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Extended Warranties Good or Bad

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Extended Warranties Good or Bad

Old 12-14-2018, 03:05 PM
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Extended Warranties Good or Bad

Recently purchased my wife an 09 maxima. Great car low miles 51K. Mechanic at dealer strongly pushing Extended warranty they sell. Worth it or is there other options as far as ligitiment Extended Warranty Programs? Thanks for any advice.
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Old 12-17-2018, 05:55 PM
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The problem with the ones typically sold on used cars is the cost is high and the coverage period, short. So you end up weighing your options, i.e. "This is gonna cost me $3K and I'll have ~50,000 miles coverage...out to say 100,000 miles on the car. In that period, am I likely to incur a MAJOR cost that would exceed the cost of the warranty?"
The answer is usually, no. On modern cars one can generally expect to go 100,000 miles easily without a major repair issue.

Ultimately it comes down to personal choice and carefully weighing the options. Remember the dealer makes major bank on these warranties. Also remember that you can often find the exact same warranty online/independently that the dealer is offering you. And never...never...NEVER finance it! Of course, that is what they do...saying, "Wouldn't you like the peace of mind of NOT having to worry about any expense for the next 3 years? And it only adds $90 per month onto your payment...FAR easier than coughing up FIVE THOUSAND DOLLARS when your transmission goes out!"
On the flip side, if you simply don't or wouldn't have the bucks to repair the car if it were to need it, then an extended warranty may be your best choice.

I've bought a lot of vehicles in my day, and some times I purchased the warranty, and only ONE time did it pay for itself...that was on a '92 Suburban I had that had the transmission fail. I think I spent $800 on the warranty and the bill to fix the truck would have been $2,300. On the other hand, I spent over $2K for an extended warranty on the 2010 F-150 I bought and never had to use it during the period it was active.
Crapshoot...roll the dice...
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Old 12-18-2018, 05:52 AM
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Originally Posted by Bobz09 View Post
Recently purchased my wife an 09 maxima. Great car low miles 51K. Mechanic at dealer strongly pushing Extended warranty they sell. Worth it or is there other options as far as ligitiment Extended Warranty Programs? Thanks for any advice.
I don't know about the 2009 but my 2004 was in and out of the dealer shop for a variety of electrical issues, ABS, power seats, paint bubbling, roof leaking, etc etc the list goes on id rather forget the ownership experience from new until it was traded in with 120,000 miles and 9 years of driving. Id get it, these cars are not reliable or of a high quality build and need to be babysat to keep running.
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Old 12-18-2018, 06:59 AM
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My 2007 I purchased with 20,000 miles on it, paid $1200 for the warrantee, ended up with almost $15000 in repairs and rental costs in the 5 years I owned it. Evaluate the plan, make sure it at least covers you while you are making payments (mileage and/or time), and make sure the cost is right. Getting a quote from 2 or 3 different places may help, but you'll find in some states the coverage's are regulated, therefore the price won't change much from one company to another, unless of course the level of covereage is different. Make sure you compare apples to apples before assuming the cheaper plan is better.
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Old 12-18-2018, 07:02 AM
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Originally Posted by 04BlackMaxx View Post
I don't know about the 2009 but my 2004 was in and out of the dealer shop for a variety of electrical issues, ABS, power seats, paint bubbling, roof leaking, etc etc the list goes on id rather forget the ownership experience from new until it was traded in with 120,000 miles and 9 years of driving. Id get it, these cars are not reliable or of a high quality build and need to be babysat to keep running.
And to add to your point, it's not even about the reliability, it's that each repair typically runs up over $1000. AC compressor, Starter, Alternator, suspension and steering repairs, timing chain tensioners, hell the motor or actuator goes out on the door window, that's $500 to repair. Most warrantee's run around $1500 to $2500, so depending on the coverage, 2-3 major repairs and you've paid for the warrantee.
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Old 12-18-2018, 03:49 PM
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Originally Posted by MadMax07SL View Post
And to add to your point, it's not even about the reliability, it's that each repair typically runs up over $1000. AC compressor, Starter, Alternator, suspension and steering repairs, timing chain tensioners, hell the motor or actuator goes out on the door window, that's $500 to repair. Most warrantee's run around $1500 to $2500, so depending on the coverage, 2-3 major repairs and you've paid for the warrantee.
I've purchased VSCs on two used cars in my past. On both of those cars, my AC compressors went out just outside of the manufacturer warranty... no coverage. The cost to replace the compressor on one car was over $1100.00 dollars. Parts, labor, replacement oils. The VSC I had cost me $850.00 dollars (I have friends that sell VSC and ancillary products to dealers, so I got a good deal without a ton of markup). Most of these VSCs are way overpriced ($2000.00 to $3000.00). I know what cost is on these contracts and dealer holdback, so the margins are extremely strong on VSCs. This, and financing the car through the dealer source, are the two biggest profit centers. Dealers push hard on using their finance source because they make good money on rate. It's not necessarily a bad thing to use their source, but always check your credit unions and/or bank for competitive rates... always. Many times dealers will match, or slide a quarter percent under, to keep you there.

So, do I think that VSCs are a good investment? Yes and no. It's like MadMax07SL said, coverage, term and time can vary from policy to policy. On a used vehicle, depending on the mileage, you may only have the option to purchase a "Named Component" policy. This is a policy that covers a list of stated components listed in the warranty and nothing else. It is a limited warranty, but they all are. If you qualify, depending on year model and mileage again, you may be able to purchase an exclusionary policy. This is a policy that covers everything the factory covers except for your wearable items i.e, belts, hoses, bulbs... etc. The best exclusionary policy is one that has add-on miles and years. This means your coverage, let say it is a 10-year 100,000-mile policy, will add 100,000 miles to your existing mileage on the odometer and same for the years of coverage.

If you have a used car and it is out of factory warranty, then you have to decide whether paying out of pocket is good for you. An extended warranty does not benefit a new car until the 3/36k or 4/50k is over. The extended warranty will only kick in on the backside of your note. That is after the factory warranty expires. As MadMax stated, the cost of servicing these new cars today can be stupid expensive out of warranty, so you may consider it. Think of it this way, you have fire and flood insurance in the event you have to use it. God forbid you ever have to use it, but you will be thankful if you did. One's decision on these kinds of things are relevant to you and what others say or think shouldn't matter. These policies are really peace of mind. However, if the day comes when you have to exercise said warranty, it is less peace of mind and more relief you have it.

I have one on my 16 Maxima. The only reason I purchased one for my "new" car was that I knew I was keeping the car and would drive it well out of the factory warranty. I did not purchase it through the dealer and I purchased it through a buddy of mine that works for a national and very large VSC company here in the US. My cost is stupidly low and it makes sense to have it. if I were leasing a car, or trade out every 3 years, I wouldn't buy one. As a matter of fact, most Highline car dealers include all the servicing in the deals because they want that car back in good condition.

Bottom line, figure out what works best for you. I know there will be folks that are adamantly against VSCs... that's ok. Not everyone is financially able to pay out of pocket for their car repairs, so you have to decide what is in your best interest.

P.S. If you do purchase a VSC, you absolutely need to keep up all the service intervals and have all the receipts on hand if you file a claim. The first thing that happens on a claim is they check to see if you have kept up the service intervals. I'm not kidding you... keep that up. A VSC is not a license to let your car go to hell.

Last edited by Ed Hanson; 12-18-2018 at 03:55 PM.
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