Extended Warranty

[flyinacez]

Hi everyone, I checked out the extended warranty thread above and was wondering what your thoughts are on them! The offer is great and seems obvious. Consumer Reports and other resources all say not to purchase it though. Any insight would be greatly appreciated.
Thanks

[Dana_15]

I would never purchase them if you are purchasing the vehicle new, best to wait the three years on the factory bumper to bumper and then purchase one.

When we purchased the 4Runner, it was used and the factory warranty was up (by a month), so we purchased a 5yr/60k extended warranty from Toyota with no deductable. It does give me a piece of mind, especially since that will put us at the end of the loan. The radio stopped working last month and it was replaced with no hassle at all.

If I keep the Tundra, I'll pick one up at the end of three years.

[tundraboy64]

dont the x warranty start from when on the car's in service date ?? if so then what the advantage of waiting to buy it

[eurohazard]

Originally Posted by tundraboy64

dont the x warranty start from when on the car's in service date ?? if so then what the advantage of waiting to buy it

The advantage is simple....it's extra coin in your pocket, bank account, or investments instead of the dealership's pockets.

You get 3 years and 36k miles for free. Why not use that first, and make sure you are even going to keep the vehicle up to 7y/75k or 7y/100k.

Another way to look at is like this: Say you buy a 7 year 75k mile warranty for $1,500. It sounds like a good deal right? But the reality is you bought a 4 year 39k mile warranty for $1,500. You're paying, and gambling that something will break worth $1,500 in that 4 year/39k mile timespan (which ever happens first of course). lol

[tundrahq]

I worked in the car business for a long time, even did a couple years as an F&I manager, so I feel very comfortable telling you the following:

1) Extended warranties for cars/trucks are a good idea. But, like all products, you need to shop around before you buy. Dealerships mark-up extended warranties like *crazy* - adding $1000-$1200 to the price is a common occurrence. Make sure you find out the cash price (the trick is to say "it's only $25 more a month to protect your car" instead of saying "it's $3000"), and make sure you call around with that price.

2) You can buy warranties from about 1000 different warranty companies, but the vast majority of them don't have your best interests at heart. It's a common occurrence for these "independent" warranty companies to be hundreds of dollars cheaper than a factory warranty, yet they'll fight every claim you make tooth and nail. Buy a warranty from Toyota if at all possible - they want to keep you as a customer as much as they want to make money, so you'll get treated fairly.

3) Don't pay "suggested retail" for a warranty. You should be able to buy one from a dealer for a few hundred over dealer cost. Like I said, call around before you buy.

4) There's an advantage in buying now over waiting. Specifically, you lock in your costs earlier. For instance, if labor rates increase 10% over the next 3 years, you'll pay at least 10% more for the warranty in 3 years than you do now. But, if you need to finance the warranty (or put it on a credit card and make payments), then don't buy it yet. Set aside an extra hundred every month and you can write a check for it before your factory warranty expires.

5) Extended warranties for cars are a good idea for 90% of the population - unless you're well off enough to write a check for every possible repair (keeping in mind the average big ticket is about $1200 right now), it's a good idea. Why? They cover more than just "defects" like most warranties. A car extended warranty is technically a "service contract" - an agreement to fix or repair a vehicle regardless of what goes wrong (assuming maintenance is performed and the vehicle hasn't been abused). If the warranty company is reputable (aka Ford, Toyota, GM, etc.) they'll pay for every repair you'll need.

[flyinacez]

Good points, I have had 2 new vehicles over 10 years and neither had any troubles before 100k miles. That is why I am on the fence with this. But with the cost of service now, any minor repair will start around $500. I took my wifes Jeep in 2 months ago because the radio was acting up. They said it would be about $200 to pull it out and put in and $300 to fix it. I just bought an aftermarket and replaced it. There's just so many things that can go wrong and $1000 doesnt seem bad at all. Plus the $1000 I need to invest in the warranty would gain me about $200 or so in the next 3 years if invested. I am wondering if the cost of the warranty extension will go up $200 in the next 3 years, probably so. Also, if you buy the premium extended warranty I think it covers things that are not covered on the factory warranty. Some one on here had their tires crack and they said had they bought the other warranty it would be covered?? Here's a link to the warranties.

http://www.toyotafinancial.com/consu..._VSAComponents

Thanks

[eurohazard]

Tires have their own warranty from the manufacturer who made those tires (Goodyear, Michelin etc). I'd be REAL surprised if someone has gotten free tires just because they bought an extended warranty. Tires, brake pads, and a few other things are almost without exception not covered under extended warranties. The only way tires might be covered under an extended warranty would be if a warranty covered item (some type of suspension component) physically caused premature detrimental wearing of the tires. And even then, most dealerships would prorate the cost based on tread used.

tundrahq offered fantastic insight! A lot of people who worked that kind of job, typically don't like to share "how it is". The only thing I even remotely disagree on is the advantage of buying now. Did the cost of these warranties go up 10% compared to 3 years ago? Serious question......I don't think they have. I bought an extended warranty on a 2004 Acura MDX back in 2004, and I want to say I paid $1,500 for it. I guess to counter my thinking...could the price go up in the next 3 years?...and the answer is yes of course. That's a gamble I AM willing to take. Sort of like deciding on getting the extra warranty or not!

p.s. I really like the idea of paying cash for the warranty, it makes a lot of sense.

[tundrahq]

To quote eurohazard:

"The only thing I even remotely disagree on is the advantage of buying now. Did the cost of these warranties go up 10% compared to 3 years ago?"

I don't have exact figures in front of me or anything, but my answer would be no as well. The only reason I mention it - a lot of repair shops are seeing their senior techs retire right now. A whole generation of workers is leaving at roughly the same time - not sure why that is, but it's a trend in the industry. It's possible labor rates could climb a lot in a short period of time.

Having said that, I'd invest the money and take the risk (just like you said).

Thanks for the compliment btw - I like to share my experience. Check out AccurateAutoAdvice.com - it's another site I have where I post all kinds of stuff like that. Lots of insider info !