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Again: New car extended warranties
Old 02-07-2016, 12:49 PM   #1
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Again: New car extended warranties

As I stated in a previous thread, we recently bought a new Toyota Camry. Went with the Camry due to reputation and at our age, might be the last car we ever buy. Dealer had some add on's that we went for because we have 30 days to cancel and get a full refund. We bought GAP insurance for $800, extended warranty for $1960, road hazard for $415 and a maintenance agreement for $1400. That's a lot of money for something you may never use but I had reasons.

1. Bought the car for nothing down, no out of pocket costs with zero percent financing for 72 months. In six years a lot could happen and I want to protect my surviving wife from dealing with anything having to do with a car. Read somewhere the GAP insurance is important in leasing and on purchases where there is no down payment. My car insurance agent says I can add it to my policy for $24 year. I will get more information on this coverage tomorrow. Want to see if I'm comparing apples to apples.
2. Extended warranty is bumper to bumper on all mechanical, electrical and electronic parts, labor and parts for 10 years, 100,000 miles.
3. Road hazard cover all repairs and /or replacement of wheels and tires (original tires only).
4. Maintenance program. Covers 100% of maintenance for for 5 years, 35000 miles.

Without saying which of the above four I'm thinking about cancelling, thought I'd ask all the car nuts out there what they think about the cost associated with these warranties. Generally speaking, I'm lead to believe that none of the four are worth the price. Don't forget my objective, ie, I don't want my surviving wife to ever have to think about those repair/maintenance items. She just told me not to worry about it as she will just probably buy a new Cadillac every year.
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Old 02-07-2016, 12:56 PM   #2
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First of all, I'd venture to say you did not buy an "extended warranty" as those are typically third party repair insurance policies sold by dealers at a very high markup. Auto manufacturers typically do not "extend" warranties.

Doesn't the car come with a bumper to bumper warranty for a predetermined period like most new ones do? If so, why buy the policy during that period? You can always buy one later at a much reduced price from a third party. (the one from Toyota is also from a third party).

Tires have a warranty also (from the tire manufacturer) - IMHO, waste of money here.

Skip the maintenance program as that is pre-paying fr maintenance and your car will only need oil changes during that period (any other repairs are probably covered by the factory warranty). An independent shop can do those oil and filter changes for a lot less.
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Old 02-07-2016, 01:10 PM   #3
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Gap insurance for a car known for great resale that you don't plan to trade anyway seems unnecessary. Find out what the residual would be on a lease after x yrs and compare to what your loan balance would be after same time period. You could also look at current trade in values for Camrys.


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Old 02-07-2016, 01:14 PM   #4
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Gap insurance for a car known for great resale that you don't plan to trade anyway seems unnecessary. Find out what the residual would be on a lease after x yrs and compare to what your loan balance would be after same time period. You could also look at current trade in values for Camrys.


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Agreed. Correct me if I am mistaken here, but doesn't Gap insurance work if you total the car early in its life and the insurance payout doesn't cover the loan balance?
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Old 02-07-2016, 01:15 PM   #5
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If those extended warranties and other add ons were not profitable for the providers, they would not do them. That means that on average you have paid more than the value you receive. Of course, some people will come out ahead, but more will not. If you want to do it for the peace of mind, just be aware you have paid for that too.
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Old 02-07-2016, 01:17 PM   #6
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Originally Posted by aja8888 View Post
First of all, I'd venture to say you did not buy an "extended warranty" as those are typically third party repair insurance policies sold by dealers at a very high markup. Auto manufacturers typically do not "extend" warranties.
Some manufacturers do sell extended warranties. I purchased one with my last Ford and it extended my warranty to 100,000 miles; they paid off on a couple of problems.
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Old 02-07-2016, 01:22 PM   #7
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Some manufacturers do sell extended warranties. I purchased one with my last Ford and it extended my warranty to 100,000 miles; they paid off on a couple of problems.
Did you buy it directly from Ford or from the dealer?

Edit: I see that Ford has gotten into selling these policies under their brand name, something that was not done a few years ago. It could be they have entered the insurance market or are just re-branding the policies, and believe me, these are insurance products.

I hear that Gieco in the states offers auto repair policies with an adder on to an existing policy for less that $10/month additional. I have not seen that personally, but a few people I know have mentioned it.
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Old 02-07-2016, 01:40 PM   #8
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IMHO, by purchasing a Camry you have already done much to protect her from problems up to and beyond 100,000 miles

If it was some other car, that might be a different issue. Of course, there are always exceptions to even the best statistical evaluations.


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Old 02-07-2016, 03:13 PM   #9
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Did you buy it directly from Ford or from the dealer?

Edit: I see that Ford has gotten into selling these policies under their brand name, something that was not done a few years ago. It could be they have entered the insurance market or are just re-branding the policies, and believe me, these are insurance products.

I hear that Gieco in the states offers auto repair policies with an adder on to an existing policy for less that $10/month additional. I have not seen that personally, but a few people I know have mentioned it.
I know GM and I think the other manufacturers have offed extended "coverage" for a very long time. Sometimes they cannot use the term "warranty" for legal reasons.

As far as your comment on GAP coverage if the car gets totaled, I believe you are correct that it would pay if insurance company settlement is not enough to pay off the loan. I didn't think of that as a reason to justify the purchase, so I guess it depends on the individual. Some companies offer new car replacement coverage would might satisfy this concern. I only ever heard of GAP coverage at the credit union and it reminded me of buying undercoating or bumper guards from the dealer.
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Old 02-07-2016, 03:20 PM   #10
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I think extended warranties from the manufacturer can make sense never from third parties. However you didn't negotiate a good price on it or any of the other items. You have until the end of the original warranty to buy the extended one and can buy it from any Toyota dealer. Find one on the internet that sells it cheapest.
Gap insurance makes no sense on a purchase.
Price the scheduled maintenance and then see how much of a discount you can get by pre-paying it.
All of these items are negotiable. Cancel them all, decide what you want and then negotiate the prices after getting competitive quotes from other dealers.


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Old 02-07-2016, 03:24 PM   #11
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When I bought my Honda Civic, I purchased an extended warranty through Honda, called Honda care. I searched online and found a policy that was ~$800 for 100K miles and 8 years. $0 deductible. It was through a different dealer.

My dealer originally wanted like $1500, but they matched my online price.

I had a Warranty Gold policy once, they went bankrupt. Luckily I charged it and was given a 100% refund.
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Old 02-07-2016, 03:36 PM   #12
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I only ever heard of GAP coverage at the credit union and it reminded me of buying undercoating or bumper guards from the dealer.
We bought a new 2005 Hyundai in that year and financed it at the time at the dealer (lowest rate back then). The dealer offered to sell us Gap insurance at that time which I declined since we had put down a sizable down payment.
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Old 02-07-2016, 03:54 PM   #13
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We bought a new 2005 Hyundai in that year and financed it at the time at the dealer (lowest rate back then). The dealer offered to sell us Gap insurance at that time which I declined since we had put down a sizable down payment.
aja, that was my point. My purchase price to start was $28831 for an XLE. Zero down. I drive out of the dealer and total the car. How much is covered by insurance? In your case, you invested a sizable down payment. So how much of that down payment was at risk? I put zero down, so my $28831 value car is worth what? $24-25000 ? I'd be out $3-4 grand. Maybe I'm looking at it in a different manner.
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Old 02-07-2016, 04:13 PM   #14
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To answer a few questions as we go: Yes, all the warranties are with third parties, not the dealer. My policies are through Fidelity Warranty Services, Inc. out of Deerfield Beach, FL. My previous Toyota through another dealer also had this coverage by the same outfit in Deerfield Beach. The Toyota dealers here are all part of Southeast Toyota Association and they probably have a contract with this Fidelity Warranty Services. I can't remember back when I was driving GM products, if the extended warranties were with GM or some outside agency.

I thought from the beginning that since the original factory warranty is bumper to bumper, three years, 36000 miles, any "extended warranty" you buy is from that point forward. Don't know how the cost would compare, but why not wait until the original warranty is about to expire and then go for the extension. Something could happen in the first three years that might make you change their mind about the whole thing.
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Old 02-07-2016, 04:20 PM   #15
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aja, that was my point. My purchase price to start was $28831 for an XLE. Zero down. I drive out of the dealer and total the car. How much is covered by insurance? In your case, you invested a sizable down payment. So how much of that down payment was at risk? I put zero down, so my $28831 value car is worth what? $24-25000 ? I'd be out $3-4 grand. Maybe I'm looking at it in a different wrong.

I agree if you feel that you will owe more than the car would be worth if totaled while you are paying it off, then Gap is appropriate coverage.
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Old 02-07-2016, 04:22 PM   #16
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To answer a few questions as we go: Yes, all the warranties are with third parties, not the dealer. My policies are through Fidelity Warranty Services, Inc. out of Deerfield Beach, FL. My previous Toyota through another dealer also had this coverage by the same outfit in Deerfield Beach. The Toyota dealers here are all part of Southeast Toyota Association and they probably have a contract with this Fidelity Warranty Services. I can't remember back when I was driving GM products, if the extended warranties were with GM or some outside agency.
As far as these insurance policies go, I would not buy any of them until the car is no longer in factory warranty. Remember, when you buy the car, you are paying for the factory warranty in the price of the car. Why pay for another one at the same time?
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Old 02-07-2016, 04:29 PM   #17
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OP,

Get gap insurance from your own insurance company like the person above said.

Cancel the road hazrd warranty. Put the money in an account in case it happens. Doubt it will, you can get replacement rims for way cheaper.

Cancel the extended warranty. You have until the bumper to bumper warranty expires to buy it. Only buy it from the manufacturer of the car. In this case Toyota. If you buy it from a 3rd party there's a good chance they'll go out of business. This is the way the operate. Once they have a ton of contracts, they go out of business and start up as a new company.
At the end of three years, you'll know if your car needs the warranty to be extended.

Cancel the maintenance contract. Pay for it as you go. You're not saving any money there at all.

In short, don't buy any extras from a dealer. NONE of them are worth it.
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Old 02-07-2016, 04:30 PM   #18
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Even considering your motivation, I would not buy any of these, especially at those prices. You would just be putting extra profit in the dealer's pocket.
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Old 02-07-2016, 04:34 PM   #19
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I average 40,000 miles per year in my company vehicle. The company switched to a fleet of all Toyota vehicles a number of years ago due to their great service record and resale value. Over that time I have had three Camry's two Avalons, and two Highlanders. I do not recall ever having to do any repairs on any of them other than tires and a few windshields. I also think that Toyota offers free service (oil changes) during the first year of ownership.

With all that, I would not buy any service agreements on a new Camry since it is under warranty and is one of the most reliable cars on the road. You can probably get Gap insurance on your personal auto policy and possibly a road hazard coverage pretty cheap. My policy offers a road hazard coverage for $10 per year that covers towing, running out of gas, needing the battery jumped or locking the keys in the car, etc.

You may be buying peace of mind, but I think the dealer smelled the money in your wallet.
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Old 02-07-2016, 04:40 PM   #20
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I love the way when you have agreed to buy the car and they send you in to the assistant manager (or whoever) to talk about all this stuff that the vehicle that was so fabulous in the eyes of the salesman has suddenly become a rust-prone lemon. I always go in knowing what vehicle I want and what features and ready to leave if I don't get my price and answer is always no to all of these extras. I suppose that they offer some peace of mind but as mentioned, it is at a cost in excess of value.
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