By on February 5, 2011


Kurt Wiley writes in:

Having been a long time reader of TTAC, I now pose a question to the Best and Brightest:

Should one who likes the driving experience offered by German brands, but abhors their reliability and maintenance expense, seek safety with an extended warranty? Or will purchasing one of those warranties be an utter waste of money?

Considering I’m about to embark on a weekend roadtrip in a 12-year-old M Coupe, I’m hoping the answer to this question is “no.” At the same time, I’m willing to admit that I bought the car I wanted and that a little bit of risk was part of the deal. But then, I’m just a callow youth with no kids to worry about… I’ll let TTAC’s Best and Brightest bring their wealth of experience to this question while I pray that Mr M doesn’t blow a gasket this weekend.

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77 Comments on “Weekend Head Scratcher: When Is An Extended Warranty Worth It?...”


  • avatar
    Educator(of teachers)Dan

    Isn’t that one of those questions that’s entirely dependent on the brand in question and the terms of the warranty and the “wonderfullness” of your local stealership? 

    BMW/MB/VW might be worth it but how well will the warranty be honored? 

    For example:  I love Ford’s products and would consider CPO but the local Ford dealership has a god awful reputation.  I don’t care that much for GMs products but the local Buick/GMC dealership is well known for treating the customer like a king.  So much so that I would consder giving those guys a “shopping list” and seeing what they could find for me. 

    • 0 avatar
      neevers1

      I just bought a Ford, and the local dealership, in my limited experience has been nothing but great, especially compared to the other dealers I went to before buying. I bought the extended warranty, 1. it was “only” 1k, for 3 more years and twice the mileage. 2. I think they will do right by me and honor it above and beyond my expectations.
      I could be wrong on both accounts, and honestly I hope I don’t find out. Obviously they wouldn’t sell them if they didn’t make money on them, I know that, and I almost never buy extended warranties, but for 1k it was worth the piece of mind.

      Now on a VW product you should always buy the extended warranty, mainly because it extends the service life of the car. Why? Because you should sell any VW once it’s out of warranty.

    • 0 avatar
      Educator(of teachers)Dan

      But you see that’s the thing.  Some are good, some are bad.  Bought a used car from a Ford dealer in Detroit cause it was the best respected used car dealer in the area. 

      My father is a GM man and a hard core used car buyer, even with dozens of choices almost always bought from 1 dealer that was the one with the best reputation. 

      I moved and needed a new dealer I always ask around with colleauges and friends and members of the church I’m attending to see which dealer is most highly respected. 

      That’s the thing with independently owned francises.  Some are good, some are bad.  Most of the B&B bash the VW dealers they’ve had experiences with, family members that have owned VW only have good things to say.

    • 0 avatar
      neevers1

      Oh I agree completely, I was just stating my experience. I visited most of the Ford dealers in my half of the state, they weren’t all that grand. The one I ended up dealing with has impressed me more and more as I have gone there on the other hand. Though are still out to get the most amount of my money as possible.

      I have a VW, and I will never ever own another.

  • avatar
    Deaks2

    In my opinion, anything with a German badge on it must be CPO.
    For most other “reliable” brands, just put the cash that a warranty would cost aside into a savings account to cover any failures.

    • 0 avatar
      Crosley

      That would also be my advice.  I would feel comfortable taking my chances with most Japanese brands, but with the European manufacturers like Audi, BMW, Mercedes, etc, I would sleep a lot better with an extended warranty.

  • avatar
    BuzzDog

    I’m not a huge fan of extended warranties, but the answer to your question depends upon several factors.
     
    First off, I don’t recommend buying one at the time you purchase a new vehicle. You have the manufacturer’s warranty to protect you as you drive off the lot; during the term of the warranty you can usually get a pretty good idea of how reliable the vehicle will be over the long term. After a few years you can decide if you want to keep going without a warranty, unload the thing or purchase an extended warranty that picks up once your original warranty expires.
     
    If you do buy one at the time you purchase a vehicle, try to negotiate the heck out of the price. With many of the ones offered by the manufacturers, there is a significant amount of dealer markup built into the quoted price.
     
    If you’re buying used, do your homework and make your decision by looking at the vehicle’s maintenance record and its reliability record. But as Edward said, part of driving an aging German car is knowing that repairs can be expensive. If you’re buying certified pre-owned (CPO) from a dealer, you likely have no choice; it comes with the vehicle and may not be able to be “unbundled.” Also, keep in mind that CPO warranties do not always transfer to the next owner.
     
    In my opinion, I’d steer clear of extended warranties that are not offered by the manufacturer. Several years ago I evaluated extended warranties offered by the major third-party providers, as part of an extended warranty program that was going to be offered with auto loans made through a fairly large regional bank (that is conservative, careful and still around, by the way). ALL of the warranties had major loopholes, so much so that this bank quickly abandoned the idea, not wanting its name sullied by the warranty provider’s actions.

  • avatar
    Hayden535

    I just purchased a 2011 VW Jetta Sportwagen TDI and have been asking myself the same question. I know a mix of people that have had both good and bad luck with VW, but the diesel was simply too attractive to pass up.

    I believe the dealer wanted approximately 1300 to extend the warranty to 5 years / 60k miles. I can still go back to get it, but would just hate to lay down that money and have nothing major go wrong with the car. Reliability ratings for VW have been on the rise…

  • avatar
    Terry

    As a dealer tech, I would recommend an extended warranty.
    When an automatic transmission costs $4500, or an engine goes for $6K a failure in either can devastating depending on your financial outlook.
    25 years ago I might have thought otherwise, but not with today’s labor and parts prices. It’s like any other insurance–youre paying for peace of mind whether you use it or not.
     

    • 0 avatar
      MBella

      As a dealer tech, I’m sure you have seen many of these extended warranty companies deny repairs and find ways to blame it on the owner. Or maybe your not a tech for one of the aforementioned German brands. Having been a tech at a VW dealer, and now a MB dealer, I can say that these companies find ways to screw the customer. At best you will brake even.
       
      My advise is to buy a car with a good CPO warranty. Due your homework though, the MB CPO warranty does not cover everything their regular warranty does. The proper (and expensive) maintenance is also a very good idea. Never cheap out and use fluids designed for the vehicle. VW products in particular have a way of punishing their owners for using generic fluids. MB cars seem to be more forgiving in this manor, and I can’t speak for BMW.

  • avatar
    HerrKaLeun

    It is a waste of money like any insurance for minor things. If the car in question is unreliable, premium will be high (+ overhead and profit) and/or many important parts are not covered and you have many “need to be dealer maintained and can’t buy non-brand gas” clauses. What you need is insurance for major things, like house, health, life and the car a s a whole (theft etc.) that could ruin you if you need to replace them.
     
    In my opinion, if you think the car you buy needs insurance for repairs, then you are buying the wrong car to begin with. Better invest the money in buying a better car, and an inspection before buying.
     
    If you really NEED one of the German cars, you better have the money or ability to repair them. I don’t think German cars are so much worse than others, it is just they are so complicated and the education system for mechanics is so bad in the US. Those cars are fine in Europe where there are well trained mechanics. the same way you are advised to buy even simpler cars in less developed countries (I love reading the Brazilian car history pieces as it gives an insight on that KISS “Keep it simple, stupid” prevails in their car market)

    • 0 avatar
      BuzzDog

      “In my opinion, if you think the car you buy needs insurance for repairs, then you are buying the wrong car to begin with.”
       
      Well put. About 10 years ago I hired an unmarried guy in his early 30s. After hiring him he quickly let me know that he preferred diving well-worn, 10- to 20-year-old BMWs and Benzes, rather than the “humiliation” of driving something as “pedestrian” as my then-new Maxima.
       
      He eventually suffered the humiliation of unemployment; he kept missing work due to a lack of reliable transportation. What’s sad is that we discussed this several times prior to his firing, and in the course of these conversations I determined (and pointed out) that his overall ownership costs were actually much higher than mine. But this guy couldn’t get past his lust for having a certain logo on the front of his ride.

    • 0 avatar
      daviel

      BMW or whatever – I agree that if you are already worried about repairs before buying the car don’t buy it!  It may be a BMW, but first it is a 12 year old car!  If you’re not paying cash for it, then you have car payments + whatever it costs per month to repair/insure it.  Bad business move!  Save up and buy a new one. Rent a car for the trip.

    • 0 avatar
      Dr. Kenneth Noisewater

      Depends on the German car I guess.  My Benz just ticked over 426k mi like 6 weeks ago, and I probably put in $1500/yr on average as far as fluids, filters, and the occasional broken bit go..
       
      (I’ll probably replace it with a minivan though, I don’t really need a car for enjoyment of driving, ever since I got a bike..)

    • 0 avatar
      HerrKaLeun

      Buzz Dog: yes his ownership cost was indeed higher. Repair cost plus the $ 40K (or whatever) every year he was missing out :-)
       
      Even if my boss’ car was worse than mine. I wouldn’t point that out since i intend to keep my job. also if i told my boss I spend all my money on expensive cars, I have less right to whine that I need more money to survive. If I was boss and an employee would point out he has a better car than mine, I wouldn’t give him a raise since he already does better than me :-)
       
      At least in Europe VW and Mercedes have some good reliability reputation. Unlike BMW. Mercedes used to be the car to get to drive 400,000 km. I’ve never heard anyone arguing for BMW about reliability. BMW selling point is driving dynamics (perceived or real), never quality.
       

    • 0 avatar
      neevers1

      Why is 1500 dollars a year acceptable for nothing but maintenance? It wouldn’t be to me, and I know it’s not because I have a VW jetta that has cost me a total of around 2k, over 5 years. The damn thing breaking down, 5 times, is worth way more than 1500 dollars. The repairs are a small part of it, as Buzzdog points out, it can cost you in opportunity cost.
      1500 in repairs a year is a TON, a TON of money, and is wholly unacceptable to me, and ridiculous when someone says it is ok. Unless you are running some super exotic, or something, 1500 for a car is ludacris. I have 2 cars and one motorcycle, and one breaking down isn’t ok, it’s not normal, it’s not the 1960s anymore reliability should be a given. Oh yeah two of those, sans the VW which is going to the great highschool kid in the sky soon, cost less than 1500 a year to run, hell they cost less than HALF that.
      1500 a year=FAIL
      It’s funny what people think is good.
      VW’s in europe maybe fine, but in the us, they are a pile of garbage.

    • 0 avatar
      Kevin Jaeger

      Why is 1500 dollars a year acceptable for nothing but maintenance?
      Did you notice the part where he mentioned having 426K miles on his Benz?

    • 0 avatar
      neevers1

      What part of 426k or Benz makes 1500 a year on maintenance a good deal? I’d be impressed it got that far, except he’s throwing money down a drain.

    • 0 avatar
      CJinSD

      German cars’ good reputation in Europe is entirely because the Japanese haven’t had the market penetration there that they’ve had in the US. The bar just isn’t that high when the competition is the French and the Italians. The Japanese entered the US by force and without the level of protectionism evident in many European markets in the ’70s and ’80s, and they killed all the lesser European auto nations’ exports to the US. Peugeot, Renault, Austin, Fiat, Alfa, Lancia, Simca, Citroen, Opel, and the various British sports car marketers all sold cars in the US until the Japanese introduced import buyers to cars that worked. You can learn all you need about European jingoism and bigotry just by reading this thread. Otherwise they’d buy Japanese cars and understand just what reliability can actually mean. Fans of all the brands that surrendered blamed our mechanics and habits too, but the Japanese never needed to make excuses.

    • 0 avatar
      CJinSD

      German cars maintain their reputation for being reliable in Europe because the bar is set there by all the brands that the Japanese killed off in the US. We had Citroens, Peugeots, Renualts, Fiats, Alfas, Simcas, Austins, Lancias, Opels, and a bunch of British sports cars until the Japanese arrived in force and showed import car owners what it meant for a car to work. Protectionism and the sort of jingoism showing its ugly face in this thread kept the Japanese from plundering Continental car markets in the ’70s and ’80s, so the Germans can mostly rely on press in the EU to damn Japanese cars with faint praise and keep selling to people who have never owned a good car and probably never will. Fans of British, French, and Italian cars blamed our mechanics and habits for the dreadful performance of their products. The Japanese never needed to make excuses for their own failings. I think it bodes well for the demise of German cars in the US market if they’re repeating the behavior of other inferior automakers rather than returning to the path of gradual improvement that once made their cars so admirable.

    • 0 avatar
      vbofw

      Neyers you’re bright enough to mention the opportunity cost… but don’t seem to understand the full meaning.  $1,500 a year is $140ish a month.  Compare that to the cost of the alternative, which in this case is obviously buying something more reliable (and the associated $400-500 payment for that new whatever).
       
      Many would kill to hold a car for 400,000 miles at an annual operating cost of $140 a month, plus zero depreciation.  Especially one with the cache of an old MB. Imagine holding your Jetta for another 20+ years (or the equivalent miles) and paying only $1,500 for upkeep annually.
       
      Maybe you’re the luckiest SOB in the history of the world, but for the rest of us, $140 a month to achieve that many miles is obviously a hyyyuuuge coup.

    • 0 avatar
      MrKiwi

      I don’t know that 426k miles makes $1500 a year necessarily a “good deal”, but it does make it more understandable. And takes it out of the realm of “ludicrous”.

      The main point I’d have made (if someone else [vbofw] hadn’t already made it for me) is the alternative – laying out the cash or making the payments on another car. My 2000 Camry (175k miles on the clock) has run about $1000 over the past 12 months, but that’s a bit of an anomaly as it was due for the timing belt to be replaced. A typical year probably sees no more than $500 in payments.

      But, even if it were up at $1500 or $2000, I wouldn’t be ecstatic but I would be sensible enough to realize I’m still ahead versus the option of buying a new car and paying, say, $350 a month. $1000 a year is less than $4200 a year, and my Camry has broken down and left me stranded maybe once in the past five years. Usually the repairs are things the shop finds when it’s in for inspection or something that’s degrading over time. So…reliable car, no regular monthly payment, offset by a few hundred dollars a year for maintenance. Win.

  • avatar
    Steinweg

    As with all insurance there’s a good likelihood you will never need it; it’s the stand-by value you get out of knowing you’re covered that may or may not be worth the premium. But having extended warranty on my Opel Saab saved me $8,000 in components and labour so I’m glad I had it.

  • avatar
    Sam P

    The E36/8 is a relatively simple car compared to complex modern BMWs like the E60 5-series and the ridiculously complex E62 7-series. As long as your cooling system’s in good condition (have your water pump and expansion tank and hoses ever been replaced during the time you’ve owned the car?) you should probably be fine driving it around out of warranty. Enjoy your roadtrip.
     
    Since I don’t mind DIY repairs and the E46 is pretty simple compared to modern BMWs, I’m fine with owning a German car out of warranty (although with the way German cars are trending to be more complex and unreliable with every succeeding generation, when it comes time to replace it, I’ll probably go for a Japanese sport sedan like an Infiniti G or some kind of Acura with a manual gearbox).
     
    Worst case scenario, I use my AAA membership to get it towed into a garage if it stops running somewhere. Had to do that a couple times when I was in college and the fuel pump relay failed on my Volvo 940 (didn’t carry a spare around with me).

  • avatar
    Boff

    Extended warranties are bullpucky. You pay up front for something you won’t need for years, and often pay interest on it to boot! Then the list of exclusions is cleverly crafted to avoid covering most of the things that really do go wrong. I say put the cost of an extended warranty into a money market account when you buy the car, and save it for the 4-5 years you’re covered by the normal warranty (not to mention the 4 or 5 more years it takes for anything truly expensive to break). Then you’ll have a paid-off car and the means to fix it if need be.

  • avatar
    segfault

    If you get one, go with the manufacturer’s extended warranty and not an aftermarket one.

  • avatar

     
    When I buy the 2012 SRT8, I’m getting the maximum warranty extension so parts like tire rods and engine shields are covered through the car’s life.  As I see it, its best to get the extension when you know you’ll be keeping the car for a long time. Best when you’re buying it new.   Completely unnecessary  when leasing.

  • avatar
    pb35

    I faced the same decision recently when purchasing our XC90 off-lease. I decided against it as it has been reliable up till now so I’m hoping that it’s future performance will be representative of it’s past performance.
     
    Another reason why I decided against it is that I have enough cash reserves to pay for virutally any repair if necessary. Now THAT’S insurance. I can still CPO it until this July if I decide.

    • 0 avatar
      neevers1

      You mean it’s past performance will be representative of it’s future performance……
       
      I don’t think the future performance will have any bearing on the past performance.
       
       

  • avatar
    obbop

    Caveat:
     
    Even with a manufacturer supplied/sold extended warranty what do you do when the dealers murmer the apparently memorized “magic words; “Unable to replicate the problem.”
    Omitting the details that proved to me those oft-repeated blatherings were an out-and-out lie.
     
    Uninformed masses will babble their knee-jerk rhetoric such as, “Well, sue them!!!!”
    Life is NOT a TV show.
    Especially in a state/judiciary that is pro-business and anti-consumer!!!!
    And when the cost of litigation exceeds repair expense so the cost of “winning” exceeds the cost of repair outside the warranty what has been won?
    The royal scam.
    Never again, GM.
    Thanks to the Web I learned back then your scam was mostly observed in the upper midwest states where your most loyal adherents lived and was seldom reported outside those areas….. I suppose the competition prevented you from screwing over the consumers in areas that are quite apt to shun you and consider “foreign” sourced competitors.
     

  • avatar
    Joss

    Asian brands: Get the cost from the dealer then give it your trusted financial adviser to invest then if you need it you’ve got fallback and if you don’t you’ve an invsetment.

    European and any used SUV – best get the extended.

  • avatar
    Ivanho

    In forty years of buying cars I only recall buying an extended warranty once.  That was for the 1990 Audi 80 demo I purchased from a dealer in Akron.  The car had about 15,000 miles on it at the time of purchase and the price was very reasonable.  I loved driving that Audi even though the fire engine red paint attracted speeding tickets like fly paper.  It was a marvelous drive for deep snow covered roads in the northeast.  Anyway , at somewhere during about the third year of ownership the transmission tanked and it was fixed by the dealer for no more than the deductible.  I was glad to have purchased the extended warranty though I generally don’t believe in doing that.  I was told by a trusted transmission shop that the auto tranny in that Audi was actually a BMW part.

  • avatar
    Doc

    I recently bought a 2007 335i CPO and unfortunately had no choice but to get the extended warranty.  Like extended warranties on anything, I do not think that they are worth it.
    I am by no means a mechanic, but I can do a few things myself and save a lot of money on repairs. For instance, I replaced a wheel bearing on my last car (a G35). This is not something that takes extensive automotive repair training, especially with all of the resources available on the internet.

    If you are looking to buy a 10 year old plus car as a daily driver, I would be very careful about buying something the least bit exotic. These are better used as second cars that you want to toy with, warranty or no warranty.

    • 0 avatar
      Sam P

      With the E90, that extended warranty might come in handy, especially with the HPFP issues on the 3.0 liter turbo engine.

    • 0 avatar
      Doc

      You might be right about that. I have yet to get the car serviced, but I will have to check into the recall. It does not look the recall work has been performed on this car.

    • 0 avatar
      CJinSD

      You can pretty much bank on having the head off to decoke the intake valves of a DI engine. Oil that gets past the valve guides and blow back from combustion ends up on the valve seats and backs of the valves. Without the cleaning effect of gasoline and its additives, the intake paths get packed up and drivability and idle quality go into the toilet. Pretty foreseeable,  but DI is what people who think a spec sheet makes a car want to see.

    • 0 avatar
      Sam P

      And that’s why I’m glad my Bimmer has old fashioned port injection. If I buy a DI car, it’ll be a Lexus IS250/350.

  • avatar
    Zackman

    In retrospect, any Chrysler from 1990 ’til 2003 for Ultradrive failures, and 1998 – 2003 for 2.7L engine sludge failures. Now? you have to look at reliability data from CR & TrueDelta and maybe researching owners of brands of cars you have a particular likin for. For example: I researched for a year before we bought our 1990 Plymouth Acclaim in March, 1990 – 4 cyl, auto – not Ultradrive. It was an outstanding car we had for 10½ years. We did the same befor we bought my wife’s 2002 CR-V. I researched and test-drove Impala before I bought my 2004. All these cars have been excellent, but I did the research and so should you. It takes time, I know, but it’s well worth it just the same! Good hunting! As for Educator Dan’s comment on dealers – that’s very true and can make all the difference of your ownership experience. For a used car – well, again, do research on the warranty company to make certain they stand behind their promises! That can be a touchy thing. I’ve never done either, but take into consideration of what stuff breaks and how much it costs to fix and you’ll get a feeling for the best option for you.

    • 0 avatar
      golden2husky

      Your advice to search through various sources of information is wise.  Some companies with poor product reliability resort to a technique know as “Google Bombing”…Google it.  A great example of a company that does this is Generac Generators**.  Known as the “The Brand that Fails”, Generac has flooded the web so that the legendary reliability failures are much harder to find.  So you have to use your head when searching for information on products.
       
      **Home Depot is a big seller of Generac.  To see the confidence they have in them, drive behind any Home Depot and see what brand generator they count on to keep the cash registers running…yup, a  Kohler is what they count on to keep their money rolling in.  And no, I don’t sell generators for a living.

  • avatar
    Dragophire

    Bought two in my life time. Both for a Olds.  One for a 99 Intrigue and the other a 01 Aurora. Both warranties were a god send. Needed both and saved about 9 grand over the life of both cars no kidding. We didnt get one for my wifes ES350 because I knew that would be a waste of time. Didnt on my CX9 and its been perfect for three years now., If you feel you need one get it. It will provide some form of security for you and piece of mind.

  • avatar
    kurtamaxxguy

    Thanks for posting my thoughts and question to the Best and Brightest.
    Something to Ponder:  Audi offers an extended warranty, but it’s administered by Fidelity Warranty.  A web search of the latter brought up a number of horror stories, which honestly make me wonder if similar situations could happen with Audi’s extended warranty.
    Also, Auto Dealers tend to push third party “insurance” plans rather than the manufacturer’s extended warranty. A number of Portland OR dealers I visited didn’t offer factory extended policies (BTW, there is no Lemon Law for Oregon auto buyers).

  • avatar
    FromaBuick6

    Depends on the vehicle.  I grew up with Hondas and Toyotas; just one was purchased with an extended warranty, and it was a waste of money…only the starter and an 02 sensor had to be replaced in 11 years of ownership.  When I bought my Mustang GT last August, the dealer tried hard to convince me why I needed the extra warranty coverage, but I wasn’t having any part of it…this is my first Ford product, so we’ll see how it holds up.
     
    But a German car?  That’s a tough one.  Maybe on a newer one, if I thought I was going to keep it long enough.  Although if the particular model’s reliability record was decent, maybe I’d just roll the dice. Or just buy a cheap, old one, and when something breaks, just replace it with another one.

    • 0 avatar
      WRohrl

      When I buy a new car and the dealer pushes me to buy the extended warranty and starts jabbering about why I need it, I look at him and tell him if he thinks that the car is going to be so unreliable, I should probably be looking at a different car….Then make it look like I am getting up and leaving and all of a sudden they start talking about good scores on JD Power quality surveys etc…

  • avatar

    I mistakenly got one for my Toyota…what a waste. However, looking at a VW I haven’t quite made up my mind to go for the extended warranty. Cost of repairing a German car scares the shit out me, but at the same time having to go through VW service scares the shit out of me as well. Maybe I should bank (yeah, when I get around to it)  what I would normally spend on an extended warranty and goto a local mechanic instead that specializes in German cars.

  • avatar
    blowfish

    W are for the common folks who dont have deep pockets, if u can afford u no need to buy ins or W.
    Now how the contract is favoring the seller then is a different q.
    I take most W sold with used cars CPO etc, one has to place the bets before the gate opens or cards get cut!
    Dont think U drive her for 2 wks smelled funny/burnt on the tranny dipstick and come back to buy W.
    U will get burned literally.
    as one of the tech says, a rebuild tranny is 4 k, engine 6 k, u really worry about these big items, rest u dont care, but even small stuffs can be a constant source of irritation.
     

  • avatar
    anchke

    Think of it as a rite of passage rather than callow youth. Girls are expensive, too, but they remain a popular choice.

    Check if you can buy a warranty with a high deductible. Your premium will go down. If yr car dumps a transmission miles from home, you won’t worry much about the $500 out of pocket (or on plastic).

    But I think your best choice is to forego the warranty and establish a repair fund. Once the drain on the fund becomes ridiculous, yu can consider your rite of passage over, your flirtation with sexy cars in the past, and begin to audition sensible cars that offer satisfactory performance without being, well, needy and dramatic.

  • avatar
    Davekaybsc

    I think the best way to get the maximum out of a German car and minimize the risk is to be the 2nd owner and use it in the middle of its life, buying at 2-3 years old and selling at 6-7 years old. CPO and an excellent service history are a must. Any German car that has been neglected or maintained poorly or cheaply will punish you dearly. If you’re buying new and plan to keep it longer than the standard warranty, I’d suggest a wait and see approach.
     
    Regardless, here are some general rules to follow.
     
    1. Avoid the first model year, and to really be on the safe side, the second model year. There will be blood.. er, bugs.
     
    2. Research the model you want on some enthusiast forums, find out what the most common issues are, what the fixes are, and if those fixes are successful.
     
    3. May be related to #2, find out if “wear” items like pads, rotors, certain suspension components are going at an alarming rate. CPO warranties will *not* cover these, although I think you can roll maintenance programs like BMW Ultimate Service or Audi Care into the CPO warranty period for an extra cost.
     
    4. If the car turns out to be a shop queen, be able to get rid of it as soon the warranty expires. That means of course never finance longer than the warranty is still valid.
     
    I think for the majority of cases, the CPO warranty will either waste a few hundred or save a few hundred, and the peace of mind is worth it. If it’s saving you thousands in repairs that’s great, but get rid of the car. The chances of everything being perfect and *never* needing the CPO warranty at all are likely to be pretty slim.

  • avatar
    jpcavanaugh

    A few years ago, a friend bought an 05 Acura TL.  Acura certified used from the dealer.  When he told me that he bought the extended warranty, I thought “what a colossal waste of money.”  But two transmissions later, I have re-thought my position.

    • 0 avatar
      Adub

      Well, that’s because it was the Honda automatic with a V6. Those things are turds (I have one). The laugh is that I have owned two GM vehicles, and had only one tranny failure among them (at 200k). The replacement 700R4 was still going strong 350k miles later when a poorly driven Durango hit me at a red light.

  • avatar
    DC Bruce

    I’m the owner of an ’01 Z3 3.0 that I bought as a CPO in ’03.  At the time BMWs included all scheduled maintenance for the life of the original 4 yr/50K comprehensive warranty.  The CPO added, IIRC, another 3 yrs/100k limited warranty.  My car has just under 60K miles now.  The only part replaced (under the warranty) was the water pump.  I’m still driving on the original brake pads that were in place when I bought the car (just had the 55K service a few months ago).  The CEL is coming on intermittently and the thermostat seems not to be working exactly right (car seems to run a little bit colder than normal, according to the gauge), so I may be into some money for those in a month.

    If you’re buying any used car, German or otherwise, it’s essential to do 3 things:

    1.  Research the model’s repair history with every tool you have, CR, True Delta, etc.  Believe what you find, if its negative. (CR rates my particular yr and model Z3 “better than average”)  Be wary of buying a car that rates poorly.

    2.  For any used car, you are at the mercy of how it’s been maintained by previous owners.  Therefor, the older the car and the more owners, the higher the risk of neglect or incompetent repairs.  With expensive to repair cars that have been through multiple owners, just assume that the most recent owner probably didn’t have the cash to maintain the car correctly.  If you’re buying from an original owner, if he had enough money to buy the car new, he probably had enough money to take care of it correctly.

    3.  Consider who is going to service your car.  In metro DC there’s an excellent Saab/Volvo guy out in Virginia who’s reasonable, competent and doesn’t overdo things.  So, if you live in this area, a used Saab might not be such a bad thing.  There’s also an excellent independent BMW/Mini Cooper shop in Alexandria.  Same thing.  He does prepurchase inspections, too.

    And finally, understand that complexity is not your friend in any car.  One of the unfortunate trends in modern autodowm is the demise of the manual transmission/clutch drivetrain.  Yes, clutches eventually fail and bad drivers can make them fail early.  But, I don’t think it costs $4-5K to replace a clutch on any car, even a BMW.  Today’s autoboxes appear to be virtually unrepairable.  Once they fail, you have to get another one.  And, if you want even more headaches, get one of these trick AWD systems, like X-drive, SH-AWD or quattro.  More failure points.

    Finally, remember, with a warranty, especially a third-party warranty, you are trading one problem for another.  That is, you are trading the problem of paying for a repair of your car for the problem of getting someone else to do it . . . who has every incentive not to fix the problem, or to fix it in a cheap and incomplete way.

    • 0 avatar
      MBella

      “And, if you want even more headaches, get one of these trick AWD systems, like X-drive, SH-AWD or quattro.  More failure points.”

      It’s funny you bring that up. I just had to replace a customers transmission in a GLK because the transfer-case starting making noise, and it was not serviceable individually. The car had about 25K on it.

    • 0 avatar
      golden2husky

      And finally, understand that complexity is not your friend in any car.
       
      Makes perfect sense, yet today’s cars are more complex than ever and in aggregate they are more reliable than ever.  Though I have to question the addition of complexity for what I perceive to be silly, like pushbutton starters, the demise of a throttle cable.  I guess they are cheaper and integrate with the ECU better, but I wonder if this is the best path in the long run.  I guess it adds a nice profit center for the dealer in that the “key” fob can only be bought an programmed by them for $400.

  • avatar
    kkop

    My 2006 Nissan Titan had been very reliable.  I still got the extended warranty (100,000 miles).  What can I say, it makes me sleep better at night.
    A few months ago the truck started being noisy on startup.
    Last week (nearing the 100,000 mile mark), I had the dealer go over the truck with a fine tooth comb.  Ended up with two new exhaust manifolds/cats: a repair that would have normally cost me (dealer installed) over $1,000 each…
    Extended warranty was $900, so well worth it in this case.  BTW, the extended warranty came with a few additional perks such as towing, free rental etc.
    Extended warranties are great for people who don’t do any work on their cars themselves (like me), and appreciate peace of mind.  If you are handy with tools, and have the time and money to do your own repairs, you’re better off putting the money in the bank.

  • avatar
    twotone

    I would only buy an extended warranty if the model ended in “AMG” or was made in The UK.

  • avatar
    turbobrick

    You have to think of it this way: What are warranties? Insurance policies. What is insurance? A method for controlling risk. Insurance policies are also lottery tickets to the worst drawing in the world, and the house wins every time in the long run. For every “I saved 9 thousand” stories out there, there are 20 untold stories about people who paid a thousand in insurance premiums and didn’t use them.
    With that said, if you’re a wrencher and know how to pick ‘em, you probably can tolerate the remaining risk. If you just put gas in the gasoline hole, trust the salesperson and think that a slightly used Audi is a wonderful idea, you’re looking at more of a risk overall than without it.

  • avatar
    John Horner

    One thing for sure, if you do buy an extended warranty, make sure it is from the original auto manufacturer and NOT from a third party. Many, many dealers push third party warranties because that is where the immediate profits are highest. But, on occasion these third parties go bust, and then ya’ got nuthin. Also, in general, the manufacturer issued extended warranties are less likely to have an “oops, that part doesn’t qualify” clause buried in there to pull the rug out from under you.
    Another point: A good personal finance rule of thumb is to only buy insurance against those potential financial consequences which you would otherwise be unable to deal with if they were to happen. Following this rule, I haven’t purchased extended warranties on cars, appliances, computers and the like in a very, very long time. The money I’ve saved by not buying these things is far greater than my out of pocket expenses to cover the needed repairs have been. I do, however, have medical, homeowners and automotive liability insurance. All of the insurance products I do buy have cost me a lot of money, but if the house burns down I’m not ready to pay to rebuild it out of pocket.
     

    • 0 avatar
      don1967

      +1   Best extended warranty advice ever.
       
      Let’s say that 30% of BMWs cost more in repairs than the price of a good (ie: factory) extended warranty, while 70% cost less.   A foolish man concludes that extended warranties are a waste of money, because BMW wins 70% of the time.   A wise man asks himself if he can afford to be caught in the 30% group without a warranty, and if the answer is “no” he buys the extended warranty.   Either that or a Toyota.

  • avatar
    Brian P

    Our family are long term VW owners; my own is a Mk5 Jetta TDI which currently has 309,000 km on it (I bought it new) and has had no major problems other than wheel bearings at all four corners. I sold my previous TDI with 462,000 km on it. My dad has had several VW’s, but he buys a new car every three years whether he needs it or not, so maybe my experience is more representative.
     
    I don’t buy extended warranties. The reason is that I’ve found the best way to keep VW’s going in the long term, is to keep it as far from unknowledgeable mechanics as possible (and that includes some dealers). Someone else mentioned that VW’s can punish owners for using the wrong fluids … they’re right. I’ve carefully researched which engine oil is the most appropriate (as far as I can tell) for this engine, and that’s what I use … and I KNOW what goes in the crankcase at each oil change because I do it myself. The person who takes a VW to the local quickie lube place is in for a world of hurt later on – they’re going to use the wrong oil (bye-bye camshafts), and the wrong coolant (and gum up the whole cooling system). Dealers use what VW tells them to use, which may or may not be in your long-term interest.
     
    The problem is that in order to maintain warranty coverage, you normally have to get the car maintained at the dealer. This is a hidden cost of that warranty that I don’t want to pay.

  • avatar
    ffdr4

    My rule of thumb is, if the vehicle is European(specifically German) and the extended warranty is the manufacturers extended warranty, I purchase it. In past Audi, and Mercedes Benz purchases, I woul have been out of pocket 2.5 times what I spent on an extended warranty. Audi parts are overly expensive and many are available only through the dealership, diagnostics are complex and parts that seem to last on other vehicles for many years only have a lifespan of 4-5 years on Audi’s. I would never consider a third party warranty or extended warranties on domestic or Japanese cars because (a.) in most cases aftermarket parts are available cheap through multiple retail outlets (b.) out where I live, I know plenty of competent honest mechanics who are familliar with working on a Cadillac, Lincoln, Acura or Lexus.

  • avatar
    zeus01

    When I bought my new ’09 Fit Sport (negotiated online beforehand, walked in with a certified check to avoid any back-end padding attempts) the dealer, knowing I wasn’t about to part with any amount over and above the pre-negotiated amount, couldn’t resist at least trying to weasel me:
     
    “Uh, my boss is gonna kill me if I don’t at least ask, but would you like to buy our extended warranty?”
     
    I grinned back at him and replied ” Just tell your boss that this cheap bastard of a customer wouldn’t budge, and that he kept going on and on about how if he were considering buying a car for which an extended warranty was necessary he’d have ignored Honda and bought a Chrysler instead.” End of discussion and, 100,000 kms later, no regrets.
     

    • 0 avatar
      don1967

      That’s great, but would you be bragging if your Honda was the one in x that experienced an expensive repair out of warranty?   What if you couldn’t afford the repair, and were forced to ground the car, or damage your credit rating by defaulting on other bills?

      Extended warranties are like fire insurance on your house.  They are not about predicting the future; they are about managing those financial risks which one cannot afford to take… presumably at a price which reflects the risk involved.

    • 0 avatar
      krhodes1

      @don1967

      Realistically, what are the chances that something SO major is going to fail within the term of an extended warranty? It’s not like they cover the car FOREVER. They add 2-3 years and 25-50K of extra mileage. And for this, you put aside THOUSANDS of dollars. All you are doing is pre-paying for repairs that may not ever happen. Probably will not happen during the course of the warranty. After all, if it was probable that you would use the value of the insurance, the company underwriting it would quickly go broke. Yes, you can be unlucky, but you can get hit by lightning too. Do you buy lightning insurance?

      And I will say the same as others – if you are in a situation where a $1000 or even $2000 repair on your car can put you in that much hurt, you are driving the wrong car. If you need to manage risk to that extent, lease a new base model Corolla every three years so you never have a car out of warranty. Or even better, lease a VW every two years, with the free maintenance you probably won’t ever even have to buy tires or wiper blades. Totally known cost of ownership, whatever the lease deal dujour is. $199 a month forever, easy to budget for. Of course you would come out far ahead keeping the thing for 10 years and coughing up for the occasional repair, but fear of the unknown is a powerful thing.

      On last piece of advice for car owner’s in general. DO SOME RESEARCH! In the Internet era it is a doddle to find out exactly what you can expect to go wrong with any given car, and at what age and mileage. You can also find out what to do to prevent the issues! As an example, for those BMWs everyone loves to use as an example, 15 minutes on the Internet will tell you that good preventive maintenance is to replace the waterpump and radiator and some other cooling system bits at around 90K. Not cheap, but not ridiculously expensive and can be budgeted for. On the same cars, BMW says the tranny fluid is “lifetime fill” bull-kaka – it is lifetime fill if you get a new transmission every 120K. Change it every 30K and get 250K out of it. On and on and on. Simple stuff.

    • 0 avatar
      golden2husky

      replace the waterpump and radiator and some other cooling system bits at around 90K.
       
      Make you wonder why these parts have such a high failure rate?  A car that expensive should not have cheaped out with inferior materials to begin with.  GM gets excoriated for this practice…shouldn’t everybody?

    • 0 avatar
      krhodes1

      @GoldenHusky

      While I generally agree with you, I also have some sympathy for BMW in this case. While thier cars have gotten bigger, more complex, and higher performance over the years, they have also gotten relatively a LOT cheaper. It is the same issue facing all car manufacturers, even the beloved Toyota. Look at what a 3-series cost back in the ’80s vs. what one costs now. I just ordered a 328i Wagon, 6spd manual, premium pack, cold weather pack, a few more things. ~$36K after sundry discounts. Adjusted for inflation, that relatively simple ’80s 3-series cost many THOUSANDS more! Something’s gotta give, and with BMW one of those somethings is crappy plastic cooling system parts. On the bright side, the parts are not terribly expensive, and easy to DIY. As far as I am concerned, this is just scheduled maintenance, and a small price to pay for the driving pleasure from the car. They have gotten better though, on the early e90s it was prudent to change these parts at 60K.Maybe experience will prove that 120K is OK on my 2011. I’m oding Euro-delivery in July, should be one of the very last e9x cars off the line before they switch to the new Fxx cars.

      In the case of Toyota, I think someone on here figured out that adjusted for inflation, those jewel-like early ’90s Camrys cost as much as a Lexus ES350 today. So no wonder they are kind of cheap inside, when they sell them for less than $20K.

  • avatar
    ffdr4


    I have bought manufacturers extended warranties before for European vehicles (specifically German). They’ve been worth it. I would never consider a third party manufacturers warranty. On my Audi, I would have been out 3.5 times the cost of the extended warranty, if I hadn’t purchased it. For whatever reason critical parts which typically last on other vehicles for 8-10 years only last on Audi’s for 4-5 years. Diagnostics are complex, as is labour and in many cases the parts are dealer only and very expensive. I would never buy a extended warranty on a domestic or Japanese vehicle, because (a.) aftermarket parts are available readily through many different channels (b.) in my case, I know many trustworthy mechanics who are comfortable working on a Cadillac, Lincoln, Acura or Lexus.

  • avatar
    philipbarrett

    I have a 2004 325i wagon with 72K & wish I had bought the extended warranty.  No major failures but the general repairs and maintenance have put me well over the original cost of the warranty.  Latest is a $650 windshield wiper motor replacement. Now I’m thinking about selling a nice low mileage car that I’m very fond of merely because I’m worried when the shoe will really drop.

    • 0 avatar
      Sam P

      philipbarrett,
       
      Take a look at this repair FAQ for the E46 BMW. I read through this before I bought mine. Great resource.
       
      http://www.bimmerfest.com/wiki/index.php?title=BMW_E46

    • 0 avatar
      philipbarrett

      Thanks! Now I have to look forward to a cooling system failure :-)

    • 0 avatar
      John Horner

      A seven year old BMW seems highly likely to start costing you major bucks to keep it going. I don’t know how the German makes get away with it, but many of them become money pits from middle age on.

    • 0 avatar
      Sam P

      “I don’t know how the German makes get away with it, but many of them become money pits from middle age on.”
       
      Preventative maintenance with the Germans is the key. Owners can’t just neglect them like they would in a Hyundai. $800 of cooling system work BEFORE IT FAILS on a BMW is a lot cheaper than replacing a trashed cylinder head on an overheated engine.

    • 0 avatar
      John Horner

      ” … $800 of cooling system work BEFORE IT FAILS … “
      Yeah, but how do they get away with putting such cooling systems in their vehicles in the first place? What is it with so many European plastic parts that they are ticking time bombs waiting to self destruct?
       

  • avatar
    VerbalKint

    Normally I would never buy the EW but I did when I bought my new 2003 Explorer.  Thank God I did. Three trans failures, Three rear diffs, two A/C controls, timing chain tensioners, bad paint… This one a vehicle that see only pavement.

  • avatar
    zeus01

    “That’s great, but would you be bragging if your Honda was the one in  that experienced an expensive repair out of warranty?   What if you couldn’t afford the repair, and were forced to ground the car, or damage your credit rating by defaulting on other bills?”
     
    krhodes1 said it best in his reply, but I’ll elaborate: If I’d bought that one-in-50 Honda that turned out to be a lemon (vs. that one-in-10 Chrysler lemon) there’s still a nine-in-10 chance that it would have revealed its lemon-hood long before the factory warranty expired, providing me with enough advance notice to trade it in. This means that the odds of having a nasty surprise for which an extended warranty would be the only safety net are about one in 500.
     
    With that in mind, considering the cost of the extended warranty (not to mention the “gotchas” built into so many of them which protect the warranty provider while screwing the customer) it appears that an extended warranty for my vehicle and others of similar reliability track records would be, in the words of one Phil Edmonston of Lemon Aid fame, a “waste of time and money.”
     
    Even if the unthinkable were to somehow occur I’m not worried about my finances. That’s the beauty of buying reliable cars that don’t come with a boat-load of prestige: I was able to buy this one via the “one-payment” plan.

  • avatar

    Most of the people that I have know that benifitted from from a purchased warranty bought GM, and made out because some computer chip failed.  This just convinces me to not buy GM.  Most cars are fine for the first 75,000 miles.  One gal I know that bought a VW had her transmission fail during the purchased warranty period and coverage was denied because she was late with an oil change once.  Plus the insurance only covers manufactuer defect, not wear and tear or misuse, so many claims are denied.  I do not bother buying the coverage, I think that it is a rip up in most stituations.

  • avatar

    Funny – I was just confronted with this exact problem. I have an ’06 X3 w/46k miles and ran out of warranty one year ago. I figured….blah blah blah. So suddenly I get a cracked Vortex Oil Separator (?)…
    $1200 with my discount so I’m still ahead of the game – the BMW Extended costs $2500+/-…BUT – whadoeyedonow? Inasmuch as anything on a Bimmer is a grand to fix, I’m beginning to wonder if I shoulda.
    Maybe just buy a new one and forget about it?
    Great conundrum…

  • avatar
    brapoza

    I don’t think anyone has mentioned that if you decide to sell the car and you bought a transferable extended warranty from the manufacturer it will probably make it easier to sell and you may very well re-coupe most of what you spent on the warranty in the first place.  We bought an extended warranty on our Legacy GT that pretty much covers everything for six years or 80K miles and if we sell the car it’s transferable.

  • avatar
    raincoconuts

    Only BMW I owned was a 1993 525I. Bought brand new w/o the extended warranty. Mostly trouble free but head gasket had to be replaced @ 100K(about 2K for belts, pump,etc). Lots of annoying electrical issues as the car aged..lighting on the console near the gear lever kept crapping out as did most of the power seat adjustments. Most of the leather on the doors got unstuck and the walnut trim developed cracks like old china. But it was always remained a good drive (8 years and 153K)and surprisingly reasonable on maint(ind. shop only).


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