Extended warranty on Used Vehicles

[pikehunter]

I would say no to the offer. Remember that sales people are evaluated on the amount or quantity of service plans they sell as much as or even more than on how much they sell in dollar value of actual product, the high profits are in ESP's, not on product. Instead of purchasing the plan invest a few bucks in a trustworthy mechanic to go over it with a fine tooth comb.

 

I bought the van I'm driving after I leased it for 4 years. They tried to talk me into an ESP when I made the "lease end" purchase and I declined the offer to let them gouge me for an extra $1800.00 on a vehicle that I essentially already owned and at that time already driven out of the manufacturers warranty for about 2 years. The big pitch to try to convince me was that if the tranny goes it will cost you easily over 2 g's for a new one. I told him I'd been driving it for 4 years, I know what is wrong with it and what is OK and to stick your extended service plan up our I have not regretted it and that was over 7 years ago...and yep, I'm still driving that very same van which now has over 300,000km's on it. Come to think of it, maybe I will spend that 18 hundred bucks I saved on not buying an ESP on some paint and touch up the body work on it this spring! After all, it will have it's 12th birthday in June! Knock on wood that is....

[tinbanger]

tb, a rear seat cable and ps pump don't cost 1150 to replace!!

 

Don't tell me that . I was trying to convince myself how smart I was LOL.

 

At Least I didn't take the rustproofing

 

TB

Edited January 27, 2009 by tinbanger

[DRIFTER_016]

Dave, remind me to only ever come up there to fish, never to live :)

 

 

If you think that's bad you should see what it costs in the little isolated villages!!!!

I couldn't afford to scratch my there!!!

 

Grocery Day in the Bush

[fishinggeek]

I say no, usually. Remember an extended warranty where you pay for it is really just an insurance policy. For the insurer to make money, the money you pay in premiums has to be grow to more than they pay in claims. That means they charge you a price for this based on the likelihood you'll file a claim. So if insurance is cheap, then what you're insuring for is either very unlikely, very cheap to fix/replace, or both. And if insurance is expensive, then a claim is either very likely, very expensive to fix/replace, or both. The real value of the policy is it reduces the risk of a rare event, which can be important for something you can't recover from. You'll almost always be better off putting your money that you would have paid for the warranty into your own personal wealth, like paying down debt or an rrsp contribution, on average. But if you're better than average, (say you never drive at night, in bad weather, drive defensively), then the value of your policy goes down. If you're worse than average, then the policy's value goes up.

 

If it were me, I'd see if I could recover finally from it, and how I fare with respect to the likelihood of a claim. So if I could recover financially from a claim, say I could easily afford a replacement used car if something were to happen, then I'd never buy the insurance as I'd do better on average by using it in other ways (pay down debt, invest). If I couldn't recover from an event, then I'd see if I was more or less likely to experience a claim than the insurance company might guess (ie. they don't know if I drive defensively, don't drive in bad weather, whatever). If I was much less likely to have a claim than the insurance company would guess, then perhaps I'd get the insurance. If I was more likely to have a claim, then I'd never get the insurance.

 

This is nothing new, and something I learned in my days learning economics. It has to do with the fact the company doesn't have perfect information about you, and if everyone played this game (called "adverse selection"), then everyone's insurance would go up as a result because the insurance companies wouldn't be as profitable if everyone did the "right" thing and played the game of adverse selection.

 

Personally, I never buy insurance unless the law requires it (like car insurance) or it's for an event I couldn't recover from (like home insurance). And since I'm not self-employed, where premiums are tax deductible, it makes insurance for guys earning wages and salaries relatively more expensive. So personally, I'd never touch that extended warranty.

[holdfast]

Why dont you Google, anyways read this. NAW

 

http://blogs.consumerreports.org/cars/2008...r-warranty.html

[fishnsled]

I say yes. Probably be this time that you don't get it, and something will go wrong.

 

Now you've jinxed me.

 

 

"Extended warranties! How can I lose?!"

 

 

 

Why dont you Google, anyways read this. NAW

 

http://blogs.consumerreports.org/cars/2008...r-warranty.html

 

I always like the feedback you get here. I do Google to get as much information as I can, but the info gained here can be as good if not better in some cases. The reason for the post was more of what others do or have done when it comes to buying an extended warranty. Personally I'm not a fan of them as it seems most here are not as well. Great link, you can never go wrong in checking out what Consumer Reports has to say.

 

Thanks for the replies everyone.

[Grimace]

My buddy's sister makes 150 000 a year selling extended warranties at a Chrysler dealership. It is a gold mine. Where does the gold come from? Our pockets.

 

Keep your coin. The car will be fine. Chances are that between the deductable and the premiums you would be better off without it. Lets say a transmission goes. 1500 bucks. If your deductable is 750 and they pay 750, your premiums have already covered that other 750.