Extended car warranties

Everything else
1

My 2002 Honda Odyssey is about to run out of warranty, and I’m not eager to plunk down another $20K + trade to get a newer model when this one is running just fine. I’ve heard different things about extended car warranties, specifically:

  1. Be careful.
  2. Dealers rip you off

I’ve read http://www.carbuyingtips.com which seems like sound advice, but I haven’t heard any independent verification of that guy’s opinions/tips/advice. He specifically recommends two different warranty services, 1SourceWarranty and WarrantyDirect, but there is an obvious conflict there since they advertise with him (which he acknowledges).

So…anyone here have any advice?

2

Extended warranties are insurance. And like all insurance prdoucts, they are operated like a Las Vegas casino. The house always wins in the long run. The pricing on extended warranties are such that the warranty company makes a profit when the costs for warranty work are averaged out over their customer base. For you specifically, you may never make a warranty claim, in which case you lost money on the warranty premium. If you end up having work done under the auspices of the extended warranty that exceeds your warranty premium, then you win.

3

Ummmm…okay, thanks for the remedial on how this type of thing works. I know what I’m buying, my issue is finding a reputable warranty provider and possibly any other gotchas.

4

I had some luck with the extended warranty for my Toyota, I work around construction sites from time to time so I get lots of debris (nails, screws, etc) in my tires. Over the course of the warranty, they paid for six tire changes. Getting the paperwork done was a hassle, but they did do it.

5

Did you just buy that from Toyota? I’ve heard that most manufacturers actually just resell third party warranties at a premium.

6

Did you just buy that from Toyota? I’ve heard that most manufacturers actually just resell third party warranties at a premium.[/quote]

I picked it up at the dealership, but yes it was a third party warranty. For example, they offered a free car alarm, but I had to get it installed somewhere else. Same for the warranty paperwork, I had to drop it off at a little office building next to Cheetah’s Gentleman’s Club.

7

Well, doing some more research, it looks like (but I’m not 100% positive) that going with the HondaCare EW is the right thing to do. It’s not a third party, not many loopholes, and I can get it from a Honda dealer on-line a lot cheaper than from a local one.

Third party ones kind of freak me out.

8

There’s gotta be a cross-promotional deal of some sort at work there :)

9

I wouldn’t credit a warranty as being worth the paper it’s printed on.

I had the con rod destroy the engine on my 90k mile landrover and had the warranty claim turned down on the basis that I must have known something was wrong with it (technically speaking 60 minutes before it died I did, I perhaps stupidly tried to limp it the 5 miles back to the garage where it was booked in to be serviced the next day).

There was also the small matter that the car had spent the previous 6months I’d owned it going backwards and forwards to the garage to have numerous problems fixed mostly at my own expense since the warranty didn’t cover it despite being anything but wear and tear such as a brand new fuel tank and connections, electrics, tyre replacement etc etc and had covered less than 6k miles since I’d had it and less than 100 since it was last towed into the place to be fixed.

In the end the garage, the local Landrover dealer, kindly offered to sort it out if I’d like to give them £3000 for a new engine.

You might surmise that I will be negotiating a discount on any vehicle that comes with a warranty in future.

10

What kind of warranty did you have these problems with? Or, more correctly, with what kind of warranty did you have these problems? I don’t know of many dealer warranties that extend to 90K, so I’m assuming this is a third party warranty?

And shit, that anyone would warrant a landrover is fairly amazing by itself =)

didn’t cover it despite being anything but wear and tear such as a brand new fuel tank and connections, electrics, tyre replacement etc etc

Er, tires are definitely considered wear-and-tear, along with brake pads, cables, hoses, clips, trim, etc. A connecting rod that blows would definitely be a warrantt repair, even with a pretty limited third party warranty here.

11

The tyres were brand new (otherwise yes I would concede they were wear and tear items), they just happened to twist one of the inner tubes when they fitted them so it went bang within a few miles and needed replacing.

The exact details of the warranty elude me at the moment, I seem to recall doing something unsavoury with the paperwork. I would guess that it was a dealer supplied warranty from Shady Joe’s warranty company rather than a manufacturers warranty.

I guess I just had “mug” written on my forehead when I visited them (though on the plus side I’ve lost them at least two brand new Range Rover sales).

12

A key to extended warrenties is also “pre exisitng problems”. Before you go buy one check with your dealer and see if they have a menu of stuff going bad. If they do then the ext warrenty will not cover those problems (since they should have been fixed under warrenty). Also keep any paperwork you have from 3rd party shops (Jiffy lube and such) since they do count as maintaining you car (at least California and Texas law state that).

But in general, an ext warrenty is worth its cost if you plan on keeping your car a long time. Normally 1 or 2 claims will cover the cost of the warrenty. But on the flip side, most people never make a claim.

13

This is one reason that I’m going with HondaCare – it’s basically (AFAIK) the same warranty, but extended. So there won’t be (in theory) any “well, the dealer said they fixed this, and we don’t have a record of it, so we’re not covering that condition at all” type thing.

But in general, an ext warrenty is worth its cost if you plan on keeping your car a long time. Normally 1 or 2 claims will cover the cost of the warrenty. But on the flip side, most people never make a claim.

Right, it’s basic insurance metrics. It kills me reading some of the car forums where a lot of people claim that EW/insurance is a “scam” simply because most people never file a claim. The point isn’t that you’ll likely never file a claim, it’s more that if you DO have to file a claim, do you want to eat the cost? A catastrophic engine failure could cost me $10K to repair. Even getting the DVD unit replaced is likely $1500.

So you’re buying peace of mind more than anything.

Anyway, I opted to go with Curry Honda Care http://www.curryhondacare.com who seem to make a good deal selling bargain basement honda care agreements with insane volume. They’re probably $300 less than what was quoted to me locally. I got a 6 year/75K policy after discount for around $850, which to me is basically the same as extending the life of my Odyssey twice over.

At the end of that policy, I will DEFINITELY be looking to buy a new minivan for the family anyway.

14

A few years ago when I bought a Chevy car they offered me an EW. At first I said “nah” because it was several hundred dollars. But then they said that if I never used it then I could simply get a refund after 5 years. It was explicitly stated in the agreement and everything. Turns out, I never used it, and when 6 years later I found the warrentee while digging through some old records, I called them and they had a check mailed out to me the next day. Which I put towards a new computer. :)

I’m guessing they sell a lot of those things and bank on the fact that most people will either forget to claim the refund or lose the paperwork, which was absolutely required to get the refund. I’ll be looking for that kind of deal again if I can get it.

15

That’s very rare. I mean, I’m REAL surprised at that, because every EW I saw has a pro-rata clause (which is pretty fair if you think about it). So if you don’t use a 4 year EW and 2 years later decide to sell, you get refunded half what you paid.

So, all in all, I think an EW is definitely worth it unless the vehicle is supercheap or simple. But with the sheer complexity of today’s vehicles, I’ll probably end up doing it with all my vehicles (my M3 came with a 4/48K, which includes all service including oil changes, and if I keep it past that I’ll have to think twice).

16

I think you’re right, factually, but you’re making the same mental mistake that many people make when buying a warranty like this (which is probably why people call it a “scam.” A lottery ticket isn’t a “scam,” because everything is explained to you up-front, but it’s such a deceptively bad bet that people might think of it as a “scam.” People probably feel the same about EW’s). As with any insurance, you’re making a poor investment in order to guard against a catastrophic loss (as you say, “buying peace of mind”). You should only do that if the loss you’re insuring against is something that you couldn’t recover from, or that would gravely impact your finances. It’s smart to insure yourself against moderate losses that have a moderate chance of occurring (costly car getting stolen), or against very unlikely losses that would wipe you out if they occurred (house burning down, killing someone in car accident, grave illness). Even though you know you’re probably going to lose money–maybe a lot of money–on the bet, it’s worth making the bet just to hedge. On the other hand, it is not smart to insure against small losses, or against moderate but very unlikely losses. That’s losing money on something even though you can afford to run the risk of it occurring, which would be cheaper.

An EW on a car has never struck me as a smart bet. For example, when you talk about the DVD costing $1,500 to replace, insuring it is pretty clearly a bad idea. The overwhelming majority of people could afford a $1,500 hit if they had to take it (and if you are driving a car with a DVD player in it, you’re one of them). A $10,000 engine replacement is a much bigger hit, and would probably badly hurt a lot of folks (although even at that, it’s probably not worth insuring for most people). But I don’t think that’s at all likely (especially if you maintain your car) so, again, it seems like a bad bet.

Just my .02.

17

Precisely. And the odds of losing money are pretty high (otherwise insurance companies wouldn’t be profitable). It’s the short term cost vs. long term costs.

You should only do that if the loss you’re insuring against is something that you couldn’t recover from, or that would gravely impact your finances.

Having an $18K minivan (trade-in value today – new is about $32K) possibly losing its entire value due to one event is bad. I mean, I carry comprehensive insurance on it as well even though it’s paid off. So I guess I’m a natural born sucker =)

But I don’t think that’s at all likely (especially if you maintain your car) so, again, it seems like a bad bet.

I don’t necessarily disagree, but to some degree you could argue that I’m comfortable enough that protecting my downside is more “affordable” than protecting my short term cash position.

And while the odds of a big problem are statistically unlikely, I’ve had enough problems with cars that were under warranty (Dodge Viper, Volvo V70, Ford F150 SuperCrew) that I’m a little gunshy at this point. The Viper needed a new tranny at 250 miles, and had paint problems on the hood and side pipe covers for almost the life of the vehicle. When I sold it the new buyer found that it had a leaking oil seal that ended up costing something like $1500 alone to repair because of labor.

The V70 had to have a fuel tank replaced, engine control unit replaced, interior replaced, power seat fixed, and some other things I can’t recall. The F150 had major brake failure at 33K miles.

I’m not confident that in any of those cases that the vehicles would have suddenly become more reliable once the warranty ran out.

Now, granted, none of those have the Japanese car reliability mystique to them, but then again, I’m not sure how stock I put into that reputating given their reluctance to provide a stock warranty past 3/36K when freaking Kia offers like a 7/70K*.

  • And yes, Kia likely has to offer that, much like Chrysler did in the 80s, in order to remove doubt about the quality of their vehicles
18

Yikes. You seem darn unlucky when it comes to new vehicles and repairs. Have you ever had to take your Odyssey in for anything?

Is it true that most manufacturing defects are uncovered during the first three years of a vehicles life? So that if your car has made it through the first three years without any problems, there is a good chance that it will continue to be reliable in subsequent years?

19

test

20

I’ve owned every brand of vehicle made almost, and so far the Odyssey has been the most reliable, but I’ve had it less than 3 years, so it’s hard to really say. And I’ve had a habit of recycling vehicles at the 3 year market for the past few years. The Odyssey will be the first vehicle I’ve owned outside its original warranty in 10 years.

The conventional wisdom for any new product is that defects are discovered early. But look at all the people who have been bitten by the LiIon battery issues of the past few years and it’s obviously not a given.

My cars have had major problems RIGHT at the warranty breakpoint or past. Same with electronics and appliances. Which is why there’s the cliche of something breaking right after the warranty dies (/me glares at his laptop). My Panasonic large screen TV died after 2 years. My Toshiba DVD player died after 4 years. My first TiVO inexplicably died after 2 years.