Extended warranties on cars...what do you think?

[project15]

I purchased an 03 VW GTI about 2 months ago and am financing it. It has under 50000 miles on it and the factory warranty runs out at 50k miles. Because it is a certified pre-owned vehicle, it has another 2 years of full coverage warranty on it. I also opted for an extended warranty up to 110,000 miles and until 2012. The warranty covers everything except wear and tear items (brakes, exhaust, belts, hoses, etc...). The warranty was around $1700 and there is a $100 deductible for service. It comes with roadside assistance as well (I don't have AAA and don't plan on getting it). I know that VW's had/have electrical problems and that is a major reason I purchased the warranty.

Should I look into cancelling this or just keep it? I'm not pressed for cash, just wondering what your opinions are on extended warranties.

[Broken Arrow]

This is just my personal opinion, but I think most (not all!) warranties are a waste of money. Getting coverage for a vehicle during a time when it should to be running smoothly doesn't make any sense.

Once upon a time, I also bought extended warranty. I thought it was a good idea because it was a used car. As fate would have it, it didn't start to have any problems until about 10,000 miles after my warranty has expired. The powers that be certainly has a wry sense of humor.

Personally, I recommend to create your own "extended warranty" fund by taking the money you would have spent on buying that extended warranty into a nice savings somewhere, earning interest.

[sweeps]

I like extended warranties, but you have to understand they are WAY overpriced. You really have to work the finance manager over and get him to come way down. Sorry, but I think you paid twice as much as you should have.

[geojen]

I agree with the other opinions. Selling these things is one of the ways car dealorships make their money--they can sell you the car a little cheaper if they get you with an expensive warrenty. Cancel it, make your own.

[Broken Arrow]

Yes, and as a matter of fact, the extended warranty I bought came from CarMax, a company that takes pride in their no-haggle policy for their cars. Of course, what they don't tell you, and what I should have known but didn't at the time, is the hard-pressure sales tactics for their warranties.

I understand perfectly that that's how they have to make their money. So, I don't have any problem with it. In fact, I plan to purchase my next used car there. However, I do not ever plan to cave to their pressure tactics again.

[poundwise]

In this case, I would agree with a couple of previous posters. The cost is too much and I would think it to be a better idea to take that $1700 and put it into a high-interest savings account earmarked as 'auto repair fund.'

[geojen]

I know that my husband and I fell for the same thing when we bought our last car. We haggled them down to a good price for the vehicle, and then they sent us to this "warrenty guy" in another office. He never really explained how much the warrenty would cost in dollar amount, but just kept saying, can you afford 20 dollars a month, blah blah. Well, he was so convincing that we signed up for one. Then when we got the paper work to sign, the warrenty took our loan from 13,000 to 18,000 dollars!! We canceled it the next day.

[bjl584]

Buying the extended warranty was one of the best things that I ever did when I bought my Blazer. The extended warranty was around $1200. I took my Blazer in for service after owning it for about 2 years. It needed, new front wheel bearings, new tie rods, new ball joints, a new water pump, a new power steering pump, and new remote oil filter lines. In all it was over $2000 worth of parts and labor. I saved over $800 by buying the warranty.

[tinapbeana]

i think it depends on the car and how you intend to use it. and how you look at it: i see the warranty kind of like repair insurance for my car, just like the car insurance i pay each month 'in case' i happen to get in an accident. it's peace of mind.

i got my car 1 yr old but it only 1500 manufacturers warranty left on in. i also purchased a 6 yr/60k warranty on top of it, knowing full well that i only drive 4 miles 1 way to work and 60k miles should EASILY cover this car for the next 6 yrs. with the miles on my car when i bought it, it wil be close to 100k at the end fo the 6 yrs, and i know fords: they can have issues well before 100k, but since i don't drive much, i should have plenty of warranty left to cover me when/if i need it.

FYI, the dealer tried to tell me fords have a 50k/5 yr powertrain warranty on top of the 36k/3yr bumper to bumper, but if you read the warranty booklet in the car the powertrain warranty is only valid IN CERTAIN STATES. check your paperwork: the extended warranty may be the only coverage your car actually has.

[MonkeyMama]

I would never buy an extended warranty on anything. On cars, a lot of things aren't even covered. That is something else people don't really realize - what is covered or not. They cover defects - not regular maintenance, etc. Which renders them pretty useless unless it is a real lemon or bad off the assembly line. Yes an older car has more repairs, but not the kind covered under warranty usually.

If everyone put the money in the bank that they would have paid on an extended warranty, every time they buy something that offers an extended warranty, it should be more than a sufficient emergency repair fund to cover things.

Of course I would never take my car in for service at the dealer either. So they tell you you saved so and so on work you probably don't even need.

Definitely read the fine print if you go for the warranty...

[brizzad]

I think where you live could also play a factor in this. Down here in southern Louisiana, it gets so hot and humid, you'd be stupid to not have something lined up in case your car's A/C goes out. Auto A/C repair shops down here usually charge between $1,000-$2,000 to get things fixed, so I don't mind dishing out $700 for a small warranty just in case.

[project15]

Originally Posted by brizzad

I think where you live could also play a factor in this. Down here in southern Louisiana, it gets so hot and humid, you'd be stupid to not have something lined up in case your car's A/C goes out. Auto A/C repair shops down here usually charge between $1,000-$2,000 to get things fixed, so I don't mind dishing out $700 for a small warranty just in case.

A/C is definately covered and that's usually the biggest repair (aside from a blown engine). I guess by taking this extended warranty, I was thinking about it more for peace of mind than a great deal. I know that if I really wanted the best extended warranty, I could get one online, but I trust my dealership and have a good working relationship with them.

[Ima saver]

I would not get an extended warrenty if it were me. I would take the $1700 and put it in a car repair fund.

[greedy4chips]

Some statistics on Clark Howard today...

Extended warranties have a return of 10-15 cents per every dollar spent on them. 300 billion dollars was spent on extended warranties last year in the US. Sales people get the largest percentage of the cost of them. The warranty company then sells it to a third party and pockets a tidy sum without any risk almost.

Just think about how many items in your home could have been purchased with extended warranties. Now how many of those items actually broke down during that extended warranty? Add up all the money spent on those warranties and you could have paid for that repair a few times over.

Take some of the people's advice on here and NEVER buy extended warranties and you will be much further ahead...unless you happen to be the 1 that does have the huge repair bill that gets covered (don't hold your breath).

[Elgin526]

From what I've read, the cost of a warenty from a dealership is negotiable just like anything else about a car deal. You can also buy your OWN warenty straight from the warenty company and cut out the dealer. If you want a warenty, price out some on your own, then see what the dealer can do for you, and go with the cheapest one.

[project15]

Originally Posted by Elgin526

From what I've read, the cost of a warenty from a dealership is negotiable just like anything else about a car deal. You can also buy your OWN warenty straight from the warenty company and cut out the dealer. If you want a warenty, price out some on your own, then see what the dealer can do for you, and go with the cheapest one.

I've come to learn that cheap does not always mean best. I feel that the warranty I got was pretty decent, however some that I've seen online are cheaper, but the reviews on the service haven't been that great.

[MonkeyMama]

I just wanted to clarify which I didn't really clarify in terms of warranty - that I would NEVER take my car to a dealer. I have a very trusted mechanic - in fact 2. For that reason I never get screwed over by car repairs. #2 - I only buy used cars very researched, ones that do not tend to have problems. I know it is not foolproof, but so far in 14 years of driving it has done me well. The people I know with much newer cars always have more problems. Of course one of the keys is regular maintenance of your car (oil and fluid levels, belts, etc.) to avoid bigger problems down the road. BUT nothing beyond what your trusted mechanic recommends. Every time I go to Jiffy Lube I get a list a mile long of "repairs" and I go ask my mechanic, he says BS, and I drive my cars until 200k miles plus.

Plus seriously if you do put all of the money from any extended warranty into a "Repair" fund instead, you WILL come out ahead. It's an odds game. If you have really bad luck, go for the warranty I guess. I know people with the bad luck, but I think they are just "Scammed" more honestly. Greedychips lays it out pretty well. Ditch the extended warranty and find a good, honest, trusted mechanic. IT will save you thousands over your lifetime.