing you twice to do the job once. Sound's pretty criminal to me. So get off the "they only pay xx% of book time for warranty repairs" soapbox. 50-60% of book time is very often all the time needed to do the job. And BTW, dealerships don't have mechanics anymore--they're just parts installers. They don't have the first clue how to diagnose a problem without a computer telling them what the problem is.
  • zueslewiszueslewis Posts: 2,353
    in a "thief" shop, maybe, but otherwise, you're wrong.

    I strongly suggest you look at a Chilton's or Mitchell manual. For instance, if you remove and reinstall the serpentine belt and it pays .8, then to do the water pump at 2.0 would have the .8 included.

    I've spent what seems like thousands of hours in those two guides and can certainly speak from experience. If there's ever a question over time charged, simply ask to see the book and have them explain how they came up with the time. Of course, if they made a mistake in your favor, it's going to cost you some money.

    Dealerships may have a FEW parts installers, but if your health insurance is paid up, walk into the Chevy dealer's service department I managed and say: "And BTW, dealerships don't have mechanics anymore--they're just parts installers".
  • q45manq45man Posts: 416
    My point was not what a dealer charges you but how the mix of warranty work causes the prices they charge you to have to be higher than if they did not do warranty work.

    Same problem with extended service contracts that may limit per hour chages and hours billed.

    If a business needs x hours at y dollars per month if you are forced to take work that pays less per hour something has to give.

    We solve the problem by using salary only techs [based on them working and billing 45 hours per week........we leave the load balancing and work efficiency up to the team which must averge 45 hours per week per member......the slackers get beat with a wrench by the other team members.

    Believe me if dealers could dump warranty work they would.......as an independent dealing with the highest quality vehicles only, I thank my lucky stars we don't have to warranty Lexus or Infiniti and they are the best of the lot with Furd near the bottom.
  • In the late sixties early seventies I worked for three Chrysler dealers. First two were salary jobs, and the last one was flat rate. The way it worked was Joe Customer came in for warranty because his charging light was on. A common problem for that era. We knew before we drove it on to a lift that the voltage regulator was bad, but we checked it anyway. Every tech had a high tech voltage reg checker. A paper clip straightened which was connected to both connections on the regulator. This usually turned off the light, and a new regulator was installed in 30 seconds. It was held on by two screws..easy fix. This is when the story gets twisted a bit. Since we have the guy's work order, the service writer starts looking around for old parts. Anything will do. Chrysler insisted that old parts be returned for waranty claims. So all parts left over from regular repairs, were kept to return to chrysler as a warranty repair. We had old engines, trannies, diffs, you name it, t'was kept out back for parts needed to collect warranty claims. So the customer who wanted his charging system fixed was happy, and didn't even know he had his differential overhauled while he was in.

    In fairness to dealers it should be noted that warranty work time rates were a bit tight. One example would be less than an hour to do a complete clutch R&R including pilot bushing. So I think each one was trying to keep the other from ripping them off. I don't blame those dealers who kept a used parts bin. You always lost money on warranty.

    These days it looks like the name of the game is buyer beware. Hey,if you can't pay someone four grand to buy a Cavalier, something is very wrong.

    Anyway I think every buyer feels like the bottom of the food chain. Too bad realy. What do you do when the customer is gone for good. Maybe 8 grand to buy your product will work. I think we might get to see.
  • chaseboychaseboy Posts: 30
    Hey everyone. Has anyone purchased an extended warranty for their A4 at the time of purchase or after? I have a 2001 A4 2.8 Quattro that I plan on keeping for a long time and would like to know if it is worth the cost of an extended warranty to cover it to 100k. I have communicated with the finance director at the dealership where I purchased the car and they said that a 6yr/100k extended warranty with $0 deductible would run around $2500. What do you all think is a fair price for this coverage, and is it worth getting, especially considering the dollar amount repairs would cost after the manufacturer's warranty is up. Thanks.
  • david1973david1973 Posts: 23
    what warranties/insurance it is for. Almost all the time you will not get as much money out as you put in once you factor in the time value of the money ( ie the company you give the money to gets to keep all the investment income). What it does do is limit your risk. In theory you are only on the hook for the 1000 bucks for your policy. In the simplest given 5 people, 4 will make no claims and "waste" their 1000 bucks while 1 of the people will make a claim for 5000 bucks and profit by 4000 bucks. The consumer has to weight the worst case (probably something like the value of the car) versus the best case (zero claims) and decide which end you expect the car to be closer to. It really doesn't matter if you buy a reliable honda or some unreliable make. That reliability gets factored into the how much the policy costs. If all Hondas were bullet proof through 100K miles, it would cost Honda zero cents to off a warranty up to that level and would give them a competitive edge. Whenever you see a manufactor reducing the warranty (happens all the time in consumer electronics) and then justifying by saying there products are so good they don't need a warranty, be afraid. Very afraid:)
     One advantage of not buying the policy (either from the dealer or 3rd party) at the time you purchase the car is that you get the manufactors warranty period to decide how well the car you bought was put together. Obviously past performance is no guarantee of future results but my experience has been cars that give you problem early on give you problems later in life so in that case buying the policy may be a prudent way to hedge your bets if you don't want to trade it in right away. Of course in exchange for this period you do give up a bit of leverage if you are planning on buying a manufactor extended warrente.
  • jsylvesterjsylvester Posts: 572
    Yes, it is true that insurance companies take your premiums and invest them to make additional revenue. In theory, in a competitive business model, those earnings are already calculated actuarily into the insurance rates one pays. The tanking of the stock market is one reason insurance rates have been rising.

    There is also other factors that are considered in setting rates. Depending on the policy, some vehicles will never make claims due to being wrecked and totaled, the owner dies, the policyholder fails to maintain the vehicle, the vehicle is sold and the warranty is not/cannot be transferred.

    In my situation, one major repair in 100,000 miles will cover the cost of the warranty. I do agree, that dealing with warranty companies and mechanics are such a hassle (along with the huge losses in the stock market the last few years) that the money in the mason jar in the backyard may be a good idea.
  • q45manq45man Posts: 416
    If you are a company like Furd, and have increased incentives to $3450 to just move cars, where do you save money [get some back] by paying the dealer and his employees LESS on warranty work........unless the government will bail you out...[No Japanese will do it too much liability] ......finally they are talking about firing 2400 white collars before end of year. [today's news]

    Their labor and pension costs [mostly unfunded] are killing them as is their lack of productivity.

    http://www.fordtechs.com/survey.asp
    http://flatratetech.com/pub102.htm
    http://flatratetech.com/pub104.htm

    What does all this have to do with warranty, the unions are in process of organizing technicans.

    Doubtful that they could cheapen the line more than they already have done......Paper and glue cars are next you really don't need metal.
  • HenryHenry Posts: 1,106
    I may be flying without a warranty on my 95 olds Aurora since WG is not paying claims. I must admit that I am a little scared about that possibility.

    The one warranty I can still get will cost me $1,850 for 2 years. What do yu think guys??? The warranty is from National Auto Care Corporation.

    Henri
  • redline65redline65 Posts: 693
    Henry why are you considering a 3rd party extended warranty after the WG disaster? Personally I probably wouldn't pay $1850 for a 2 year contract. Put the money in the bank and use it for repairs for the next 2 years.
  • zueslewiszueslewis Posts: 2,353
    No way I'd even consider it.
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