ericthehalfbee | 04-24-2009 06:02 AM | Personally I would never buy an extended warranty on a vehicle (we deal with several warranty companies at work).
Warranties are like insurance. The warranty company may charge you $1,500 for your car, but they know that the average repair costs for your car would be much less. Otherwise how could they make money? They're not out to fix cars for free.
There are occasions where the repair costs will exceed the extended warranty cost, but these are rare. I've seen examples where they charge xxx money for a warranty and I'm thinking "these cars always have problems - they're going to lose money for sure". But the average consumer would never know this unless they're a mechanic who is very familiar with the vehicle. The warranty company will quickly learn which vehicles are like this and adjust their warranty pricing accordingly.
Your best bet is take the money you'd spend on the warranty and put it away in savings and dip into it when you need repairs.
What I see that's very common is people buying an expensive vehicle (BMW, Mercedes, Land Rover) and then getting the extended warranty because they really can't afford to fix the vehicle or are scared of ridiculous repair costs. This logic never works. Even though you might have the warranty, these vehicles still require expensive maintenance.
We have a customer in our shop right now that needs suspension work. They performed their maintenance as per the manufacturer recommendations. This vehicle uses synthetic oil and oil changes are usually every 10K. However, the warranty company wants you to service your vehicle every 6K. As I write this they were talking about NOT covering the repair because the recommended service wasn't followed.
What's even worse is the repair is on the suspension. There is absolutely nothing related between the suspension and oil changes, so for them to be considering denying warranty because of not doing the oil changes at 6K is beyond ridiculous. I could see if the engine had sludge and needed internal mechanical repairs, but why deny repairs to a unrelated component? This is from one of the major warranty companies.
Awhile back we had another customer with a warranty repair. Vehicle needed a fuel pump and it's only sold from the dealer as a module for $1,000. The warranty company wanted to install a used fuel pump from a wrecker. The owner asked us our "opinion" and we said it's a bad idea as the new pump was "an updated version" and the old pump likely was the original design and would probably fail again.
She contacted the warranty company and bitched at them. The warranty company accused us of "badmouthing" them and "blacklisted" us so we were no longer an authorized facility to do repairs on their behalf. She had to take her vehicle to another shop for repairs, and they screwed things up since they weren't faimiliar with high-end vehicles. Needless to say the warranty company never paid for the screw-up.
Since then we're back on the authorized list for this warranty companyr. But only because we complained and threatened action for them "blacklisting" us for no reason whatsoever. We only did this because we had several customers with this warranty company and they didn't want to use another shop for repairs.
Bottom line: Save your money, IMO. |