THoughts on extended warranty

I've read through a few threads trying to gauge peoples thoughts on buying extended warranties. I saw some people buying warranties from other dealerships that they didnt buy their car from. Some have mentioned Acton toyota, but i saw on the news that Toyota gave them crap for selling so low.

What are peoples overall thoughts on an extended warranty. If you did buy one, did you buy it at time of vehicle pruchase or after the fact from someone else. And of course, how much did you pay?

When i was doing the paperwork, they quoed me $2700 for 5yrs/125, and i thought that was completely ridiculous but who knows. The woman doing the paperwork was getting obviously flushed as i kept turning down all these options which i assume are big money for them.

Thanks for your help on this

 

I just bought a extended warrany when I bought my truck last Saturday.. $450 ish for 6yrs 75,000. I normally don't buy any extra crap dealers try to sell! That $2700 seems high, but I am not really up on my pricing for this stuff

 

My thoughts on extended warranties are these:
1. Nobody tries to sell you something that they lose money on.
2. Therefore, that warranty is costing the customer more than the average cost of repairs and the dealer is making money off of it. That means the odds are you come out ahead by not buying the warranty.
3. If the warranty pays for itself, then I don't want the vehicle because it's going to be broke all the time. If the warranty doesn't pay for itself, then it's a waste of money.
4. All that said, there will of course be guys who throw a rod the day after their regular warranty expires, and will swear by their extended warranty. But they are the exception and not the rule. It's a game of odds.

 

I've always tried to get them to explain why I need a warantee if their product is as good as they keep hyping ....

 

Ask yourself how likely it is that you will need $2700 worth of warranty work on your truck. And pay close attention to what is and what isn't covered. It's a gamble that is not likely to pay off. Even if you do have some rare warranty issue, and even if it comes in at $3000 or something you still aren't that far behind when factoring in your interest on the $2700 you kept in your bank account for all those years.

I'm on my 5th Toyota vehicle. All bought brand new from a dealer. Only one of them, a Corolla, needed a big repair after the factory warranty expired, and before 150k miles. A power steering pump that cost much less than $2700.

 

This argument has been going on for such a long time. There are many for and many against. My point to suggesting you DO get an extended warranty is simple:

Why do you have car insurance? Do you have many accidents? I don't. I haven't had an accident in over 20 years. But I still get car insurance. I don't get it because the state forces me to. I get it because you never know WHAT might happen. I may be stopped at a red light and get rear ended by someone without insurance. Not MY fault. Not the fault of anything else other than the other driver, but if I DIDN'T have insurance, then I would be screwed.

So now we look at extended warranties. Sure, Toyota builds a really good product. That doesn't mean that the NEVER break down. Go to any Toyota dealership. Are their technicians sitting around playing cards? Nope, they are working their asses off usually doing repairs. Why? Because shit still breaks, even if you are a great vehicle. You don't have any control over it. It is called mass production, and mass production means that things STILL will break.

Yes, I agree that they wouldn't offer an extended warranty if it wasn't a profit for them. Car insurance companies are the same way. They wouldn't offer insurance at those rates if it wasn't going to be a win for them overall. That being said, while it is not REAL common for a major failure to happen per unit, it still DOES happen. And when it does, it gets expensive FAST with a Toyota. A single major engine failure can cost in excess of $9k to repair it. Do you keep $9k in the bank sitting around "just in case" the engine or transmission fail on your vehicle? I know I don't.

Of course the odds are in their favor. They wouldn't offer the warranties otherwise. BUT that does not mean you will NEVER have something break, and when it does, it gets expensive. $500-$1000 for FIVE YEARS of additional coverage is CHEAP insurance in the case of something breaking. Let's look at some numbers for simple repairs like the ones I know well. Let's say you have both front wheel bearings fail in your Prerunner. Buy them from me and that is $540 for the bearings, and then you take your time to get it fixed. If you had an extended warranty, that was $1000, paid out over the term of a 3 year loan, you have paid about $30 per month for the extended warranty, and typically have a $100 deductible. Make a bearing claim and your INSTANT cost out of pocket is only $100, and you get TWO new bearings. That is something minor that is pretty common. What about a transmission failure? (I have read several threads where people on THIS FORUM had had to replace their transmission at a cost of nearly $4k) So your total out of pocket for the extended warranty of $1000, and your deductible of $100, is $1100. For that $1100 you get a $4000 transmission replacement out of it.

Yes, it is a numbers game, yes it is a risk. But it boils down to a simple phrase that I have said to myself, and others for over 30 years: "It is better to have it and not need it, than need it and not have it". Do you go off-roading without another truck to go with you? Have you ran the trails and never got stuck, but you still had your $600 winch, and $500 in recovery tools? Well why not just leave all that expensive stuff behind, since you two never get stuck? Why? Because you never know when that ONE time may come up, and you NEED that other truck, or you NEED that tow strap, or you NEED that winch.

Same with this. It is simple insurance to protect you "just in case".


And for those who think I have never done it myself, Me and my entire family always get the extended warranties on every vehicle we have bought (Toyota included) and out of 10 vehicles over the past 10 years or so, we have made enough extended warranty claims of 5 vehicles that covered the cost of not only the warranties we paid on those vehicles, but the 5 that we never needed a claim on.

 

All great answers above. You're main problem is spending $2700. You should be able to find that same warranty for $1100. I didn't get an extended warranty.

 

I can add little to what's been said. The extended warranty is extra $$$ for the dealer. If Toyota's are as good as Toyota claims - why do you need this added "insurance".

Maintain your vehicle and try to drive it in a semi-sane manner and you'll get 300K miles or better out of it.

In my opinion, these extended warranties don't go much past what you get from the basic warranty that comes with the vehicle. If you can't get 125K out of any car made today by simply doing basic maint. relevant to that make/model, something is terribly wrong.

I might open up my views on extended warranties if/when one is offered that actually has some real extension in it...say 200K.

 

I say no. Not for a Toyota. I would consider it for a Ford, Dodge or Chevy but Japanese cars usually wont need one. I was at the home of a guy that owns a vehicle warranty company last week. It was a $15M mansion on a sprawling estate. He made all that cash from selling vehicle warranties. This should tell you how little people really save from those. If the warranty is saving you money, That guy isn't making any. By a show of hands, how many car owners with an extended warranty here have a $15M mansion?

That should tell you how useless they are.

 

I don't buy extended warranties and haven't had a major repair on new vehicle EVER that wasn't covered by the manufacture's warranty. Consumer Report recommends against getting them.

The one time anyone in my family had to collect off a extended warranty, it was sold by the dealer, but it was a third party warranty. When we tried to collect for a blown motor due to dealer error, we had to sue.

Take the money the warranty will cost, put it in the bank, at interest, and use that to pay for repairs once the factory warranty expires. In the last 20 years, three different pickups, two toys and a dodge, there have been NO repairs aside from brakes, tires, 1 starter, front wheel bearings, 1 coil, and of course, tune up and oil changes, with a combined total mileage of the three trucks of 350,000 miles, with 217k on the 94 toy pickup.

Your Mileage May Vary...

 

You can't honestly think that every single vehicle made in the world can last without ever having a failure simply by maintaining it properly. If so then you are quite naive to the world of auto repair.

The reason I have offered my advise in these threads is simple. I have real world experience of more than just "owning x number of vehicles and never needed major work done". I worked in dealerships for 20+ years and have done countless repairs on vehicles with extended warranties, and on vehicles without them. Yes, the odds are not in your favor of ever needing a major repair if you own a quality vehicle and take care of it, but there is no golden ticket here. A $1000 extended warranty plan paid out over a 4 year loan period comes to less than $25 a month. The factory warranty on a 2014 Tacoma is 3 yr 36k, with a 5yr 60k warranty on the drivetrain. If anything goes wrong after that, it is on YOU to pay for the repair. Sure, those of you who haven't had to make a major repair on your vehicles have been lucky. But how many THOUSANDS of other people have had to make major repairs? How much has it cost them? Again, it goes back to this is no different than auto insurance. Sure, maybe you have never had an accident. That doesn't mean it will NEVER happen.

I have seen this for a FACT, and have dealt with thousands of customer's vehicles over 20 years, not just owning 2 or 3 and never had a problem. It is a very inexpensive overall cost that can save your ASS in the future. Putting that $1000 into a bank account and letting it gain interest over the next 4 years isn't going to help you much later on if after 5 years your timing chain goes bad, or your engine develops an oil leak at the engine mid-case. Those can be VERY expensive repairs. Take it from someone with 20+ years of real-world experience dealing with extended warranties on a DAILY basis on thousands of vehicles.

 

I usually do not go for the extended warranty, but on my 2014 Tacoma I decided to get it just in case. $2700 is extremely high though. I paid $1150 for 7yr/100K with $100 deductible. My truck will be paid off in two years so it's not like I'll be paying much interest on the extra $1150 I added to my loan. And for the record, this was purchased through my credit union, not the dealership.

 

All good points. Here's a couple other thoughts. Will you keep the vehicle until the warranty is over? Everyone has good intentions of doing that, but many times it doesn't work out that way for reasons you can anticipate now. Your double covered during the factory warranty period. Read the fine print. Most policies have deductibles, no pay diagnostic time and/or other exclusions (accidents, abuse, mods,...). If you have to finance that $2700, you're paying much more than that. My take: service your vehicle as the mfg. recommends and that means more than just oil/filter changes. And drive it like you want to keep it forever.

 

Not every single car will, but it's an odds game. MOST will go beyond any currently available warranty being offered, especially when properly maintained.

I've been driving nothing but Asian vehicles since the mid 70s. All have gone at least 300K and NONE ever had any issues during the first 200K miles other than maint. work not covered by warranty.

Yes - it's a chance you take and many of us are willing to take that chance.

 

Yes, its the price that gets me. I have no problem with warranties, but the $2700 was insane.

Can you call around to other toyota dealerships to get a cheaper warranty?

I have seen it both ways, a waste and also worth it.

 

See, again I take that with a grain of salt. For everyperson out there who has never had a repair needed for their vehicle, I can show you 10 who DID. Yes, it is an odds game, I don't argue that point. And I also agree with the other guy who said it depends on if you plan to keep your vehicle for many years after the factory warranty expires. Me, when I get a vehicle I drive it until it is beyond repairable, then buy another one. If you count the vehicles I have PERSONALLY owned and driven, (not counting family vehicles, or wives cars) I have owned 8 cars in the past 30 years, most were parked after 300k miles (I put a LOT of miles on vehicles in the past)

Either way, I have seen plenty of people have their ass saved because they had an extended warranty cover a huge repair. With finances like they are, middle-income families can't always afford a $5k repair at one time, but can handle a $25 a month increase in their car note for 4 years, and a $100 deductible if a major repair is needed. Hey, kudos to those who can buy a $28k Tacoma and still afford a major repair IF it is needed after 60k miles have ticked off, but not everyone can. I know right now that if I was not an auto tech, and the engine went out in my Tacoma, I couldn't afford to replace the engine. I would be screwed.

 

I do agree that $2700 is way too pricy for an x-warranty. Many can be found for less than $1000, but be sure what it does and doesn't cover. Some of the pricier ones cover everything but plastic, the cheaper ones only cover what are called "wet parts" meaning that engine bearings and internal parts, or transmission internal parts are covered, but if it is a sensor, it may not be covered, or if it is a computer it may not be covered. Read the details for sure first.

 

And I used to run a bus garage and did plenty of major repairs...but insurance is a game of numbers. If you simply saved your "insurance cost" and invested it forwards, by the time a major repair comes up, a bad engine, tranny or diff, you will have funds to cover it. And be able to cover it with a lower cost using an independent mechanic, and not pay the dealers very high fixed service cost.

Now a dealership has a different viewpoint...they make money on every end of the warranty, the initial sale, interest on the warranty, performing the warranty work and such...and since you have the dealer warranty, the dealer gets to keep the service bay busy. While I think a dealer should make money on each different aspect of sales and service, in my own point of view, I would rather them only make money from me on the initial sale and then for "dealer only" parts.

On that note, we run HIGH deductibles on insurance, and drop to liability only once the vehicle is paid off and driven on by the wife and I. The insurance savings will then pay off the NEXT vehicle early. We haven't had to vehicle fixed under insurance in decades.

of course, Your Mileage May Vary.

Howard

 

On another forum, this extended warranty issue was discussed in detail.

One point that was made repeatedly was WHO you bought it from. Some believe that all dealers provide mfg. warranties, but in that conversation I heard that not all do.

It would seem that the more reliable warranties came from Toyota. 3rd party warranty providers were raked over the coals for not honoring their policies in many cases. Perhaps some of those rejections were justified; then again, maybe not.

3rd party policies might be cheaper, but when/if you ever need it, you may have issues getting the insurer to honor the claim.

Do what works for you.

 

I won't get into the big difference between a bus garage and auto repair shops.

I totally disagree with you there. Let us look at an extended warranty cost of $1000, and invest it. Let us be generous and give you a 4% ROI. After 4 YEARS you will only have $1170 saved up. WELL away from the cost of a major repair, even at an independent shop.