Did you recently take on (or consider) a loan of 84 months or longer on a car purchase?
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Banking on a warranty company that is a penny stock is asking for it.
Please read my post #1681. (the circular conversation surrounding it is interesting, but not particularly useful)
You're right to be cautious about service contracts.
The ten leading independent providers ten years ago are all out of business today. As a result, many customers who had valid claims at the time were not paid.
I can't attest to the validity of that statement - as there may be SOME company in business 10 years ago that still sells today, but the most part that is the single biggest reason never to buy a non-factory warranty.
Also with a factory backed plan there is do doubt from the DEALER that they will get paid and they will fix your car with OEM parts.
Most all of the factory warranties and fully transferable and refundable so matter what the future holds you can get some money back or some benefit from the warranty.
The really sad part is that folks are offered non factory warranties for such a high price - compared to buying the real thing at a discount. If the dealer says $1500 for a no name and then when the customer balks they pitch factory backed for $2200 or something they may take the off brand for the discount. They don't realize the same factory warranty can be had elsewhere for maybe $700 or so. So they not only WAY overpaid they did for the WRONG plan.
Folks should prepare for the WARRANTY pitch just like they do for other phases of the buying process. Know invoice, hold back, incentives, rebates, what others are paying. Get pre-approved at your bank, credit union, CapitalOne online. Research discount factory warranty plans. Do all this before going to the dealership. I helped my daughter with a deal on a new Civic - we got the best price we could on the car and showed up pre-approved for cheap financing and with a printout from Bernardi for discount HondaCare. The dealership could not beat the financing and when they started the warranty pitch I just handed him the Bernardi quote. He checked is book, shook his head, and that was the end of the discussion (Bernardi is/was selling for $1 over cost so the selling dealer did not try to match or beat it).
On most there is no rush, you have many months and miles to decide. The only one I have seen that was different was the GMPP. In order to get the lowest price it had to be purchased on the day you took delivery. When I got a new C5 'vette I had already mailed a check and paperwork to a deep discount GMPP dealer. Once the deal was done, I just called them and told them to date the plan and cash the check
With a lot of cars you may never get your money back - heck, a ton of folks trade before the factory warranty runs out. Then there are a lot more that forget to get refunds when they sell or trade their cars. Many forget they have extra benefits like roadside or towing or rental car and never use them - these things are often covered even if the car is under the normal warranty. But if you buy low, use them when you can, then either cash them out or use them as a selling tool when selling your car - it is not THAT bad an investment.
Dennis
You can plug in your GM VIN at this link and see if you can buy coverage and what the options are.
This dealer is said to be selling GMPP for $100 over cost.
Back when I had my C5 I got mine from this dealer, you can use GMPP@fichtnerchevrolet.com to get a quote.
Also, google up discount GMPP and you should find LOTS more hits
Dennis
Original owners may purchase extended coverage at any time during the first four years or 50,000 miles, whichever comes first.
Since you are not the original owner, it sounds like you are out of luck. German cars are very nice, but tend to have a high (and often expensive) failure rate. Owning one without a warranty can be quite expensive - as evidenced by the expense of the plan you quoted or even the price from MB themselves if you qualified. I sold both of my BMWs before the warranties on them expired, friends who did not were very, very sorry when the failures started to add up.
Too late now, but this is something you should have considered pre-purchase. If the MB dealer confirms you can't buy the MB backed plan, then sock your money away (and add to it when you can) against any future problems. I would not give a 3rd party company $3,800 of my money and gamble that they would stay in business and will pay up on claims.
Dennis
Oh, and you're concerns are well justified about Warrantydirect.
Dennis
Thanks.
You should find links to online HondaCare dealers that sell the policies for much less that your local dealer normally will. You do need to buy before you hit 6k miles on your new Honda to get the best price and coverage choices. Bernardi has been the best price, but always check for yourself.
Decide for yourself if you want a warranty (or service plan, actually) - but if you decide you want to get one get HondaCare from a discount dealer.
Dennis
My factory warranty recently expired on my Audi A4 Turbo. I really need to purchase an extended warranty from a reputable company at a good price. Your advice is very much appreciated.
Cheers
After researching 4 plans thought I would call AAA. Just signed up with them today as they had the best plan AND the lowest price.
The time to get the BEST PRICE on any of these plans is BEFORE 12,000 miles. Go over that and you will pay more for less.
If you are a AAA member check it out. One big reason for my getting an EW is that my car has all the optional electronics that MB has to offer on this model. To cover these AAA has an additional "Luxury Electronics" option which was not expensive.
Also plan to keep this car a looooong time.
Happy Holidays!
I found this place which is cheaper than the local dealers advertise, but high compared to discount HondaCare online dealers.
It looks like any Lexus, Toyota, or Scion dealer can sell the factory backed coverage for a Scion.
Thanks,
Dennis
Your money your decision.
Huh?? Most of what you pay is profit? How would that make a company go out of business?
I think Dave means they "take the money and run."
tidester, host
Apollo
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Thats a pretty blanket statement...you saying there is no customer who should ever buy an ext. warranty for their car for any reason?
How about the folks who can't afford to pay a unexpected $2000-3000 service bill?
Sorry to point out your brand, audia8q, but if I were purchasing an Audi that I intended to keep past factory warranty, no way would I leave without the extended warranty. Too many high-tech parts that have a track record of a) being expensive to replace, and b) failing. I'd rather pay an extra $2K, financed with my vehicle, than be hit with an unanticipated $2-3K repair bill due all at once.
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2015 Kia Soul, 2021 Subaru Forester (kirstie_h), 2024 GMC Sierra 1500 (mr. kirstie_h)
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I typically keep cars for 5+ years and I can say that I don't think I would have recouped my investment in any car. FWIW in most cars I most likely would have never used the extended warranty.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
When we sued to sell our own warrantys before we had F&I mgr's my favorite line to use when the maven would try to talk his friend out of the warranty was "Dude dont buy the stupid warranty the car wont break" "OK sir so what youre telling me is that if your friends car breaks any one of these listed parts you will fix it for him for free and provide him a loaner car and pay for his hotel and towing if he is more than 150 miles from home?" Funny thing was the answer was never a yes. Yeah it may cost you $2k or more to buy one but isn't it a lot easier to pay an extra $35/mo than pull $800 or more out of your pocket in one shot. Even if the repairs never exceed or even meet the cost of the warranty it's still easier to make a small increase in pymt than to pull a large (more than few hundred dollars) sum of money out of your pocket to make a necessary repair or to have working A/C or to have windows that roll down i could go on for days
for free (minus the deductible, fluids, any filters needed)
,and provide him a loaner car (as long as billed labor hours exceed X amount or part has to be overnighted)
and pay for his hotel (up to $50 per night, max $150 per occurance)
and towing if he is more than 150 miles from home (up to $100 per occurance)
but isn't it a lot easier to pay an extra $35/mo than pull $800 or more out of your pocket in one shot. (no-that extra $35 per month feels better earning interest in my savings account than paying interest on my $2k service contract.)
How about putting that extra $35/month in an interest bearing account? It will build up into a nice little emergency fund before your car goes out of warranty and if you never use it you have a nice little addition to the down payment of your next car.
The vast amount of time an extended warranty buys nothing more than peace of mind.
Even if the repairs never exceed or even meet the cost of the warranty it's still easier to make a small increase in pymt than to pull a large (more than few hundred dollars) sum of money out of your pocket to make a necessary repair
E-mail me I have a wonderful deal for you. But please no checks cash only.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
for free (minus the deductible, fluids, any filters needed)
,and provide him a loaner car (as long as billed labor hours exceed X amount or part has to be overnighted)
and pay for his hotel (up to $50 per night, max $150 per occurance)
and towing if he is more than 150 miles from home (up to $100 per occurance)
but isn't it a lot easier to pay an extra $35/mo than pull $800 or more out of your pocket in one shot. (no-that extra $35 per month feels better earning interest in my savings account than paying interest on my $2k service contract.)
Our warranties were $0 deductible. and if the fluids needed to be replaced as a result of the failure of a covered component they were covered free. Next
The loaner car was provided as soon as billed hours hit 2/10 which is 12 minutes which last i checkecd didnt take very long and was good up to $35 per day up to 5 days. Next
Hotel room was covered up to $100 per night for 5 nights. Next
Towing was to the nearest repair facility...whatever that distance or cost may be
Paying yourself the difference is a great idea...hopefully the repair doesnt occur before you have enough saved up.
How about putting that extra $35/month in an interest bearing account? It will build up into a nice little emergency fund before your car goes out of warranty and if you never use it you have a nice little addition to the down payment of your next car.
That's great if it's a brand new car but what about a used car that is out of factory warranty and then the tranny drops out 2 weeks later and you have a whopping $35 saved in your emergency account
Do you apply the saem principles toward auto, homeowners or life insurance? What about health insurance...if youre healthy and have never been in the hospital why should you pay for health insurance. Just put aside a little extra each month and save it up.
And besides how many times have you turned down a warranty and then religiously saved the difference of what the wty would have cost you for future repairs?
Actually I do, I don't buy service contracts for anything I buy. I didn't get an extended warranty for my house. It just doesn't make economic sense.
FWIW getting insurance is different that getting an extended warranty.
And besides how many times have you turned down a warranty and then religiously saved the difference of what the wty would have cost you for future repairs?
By default of not spending the extra $'s for the warranty I am saving it. My spending of other things doesn't go up simply because I do not have to pay more for a warranty. Conversely my spending on other things doesn't go down if I buy an extended warranty.
All in all I have most likely saved enough money by not getting extended warranties to but a new car.
I would suspect that I have paid out less than $500 in my entire life on stuff that would have been covered by an extended warranty.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
I have a big-screen TV at home that I purchased an extended warranty on. The warranty cost me $400 for 4 years on a $5k TV. The TV has incurred about $1500 in repairs in that time. Guess what? I renewed the warranty for another 3 years. Will I use it? Who knows? But even if nothing happens in the next 3 years, I would have spent a total of $700 for $1500 in repairs. I can live with that.
My father got me hooked on extended warranties. Between 2 trucks that he's had with extended warranties, he's gotten 1 engine and 2 transmissions out of them. For his console TV, he had just about all major components replaced during its warranty. On top of that, 2 phones, 1 VCR, and 1 DVD player that I can think of off the top of my head have all been replaced under warranties.
Does he have bad luck? Maybe. He does buy more tech stuff by himself than 3 average families put together, so he's certainly upped his odds of having problems.
I'm a bit more selective, personally. I've completely rebuilt major appliances myself (dishwashers, washing machines, etc), so I'm a bit more inclined to skip on those warranties because it won't cost me much to fix them myself. But, like I said, I got one for my TV, and I'm very happy I did. I just bought a new 37" LCD for the bedroom and got myself a warranty on that, too. $250 for 4 years is cheap insurance on a $1500 TV, IMHO.
No matter the choice, you are gambling. I'm betting on something going wrong, you are betting on nothing going wrong. Neither choice is incorrect. Sometimes you win, sometimes you lose.
'11 GMC Sierra 1500; '98 Alfa 156 2.0TS; '08 Maser QP; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '11 Mini Cooper S
If my used car's transmission dropped 2 weeks after I bought it, the dealer I bought it from (I only go to reputable places) would help take care of it. I had a similar problem with a radio and a seatbelt shortly after I bought my first car-the dealer took great care of me, I had zero out-of-pocket. That comes from doing due-diligence type homework before purchase.
Life, Auto, Health, and Homeowners insurance is a whole different thing than a service contract on a car. They are INSURANCE, designed to handle disasters, not a broken transmission. Service contracts are not insurance. They are not regulated like insurance.
The key here is to live in such a way that a large repair bill is an inconvenience, not a disaster, rather than hope your aftermarket service contract is going to take care of you.
Funnily, you say a service contract is 'only' $35 per month-I pay less for Full Coverage Car Insurance from a reputable company.
I have never turned down a warranty, though I'd turn down a service contract any day. I bought a service contract on a radio once (before I knew better)-that was one wasted fifty bucks.
Most people don't have the discipline to do what your suggesting...even though its the right thing.
How is it any different? You pay your insurance premium every month and you never file a claim or even rhave to use it was it a waste of money? A warranty is just insurance against your vehicle breaking down.
If my used car's transmission dropped 2 weeks after I bought it, the dealer I bought it from (I only go to reputable places) would help take care of it.
If the car was bought as is as seen as shown no warranty expressed or implied then you are on your own, no matter what happens or how soon after purchase it happens
Do you have a link so I can read this gem of a service contract? I have yet to see one where the rental starts at .2hr labor and the tow bill is unlimited ('course, you say it'll pay if I'm 150 miles away from home, what if I'm closer?). $35 per day wouldn't pay for a Hyundai rental. Did you actually deal with the company administering these policies (handle claims), or did you just sell them? Often the Salesman's information is contradictory to the Service Department's
Actually I had one on the car I bought and when the radiator blew and left me on the hiwy I called the company and they sent out the tow truck which got there in about 30 minutes. Towed it to my dealership which was only about 4 miles away and had the rental car waiting there for me before the tech even looked at the car. I simply told the guy what happened as I am pretty mechanically inclined and could explain the situation very well and he knew it would be covered so he just went ahead and took care of it. They covered the rad, the hoses, the coolant and new clamps as well as the rental for 6 days because when the first rad came in it was damaged and they had to reorder.
Because an extended warranty covers breakdowns and not a loss. An insurance policy covers unexpected losses resulting from unforeseen circumstances. Plus extended warranties only cover you for a minor amount, Insurance covers you for a much greater exposure.
A warranty is just insurance against your vehicle breaking down.
A warranty is just a service contract and its not insurance.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
I know someone who had a $2,500 tow bill. His Benz SUV broke down in northern British Columbia and had to be towed to a Benz dealer something like 600 miles away.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Once again, it's time for me to remind everyone that "extended warranties" ("service contract" is the more accurate term) violate a basic principle of casualty insurance: you should pay a 3rd party to insure yourself against catastrophic losses & self-insure for everything else.
To me, this means that I carry the best available home owner's coverage, because a house fire would probably bankrupt me otherwise. But I don't bother with service contracts. I've got ample savings that will easily cover the cost of any car repair.
You can be sure that if I have to fork over $3K to fix a transmission, I'll be cranky as hell for the next few days. You probably won't enjoy my company. But I won't have to postpone retirement or give up my vacation.
I've reached this position of financial strength because I long ago decided to budget for breakdowns. I systematically set aside money for both car & home-related repairs. High-yield online savings accounts (EmigrantDirect & HSBC Online savings, for example) are perfect for this. You can set up an automatic $25 per week transfer from your checking account. By the time your factory warranty runs out, you'll have several thousand dollars set aside.
Why pay someone else to do what you can easily do yourself? And why let someone else earn interest on your money? I don't get it.
I'll be blunt. If you think that you need a service contract to manage your repair expenses, you're probably suffering from some combination of too much debt & too little savings. It's time to grow up & fix your finances.
However, you don't believe that everyone who buys an extended warranty falls into this category, do you?
Its great you can afford repairs. So can I. I just choose not to pay full price for them.
By the way, I don't believe "service contract" is the right term. I (and I'm sure many others) equate service as oil changes, brake pads, etc. And I believe dealers sell "service contracts" that encompass exactly those things. An extended warranty does not.
I find it a bit odd that some folks seem to have such polar opinions on this topic. Those who oppose warranties have this "never buy one!" attitude. I prefer to be in the "it depends" camp. There are some warranties, IMHO, that are well worth the money. In gambling terms, they give good odds. But I guess maybe that has to do with personality, maybe. There are those who play it safe and always buy one, those who play it safe and never buy one, and those who play the odds.
'11 GMC Sierra 1500; '98 Alfa 156 2.0TS; '08 Maser QP; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '11 Mini Cooper S
Ive seen the same plan called extended warranty, ext. service contract, ext service plan, vehicle serv contract, ext. protection plan, etc....
I don't like the term 'extended warranty' because it implies that the contract is an extension of (or exactly like) the manufacturer's warranty-which it isn't. It gives a false sense of security. A real Warranty comes with certain legal rights that a service contract does not. It's just like calling a service contract "insurance". Insurance has legal protection for consumers that service contracts do not.
'Extended Warranty' may appear on the cover page, but the text of the contract will call itself a 'service contract' or 'service agreement'.
Yes, I do. I think that most of the people who think that they need these are living from 1 paycheck to the next. Certainly, those friends & acquaintances of mine who have bought service contracts have been financially overextended.
Its great you can afford repairs. So can I. I just choose not to pay full price for them.
After you account for the "opportunity cost" (interest & dividend income that you could've earned on the money that you used to pay for your SC), you're paying as much for repairs as I am.
Most likely more than you are. Remember these warranty companies make a profit.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
well that's mighty ... uhh... high and mighty of you. How's the view from up there on your pedestal?
After you account for the "opportunity cost" (interest & dividend income that you could've earned on the money that you used to pay for your SC), you're paying as much for repairs as I am.
You obviously missed the examples of my warranties that I've already given. I suggest you go back and read them. I KNOW for a fact that I've saved money. And I know what my investments earn. Like I said, I do the calculations and play the odds. I do nothing "just to play it safe" as you do.
'11 GMC Sierra 1500; '98 Alfa 156 2.0TS; '08 Maser QP; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '11 Mini Cooper S
Except for all of those that have gone bankrupt.
'11 GMC Sierra 1500; '98 Alfa 156 2.0TS; '08 Maser QP; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '11 Mini Cooper S
Just great. Thanks for asking. There's room for 2, in case you're wondering.
OK, I went back & reread your earlier post. You spent $5400 on a high-tech TV & an SC for it, & you're clearly pleased that you've more than recovered the cost of the SC. That's terrific. Meanwhile, I'm still watching the 27" tube that I bought at the beginning of the 1st Clinton administration for $750 & that hasn't yet caused me a lick of trouble. Eventually, I'll buy a TV like yours - perhaps one that's even better - but only when the price falls to somewhere in the neighborhood of (surprise!) $750. At that price point, my financial exposure will be minimal, & there'll be no need to pay extra dollars for an SC. That's one highly effective way to manage repair costs -- stay away from the bleeding edge until the technology has sorted itself out & gotten a lot cheaper. (I'll admit that I was the last guy on the block to buy a color TV, but the old B&W set that I had inherited from Gramps just wouldn't die.)
I'm not sure what this has to do with SCs for cars, though. Almost everyone agrees that cars are vastly more reliable today than they were 25 years ago, & that the average car is good for at least 10 years / 100K miles without any heroics. Although an SC might pay off for some cars under certain circumstances, anyone who makes it a practice to buy an SC with every new car purchase for, say, the next 15 or 20 years will certainly lose money -- probably, quite a bit of money.
It doesn't, but you and snake took the position of "i never buy a warranty for ANYTHING." Or at least snake did and you just jumped in at the wrong time ... i'm not sure.
Now, if your argument is simply that warranties are a waste of money for the products YOU buy, maybe you should be more clear. Obviously, not everyone buys basic and inexpensive stuff (including cars).
Oh, just to be clear, it was a $5k TV, but I didn't pay that for it.
Now, this is where it starts to relate ... "stay away from the bleeding edge." BASIC cars are far more reliable. But once you start getting into more and more expensive cars, you open yourself to risk. And this is what I mean about playing the odds. In your case of a $750 TV, I totally agree that a warranty is not worth it ... because the odds are not in my favor. A warranty would cost around 1/3 the purchase price. That's nowhere near worth it. Plus, on a tube TV, there's not much to worry about. So its similar to buying a honda civic, for instance. Its relatively inexpensive and relatively simple and easy to fix when you compare it to, say, an $80k Benz. i wouldn't pay for a warranty on the Civic, but you can bet I'd get one for the Benz because when that pesky $2k auto climate control system goes out*, and it will, it has paid for itself. Then the $4k of failures that follow are just gravy.
*the opinions of Benz reliability are for example only and in no way reflect the opinions of Edmunds or its affiliates. Do not try this at home.
'11 GMC Sierra 1500; '98 Alfa 156 2.0TS; '08 Maser QP; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '11 Mini Cooper S
tidester, host
I would suspect that the owners of those that went bankrupt walked away with a pretty penny. I will bet dollars to donuts that they took in far more than they paid out.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D