Should we get auto extended warranty ?

altoid · Post by **altoid** » Fri Dec 28, 2012 8:51 pm

DH bought a new car from Chevy, 36 month/36k miles factory warranty comes with it. But DH wants to buy additional warranty to insure to 72 month/90k miles.
Is it worthwhile? I am not up for it, but needing some help talk him out, thanks.

ICouldBeTheWalrus · Post by **ICouldBeTheWalrus** » Fri Dec 28, 2012 9:11 pm

It really depends on how much it costs.
Also, are you likely to hit 72 months or 90k miles first?

George the original one · Fri Dec 28, 2012 9:22 pm

It's probably not worthwhile as the majority of cars are bullet-proof in their first 100k miles.
Typical things that crop up in the first 100k are related to the valvetrain (valves burning due to lean burn being too aggressive or variable cam timing stops working because of sludge from not changing oil often enough) and the repair bills are in the $1k-2k range.
If you're towing with the vehicle, then the transmission will be stressed a little more and weak spots might show up. Again, though, the typical repair bill is less than $2k.

altoid · Post by **altoid** » Fri Dec 28, 2012 9:28 pm

It is a Chevy sonic 2013, car cost 18k, and the extended warranty costs $1,825.
We drive about 12k a year, hit the 72 months first.

altoid · Post by **altoid** » Fri Dec 28, 2012 9:30 pm

DH seems to think we got a bargain on this, because the dealer showed him their cost on the warranty. But it is almost 10% of the vehicle cost, and also not covering the wearable parts.

RealPerson · Post by **RealPerson** » Fri Dec 28, 2012 11:00 pm

An extended warranty for just about anything is not worth it. The salesman really pushing it tells you who benefits from it. The likelihood of any significant repairs in that time frame is very low. I would invest the $1,825 so you can pay cash for any needed repairs. These are likely to come AFTER your warranty is up anyway.
Dealer invoices don't really mean much. There are so many ways that dealers get kickbacks in all kinds of forms. Showing the dealer invoice means absolutely nothing. Again, if there was little to no profit for the dealer, why would they even bring it up?

dot_com_vet · Post by **dot_com_vet** » Sat Dec 29, 2012 1:23 am

It is not worth it. Invest the money instead.
At 36k-90k miles, you will only be dealing with maintenance and wear items. Neither of which your policy will cover. Advocating these extended warranties is poverty-think.
If you're unlucky and you do have a claim, you will be subject to a deductible, an adjuster, and the the company will do everything they can to deny the claim.
Avoid anything the dealer sells. Find a good independent mechanic if you don't DIY.

ICouldBeTheWalrus · Post by **ICouldBeTheWalrus** » Sat Dec 29, 2012 1:27 am

"because the dealer showed him their cost on the warranty"
Salespeople totally lie about this kind of stuff every day. It's not always considered lying, but they have ways of making it look better than it is.

bike_the_world · Post by **bike_the_world** » Sat Dec 29, 2012 2:08 am

I am of two minds on this. I doubt you'll need to claim on the warranty so it isn't worth it that way. Also, 10% of the car value seems way too high. I bought a 2005 Prius (still driving it) new and waited until the one year period almost expired (when eligibility to buy the extended warranty ran out) and bought one for about 3.5% of purchase price. I have found (in past vehicles) that resale is eased via private sale and often benefits from the one-time transfer fee ($50) of the extended warranty that goes with Toyota extended warranties (perhaps others?). Note too that Toyota holds and funds their own warranties unlike other car companies.
Since I kept this car past the 7 year period and any work I have required was covered under either normal warranty or else a recall there has been zero benefit to the extended warranty we purchased in 2006. The other issues for us at the time was the new technology that is hybrids (recall, at the time) but that too was silly since the orginal warranty goes well beyond the extended warranty for the hybrid technology.
I would suggest as others have that if the extended warranty was such a good idea/deal for the consumer the sales person wouldn't be pushing so hard for it. Keep your 10% and if needed set aside for repairs that are unlikely to be needed.

Dragline · Post by **Dragline** » Sat Dec 29, 2012 2:12 am

No. They wouldn't offer it if it was not a cash cow -- for them.
And if the car is going to explode or is otherwise defective, it will do so before you get to 36K. Otherwise, you are just talking about a few parts wearing out. No way that comes to over $1800.

anomie · Post by **anomie** » Sat Dec 29, 2012 2:29 pm

No.
buying a new car? plus adding 10% of purchase price with a extended warranty?
i would research purchase of a reliable car, and then buy it used.
reality check for me: $1800 is the trade-in on our trusty 99 civic. Admittedly, it is up for review in the next 24 months..
attempt at productive reply to OP: I agree with Dragline.

Sclass · Post by **Sclass** » Sun Dec 30, 2012 7:43 am

@anomie has a great point. As a chronic car fixer I've learned that a particular model will have the same problems as its siblings. For example a 1999 civic will undoubtedly get clearcoat failure if it is left out a few years. So there is something to be said about getting a low mileage car whose model has well documented devils. The devils are found by everyone else who has worn the model out.
Good manufacturing makes things fail in the same way eventually. I tore a clock down on my 30 year old oven and found a soft pot metal gear worn to a nub. Im sure the all eventually died this way.
Warranties are a form of insurance. The sellers actuaries are better at figuring the odds than the buyers emotional sense of paranoia. Insurance smooths out statistical bumps. Perhaps you want to gamble? By the time you hit 36k your car will be worth a lot less than $18k.
My sisters 2007 BMW 3 series was the exception. After hearing the reputation of prior bmws she bought an extended warranty. The car spent a lot of time in the shop up to the expiration. She's now terrified to keep it. Insurance was required because she basically couldn't afford to pay for sporadic huge services. She smoothed out her statistics to match her steady cash flow (high income low wealth). I'd heard BMW has changed their extended warranty policy after losing money. It was mostly electronics issues.

Myakka · Post by **Myakka** » Sun Jan 06, 2013 8:16 am

That extended warranty is a type of insurance policy -- meaning you'll be committing to pay a certain amount that the company has calculated it will on average MAKE MONEY from selling it to you. Therefore on average you will be spending more money on their policy than if you had paid out of pocket.
AND it is more likely to cost you more if you are responsible in keeping up with your maintance and use safe driving strategies.
My husband works in the insurance industry (he is an actuary). His approach is ALWAYS to decline extended warranties and also "life time guarantees" on items we buy from the store.

blessed59 · Post by **blessed59** » Sun Jan 06, 2013 3:12 pm

I am going to say no way due to our experience. We bought one when we paid cash for my gently used 2010 car. Manufacturers warranty ran out. We had an issue. Wow was I mad to find out that the company that had the warranty went bankrupt!!! I had been told it would be honored at any dealer of that brand during purchase. We were out $1400 and do not have the coverage up to 100k miles we had bought. I would have been better off throwing $1400 on the ground and at least making someones day.
The dealer we bought it from will honor it out of their pockets they said after I really got mad about it. This was easy for them to say since we had moved and they are now 2 hours away. They knew they were safe saying that.
I had to laugh because we recently replaced my husbands car since it was no longer feasible or safe to repair. More holes and rust than car. We drove down to the dealer we always used because it saved us a few thousand to do so.
They tried to sell us the warranty on the used truck and argued with me as I was ready to write the check about how I was unwise. I told them no way. I laughed so hard at them because they made a big deal about how they are honoring the last one and all I have to do is get the car there. See there is no risk to us. Again we are two hours away so big whoop you will honor it at that dealers service center if yet another warranty co bites the dust.
I couldn't quit laughing! Seriously the towing bill to get a car 2 hours away would so not be cost effective! The lady kept going on and I told her if they expected the truck to be that shitty I was going to go buy a Toyota instead of a Chevy as I stood up and started to walk away! Gee imagine how she shut right up about it and tripped all over herself. I know who profits on that warranty and it is not me!