New car extended warranty cost/value?

[rjk514]

Greetings, looking for some input on new car extended warrantys.
Just bought a 2007 Vibe and have till next Saturday to decide if I want to
pay $900.00 for an extra 3yrs of bumper to bumper warr. with a $200.00 deductable. The first 3 yrs come with GM warranty so the 900 would be for the following 3 yrs. or 200.00 per year. I'm not a big fan of these things and the sale pitch was that when a onboard computer,etc on the car goes it can be big $$$. We expect to put on about 10k mi. per year so would have between50-60k on in yrs 5 thru 6.. You know how Murphy works....Your thoughts ??

[chinaco]

The times I have purchased these contracts... it did not work out to my benefit. I purchased one for a car back in the late 80's. I never had an event that was covered by the policy. I have had similar experience with lesser expensive products (i.e., computers)

Here is my take: Most companies know the reliability of their products. Today, products (where this type of contract can be purchased) are fairly reliable. So the odds of you being financially better off are remote.


Here are a couple of basic hypothetical statements that I ask myself:

- If I purchase these contracts for everything, I will be worse off finanacially because the cost of insurance is much greater than the financial loss incurred by any one or two that fail within the contract period.

- If I never purchase these contracts, I will have a small number of occurances that will cost me. There is the possibility that I will have a large expense to replace something.

- If I try to cherry pick and only purchase a contract for something that I feel I might benefit from, I will likely choose wrong. This goes back to the insurer knows the probability of failure. At best you get the benefit of the pooling of money.


My take: Unless you need to sell off the risk of the event because it could ruin you (or cause you hardship)... you are better off self insuring.

I am unlikely to purchase these types contracts. I have done it in that past and could kick myself for doing so.

[OAG]

These thing are not worth very much UNLESS they are from the Manufacturer of the Vehicle -- I have never seen a 3 party one that works, and if it can be made to work it is a very large hassle to get it to work. I believe Clark Howard (www.clarkhoward.com) has a very large explanation of these things.

[Outtahere]

I bought a Vibe last August, I put roughly 20,000 a year on a car and expect to keep it for at least 5 years and have wished I had coverage. I bought the extended coverage but before you buy it ask if it's a third party or manufacturers, I saved $200 by asking that question.

[dex]

I would see if you can purchase it after the mfg. warrenty expires. If for example you have a 36K mfg. warrenty that is 3 years of driving - the car could be stolen or totaled in an accident in that time and you would be out the 900.

[Dawg52]

I bought a used 2006 Trailblazer and was offered an extended warranty contract. I was surprised it was available but I didn't buy it. Even the salesman didn't think it was a good idea.

I never have purchased one and never had an experience later that made me regret it. Maybe I have been just lucky.

[rjk514]

I could get it after the 3 yr GM warranty, but then the price goes up by quite a bit, they figured out all the angles..it appears the insurer is GMAC, but its confusing.. per info sheet (the insurer is a property and casualty insurance corporation in southfield Mi., but it appears tied to GM...I will have to ? this before deciding, as I agree if this is 3rd party coverage then it might be a hassel to get $$$ out of them although in the small community , where we are purchasing the car, if they were selling bad stuff it would be well known ...

[rjk514]

This is on the insurance handout,it appears tied to GMAC

Why is the company offering the contract important?
Regardless of the type of coverage selected, the company behind the plan is very important. A service contract is a promise to pay, in the future, for covered repairs and services. That contract is only as good as the company that backs it. The GM Protection Plan is fully insured by member companies of GMAC Insurance Holdings, Inc. The GMAC Insurance companies have earned an "A-" Excellent from A. M. Best.

When you buy a service contract, you transfer the risk of future repair costs to a company, trusting them to pay your covered repairs sometime in the future. The company must be in business for the long haul, well into the future. The GM Protection Plan is administered and underwritten by member companies of the GMAC Insurance Group, subsidiaries of General Motors with more than 75 years experience serving GM customers. That's strength and stability
Now what?

[al_bundy]

i have a toyota matrix that is the same thing as a vibe. save your money.

[grumpy]

In general, insurance is only worthwhile to protect you from a catastrophic loss. Would any likely repair issue on the car be so costly as to severely affect your overall financial health or future? My guess is the answer to that is, "no". That being the case, you can self insure. Put the $900 into a money market account. It will have at least three years to grow while the original manufacturer's warranty is in effect. It will, in all likelihood, continue to grow for as long as you own the car. Use it towards the next car.

When I was young and poor I was in the process of negotiating to buy a used car from a dealer and was able to buy an extended bumper to bumper warranty at the dealer cost which was less than half of the retail price. At that price and in my circumstance it seemed a worthwhile risk mitigation.

Grumpy

[Outtahere]

Quote:

Originally Posted by al_bundy i have a toyota matrix that is the same thing as a vibe. save your money.

That's why I bought my Vibe, but I also know the miles I put on a vehicle and what's happened to me in the past. The coverage wasn't that expensive compared to the dollars I've had to shell out, to me it's like any kind of insurance, you sure hope you don't need it but are glad you have it when you do.

In OPs situation I probably wouldn't, but I'm going to blow through the original warranty pretty fast. We didn't buy the extended warranty on my husbands Avalanche and wish we had

[al_bundy]

i had one pontiac, it was my first and last GM car i'll ever buy. as long as Honda and Toyota make good cars my wife will switch between them depending on who has the best one for us at the time

when we bought our Matrix i looked at the Vibe but even with GM Card points it was still a lot more expensive than the Matrix. and the residual values are worse than the matrix. funny thing is that my matrix has more US made parts than the Vibe

[lazygood4nothinbum]

having just bought a new american car (stang gt vertible) and planning cross-country roadtrips, i purchased a 5-year, 75k mile bumper to bumper manufacturer warranty with $100 deduct for $1,100.

the little muscle car is very fun though i just went over some bumpy asphalt and now the tire pressure monitor has disengaged. buying an american car was a compromise i felt best satisfied my minimal requirements. i have no buyers remorse on either the car, nor on purchasing the extended warranty.

i would not have purchased one on that beemer i looked at. but for half the price i thought i'd like to have all the confidence.

[TromboneAl]

What Grumpy said. When you buy insurance to save money, you are betting against the odds.

[Peaceful_Warrior]

In Nov. 2001, I bought a certified pre-owned 2001 Toyota and got the super-duper ultimate warranty... sort of like the Lexus of the bumper-to-bumper warranties for about $1700. They don't offer the warranty anymore to my knowledge.

Anyway, I did have to bring the car in a couple times. Both times the issue was covered under warranty, and they covered my rental car both times and whenever I bring it in for scheduled maintenance. Even with incurred costs, I don't think the warranty has paid itself off, and it expires next year (I got a 7 yr, 100k).

If you do decide to get a warranty from the dealer, here's some things to be aware of:

1) The years and miles are usually negotiable. They offered me the choice between a 5 yr 60k warrant and a 7 yr 75k warranty, and I told them I needed more mileage on the 7 yr.

2) The price is negotiable. Don't assume that the price quoted is the only price they will sell it for just because they're a dealership. They have HIGH margins on these warranties because they know the odds of breakdown, so they have more negotiating power than you might think. The 'Sticker Price' on my $1700 warranty was about $2,100.

3) I'm not sure if this is all manufacturers or just Toyota, but I know that the extended warranty can be bought any time up until the limited warranty expires. So, I could have waited until the 364th day after the car was initially sold (not to me, but just sold to anybody) and still purchased an extended warranty.

4) Understand exactly what is covered. Just because it is an extended warranty does not mean that it will cover everything that breaks down.

[Goonie]

I've owned a lot of trucks and a few cars, and I've never purchased any "extended" coverage on any of them.....and thankfully, I've never needed it! :

I always figured (rightly or wrongly) that if something was gonna crap out, it would probably do it during the initial warranty period.....so far so good! I'd just as soon keep that extra $$ in an account drawing interest, and if something went wrong with the vehicle after warranty, just pay the piper then.

My 'theory' on extended warranties goes for dang near everything....stereos, TVs, lawn mowers, appliances, etc. That being the case....I've saved a sh*t load of money!

[al_bundy]

LCD tv's is probably the biggest waste of money of extended warranties. the possibility of something breaking depends on the amount of moving parts and mechanical components. the more moving parts, the higher the chance.

[CyclingInvestor]

Remember, the reason the dealerships push these things so hard is that
they are mostly profit, meaning they are overpriced for what you get.

As Grumpy said, the only time to buy insurance is when you cannot afford
the loss.

[Khan]

Last week I received mail telling me I should consider an automobile warranty since the manufacturer's warranty on my car was expiring.

Well, the original warranty was for 70,000 miles and I recently went over that; but the car is 18 years old.

Their code could use some tweaking.

[Goonie]

Quote:

Originally Posted by Khan Last week I received mail telling me I should consider an automobile warranty since the manufacturer's warranty on my car was expiring. Well, the original warranty was for 70,000 miles and I recently went over that; but the car is 18 years old. Their code could use some tweaking.

I got one like that a couple of months ago, that said my car's warranty was about to expire. It was for the car that I had traded-in back in October. Only discrepancy was the fact that the car was 11 years old, and the manufacturer's warranty expired in '99!!! OOPS!!!