By on December 15, 2020

William Potter/Shutterstock.com

During my brief career as a service writer, there were many aspects of the job that I found annoying, but perhaps nothing got my Irish up on a near-daily basis like the extended-warranty business.

It usually went like this – customer brought in a car that was out of factory warranty. Far enough outside of it that our factory reps wouldn’t take pity. Car had some serious issues that would almost certainly lead to a huge bill. Customer would then say, well, “I have an extended warranty”. When it came time to get the extended-warranty company to pay up, they’d fight like hell not to pay a dime.

Oh, and they often had a deductible. And while that deductible was sometimes a relatively reasonable $50 or $100, the customer was often caught unaware, and angry they had to pay even that much.

So in the end, I’d have a pissed-off customer (pissed at me for being the messenger, pissed at paying the deductible, pissed at paying for anything the warranty didn’t cover, pissed the warranty company was trying to avoid covering anything at all) and I’d be pissed off due to having to deal with extra stress and hassle.

Meanwhile, Scumbag Joe, the CEO of ScamCentral Warranty, Inc. is raking in the dough. Not hard to do when you sell warranties like crazy and then do your best not to honor them. And you probably pay your customer-service reps in the call center piss-poor wages.

This isn’t to say all extended warranties are bad, or you should never buy one. But you do need to think about it and do your due diligence before doing so.

This should be obvious, but if you don’t plan to keep your car past the expiration of the OEM warranty, don’t buy an extended warranty. And don’t fret if you end up keeping your car longer than planned – you can often buy an extended warranty from your dealer or OEM before the factory warranty ends, but well after you bought the car. Don’t let the F and I guy pressure you.

While I’ve heard some anecdotal stories of dealers fighting to not honor warranties they themselves sold, you’re still better off with an extended warranty bought from the dealer or OEM than from some company call AutoMaxShield or CarFix or whatever.

All that said, you probably don’t need the extended warranty even if you plan to keep your car past the factory warranty period. Modern cars are better built than in the past, generally, and therefore more likely to last longer without giving owners headaches.

Do the math. Compare the monthly cost of the warranty to what your local dealer charges for labor and ask yourself if you should be spending the money on the monthly payment if repairs aren’t likely to be costly. Maybe your particular model has a reputation for reliability and is unlikely to need much in the way of customer-pay work, especially if you maintain it well. Speaking of which, maintaining your car well will help keep it out of the shop.

Check owner forums to see if your model of vehicle has certain problems that tend to crop up with age. Read the fine print – know what’s covered and what isn’t, and what the deductible is.

And check out the consumer and Better Business Bureau reviews of any company that’s trying to sell you an extended warranty.

I know reading the fine print sucks, but do you really want to find out that your extended warranty doesn’t cover anything “electrical” – I experienced that once if memory serves – when the car is in the shop, torn apart, and someone now owes the shop money for parts and labor?

You don’t.

I’m only talking about dealerships here since I never worked at an independent shop, but I suspect similar problems arise at Joe’s Car Care as they do at Hicksville Ford. I’m also talking here about extended warranties only, not pre-paid maintenance plans.

Yeah, I get it. If an extended warranty does pay out like it’s supposed to, a repair can cost less out of your pocket, even with a deductible, than it would otherwise.

Problem is, it’s rarely that easy.

If you can, skip the extended warranty. If you can’t, make sure you buy one from a reputable source. Save yourself, and your service professionals, a lot of grief.

[Image: William Potter/Shutterstock.com]

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69 Comments on “Tales from the Service Desk: Extended Warranties and the Selling of a Scam...”


  • avatar
    gasser

    I had extended warranty from Ford in the 80s on a then new Sable wagon. It required a LOT of repairs on the extended warranty, all of which were handled without hassle by the dealer. I also had an extended warranty from Lexus on a used SC 430 I bought when it was 1 year old. I paid to extend it for 3 additional years. I think a power mirror went out and they fixed it without hassle. I would NEVER buy a non factory warranty. I have, however, had even new car dealers try to sell me non-factory extended warranties. Pay attention to what your are buying. As my Honda dealer in the early 80s explained to me about my non-factory, extra cost warranty “Whatever breaks ISN’T covered. Whatever doesn’t break IS covered”.

    • 0 avatar
      wdburt1

      My midday siesta was interrupted today for the millionth time by someone selling a car warranty extension.

      These people are breaking the law and they know it. That alone marks them as scam artists and criminals.

      It strikes me as odd: Our political candidates chase various issues of only abstract importance to the voters, while this one sits in plain sight: Send SWAT teams in to break up the robocallers and their call-center slaves. The latter cannot fail to know what they are doing; people have sworn at them too many times. Let me see the culprits doing the perp walk and sentenced to prison, you’ll have my vote.

    • 0 avatar

      “I had extended warranty from Ford in the 80s on a then new Sable wagon. It required a LOT of repairs on the extended warranty”

      Twenty years later: I also bought extended warranty for the new back then Sable but never used it as well as regular one. Go figure.

    • 0 avatar
      Kyree S. Williams

      What you want is either (a) an OEM/CPO program that extends your factory coverage—and be careful; some CPO programs provide different coverage than the factory warranty—or (b) an exclusionary warranty. Exclusionary warranties simply list what they *don’t* cover, which usually consists of perishables like batteries and tires, and things like glass and aftermarket items. That makes them much easier to parse because if it isn’t in the list of exclusions, it’s covered. What’s more, exclusionary warranties tend to fix peripheral damage to things that otherwise wouldn’t be covered. For instance, a 12-volt battery usually isn’t covered by any type of aftermarket warranty. But if the battery was killed because your starter—which *was* covered—went berserk and destroyed it, then they’d replace the battery, too.

      • 0 avatar
        SSJeep

        Ill help everyone out here – ALL THIRD PARTY warranties are a waste of the paper they are penned upon. Never buy a third party warranty. If you are going to go with an extended warranty, go OEM – they are usually cheaper and if you are not in Florida, they can be cross shopped online amongst dealers.

        Which brings me to #2 – You dont have to purchase an OEM extended warranty when you buy the car. OEMs sell them up to a certain mileage, and it doesn’t have to be purchased from the dealer where you buy your car. Getting the lowest price online certainly helps negotiation if you are buying the manufacturer warranty with the car to get the warranty financed.

        • 0 avatar
          volvo

          Late to this discussion but at least forToyota OEM extended warranties as best I know they were considered parts sales items. There was a Toyota dealer in the NE that only marked them up about 30% above his cost. Dealer I bought my vehicle from in 2009 wanted about a 125% mark up.
          I believe the dealer in the NE was stopped from this practice by Toyota US corporate but I haven’t looked lately.

  • avatar
    bradfa

    I’ve been using OEM extended warranty pricing sales sites to estimate expected repair costs when shopping for a car. I expect they all have similar margins and a LOT more data than I will be able to get my hands on. This gives me a dollar figure to include in my long term ownership budget, especially when pricing different length/distance warranty coverages from the same vendor on the same vehicle, it becomes pretty clear to see what mileage bigger repair bills are likely to start.

    • 0 avatar
      Kyree S. Williams

      Right. It also helps you see what they emphatically won’t cover.

      When BMW wants a full $10,000 to extend the warranty on a 750i, and they’ll only do it for an extra two years, that should tell you that it’s either (a) a sh*tty car, or (b) very expensive to replace (in the case of the 750i and its horrid N63 engine, both are true).

  • avatar
    ajla

    “Meanwhile, Scumbag Joe, the CEO of ScamCentral Warranty, Inc.”

    Nice line.

    I know extended warranties have worked out for some people but my general feeling is that if I can’t afford repairs then I can’t afford the vehicle.

    • 0 avatar
      indi500fan

      I used to get Automotive News back in the late 90s/early 2000s, mostly oriented toward dealers, and that was chock full of adverts for warranty companies as an avenue to increase profits. Occasionally you will see a state attorney general go after one of these guys, but in general I think they pretty much have a license to loot and pillage. Primarily due to the wording of the contracts and the ability to deny coverage based on parsing language.

  • avatar
    28-Cars-Later

    Correct, don’t ever buy a third party extended warranty.

  • avatar
    copyrunstart

    Like the article says, there’s nothing inherently bad about buying a third party extended warranty. In fact, I’ve bought a few and haven’t had issues. The most important thing you can do is research reviews about the company and READ THE CONTRACT! Exactly like the article says, read and understand what’s covered and what isn’t. See if you can find samples of the contract or ask the company for a copy of it. They shouldn’t have a problem providing it, and if they don’t want to, then you know they’re not legit.

    Once you understand exactly what is and isn’t covered, you now understand what to expect when it comes to service. If something breaks, look at your contract, make sure it is or isn’t covered. Call the company and verify something is covered or not before you get the work done (if you can). KEEP ALL YOUR MAINTNENACE RECORDS AND RECEIPTS IN CASE THEY WANT TO SAY THAT THE BREAKDOWN WAS CAUSED BY NEGLIGENCE ON YOUR PART. Be prepared, if need be, to pursue action against the company for not adhering to the terms of the contract, if that’s the case. Basically, be informed.

    Do yourself a favor and also read through the contract and then go read bad reviews for that same warranty company. You’ll see why people get upset. Contract says “no maintenance items covered”, then you see a review that says “They refused to warranty my brake pads!” or “The engine had tons of sludge in it, but they refused to warranty a new engine when I couldn’t prove I did any oil changes!”

    Of course there are scummy companies out there, avoid them when you can. But doing your research and understanding your contract will make the experience much better and set you up for success.

  • avatar
    thegamper

    I bought an extended warranty in the past and got my money’s worth out of it, but not without a great deal of headache.

    Just remember, every warranty sold is done so with the anticipation of making money for the underwriter. Their business is predicated on not paying claims. Period.

    As I recall, I got into it with the warranty provider (I dont even recall if it was OEM or not, cannot recall the name) over a repair to a rear dif, fighting over whether the failure was caused by a wear item (gasket) or if the failure of the dif caused the gasket to fail. One is paid, the other is not. But if neither you nor I can prove which came first, the chicken or the egg, then the way I see it the warranty company should be paying. They did pay….eventually.

    One more thing I recall was the wheel and tire warranty. Sure enough I bent a rim or two, even had tire damage with sidewall bulge. The warranty would not pay so long as the tire was holding air no matter how messed up the wheel or rim was. Worthless.

    This was on a daily driver that was a rather complex vehicle for its time period and was driven like it was stolen on a daily basis. Seemed like a good idea to get the extended warranty, but…….the fine print…… yeesh

    • 0 avatar
      Lie2me

      I have gotten my monies worth out of tire hazard warranties. They usually add about 10 bucks to each tire, but one puncture or gash in the wrong place and you’re well ahead of the game. I have always made out on tire warranties

      • 0 avatar

        They appear to be necessary if you have a car with runflats and live in a city. I passed on the EW for tires, as my runflats were gone in under 20k miles, and I wear out a set of tires in a year anyway…but there are guys on one of my benz forums that have gotten 5x the warranty cost on those hard as a rock why do they even fit them runflat nightmares.

    • 0 avatar
      Lou_BC

      One has to view extended warranty like collision/all perils insurance. Do you want to take the risk? And how much are you willing to pay?
      My first 2 vehicles had extended warranty. I bought it because I planned on using both offroad a lot. They paid for themselves many times over.
      My current truck had basic warranty. I hadn’t had any issues that would have fallen within a typical extended
      warranty period.

  • avatar
    toronado

    I was in the car business for 20 years and would say that extended warranties are not needed on mainstream cars but I would not buy a European car without one. The key is reading what you are purchasing and getting it from a reputable company and not a telemarketer. Cheap warranties are not good, and good warranties are not cheap, but get a Mercedes or BMW with a big repair and you will be glad you bought one. They will never cover maintenance or a wear item, but I think they are very worthwhile on high risk cars. If you make sure you purchase one that is pro rated and can be cancelled I think they are a good thing. If I were buying a Camry or an F-150 I would skip it though.

    • 0 avatar
      Dave M.

      Fully agree on European cars, especially if you plan to keep them outside the manufactorer’s warranty. The only extended warranty I’ve ever bought was for my Saab convertible, and it paid for itself twice over in the first 5 years.

      • 0 avatar
        krhodes1

        Conversely, in the five years my infamous 328! has been out of warranty, the only “repair” it has needed is a new battery. Which no extended warranty will ever cover (and it only cost $115 anyway). I also know that my Saab 9-3SC also has needed no repairs that would have been covered (sold it to a friend). The trick is don’t buy *stupid* European cars, like BMWs with V8s and V12s in them, or early BMW turbos.

        Roll the dice, take your chances. If I can’t afford a car without a warranty, I can’t afford that car in the first place. Of course, I also refuse to owe money on a car out of factory warranty, which also helps.

    • 0 avatar
      ajla

      “but I would not buy a European car without one.”

      Obviously run the numbers but it seems like after depreciation, maintenance, and ext. warranty costs that you’d be better off leasing.

      • 0 avatar
        toronado

        oh I completely agree. I saw lots of folks buy cars that were posh looking and cheap, but boy they sure can bite you in a hurry. But a nicely maintained luxury/import with reasonable miles can still be a deal for someone who intends to hang onto it, and if purchased right can still be covered and save money. Its all case by case though. I always advised folks who financed and traded every 2 to 3 years to just lease and save money but they felt if they leased they didnt “own it”, even though since they never paid the finance contract off they didnt truly own it anyway.

        • 0 avatar
          ajla

          What’s a European vehicle *today* that you think is worth buying “well maintained” used, getting an extended warranty and holding onto semi-long term?

          Pretty much anything I can think of is closer to being eligible for classic car plates than for an extended warranty.

          Maybe the outgoing S-Class? Mercedes still seems to use its whole a$$ on that.

          • 0 avatar
            28-Cars-Later

            Jag XF is the only which comes to mind.

          • 0 avatar
            toronado

            possibly an S class, but thinking more Porsche. 4 to 6 years old some have crazy low miles. Also have sold Jags (XKs, XJs) that were a 3rd car for the original owner and such that made sense to buy like this. Cars that were 100k when new, not C class MB or 3 series type cars, for those just do the featured new lease and walk away in 3 years.

          • 0 avatar
            28-Cars-Later

            @toronado

            Those 100K as new cars tend to grenade or require some sort of dealer only/specialty part which bankrupt you. I recall either the S-Klasse or the S600 had some kind of ceramic brakes which could only be changed by the dealer for some ridiculous amount of money. Zee Germans don’t want proles in the bespoke flagships for the most part.

          • 0 avatar
            krhodes1

            I bought a 2011 e88 128i convertible this past summer. 46K on it, lovely ramped and stamped condition. I have no worries about owning it at all, or any similar condition RWD e9x 3-series BMW with the n/a six in it. I would not even consider an extended warranty. Waste of money.

    • 0 avatar
      Cicero

      My own experience with a new 2013 Mercedes E-550 confirms this. The car had a reputation for needing expensive repairs out of warranty. I drove mine for 132,000 miles, and despite my obsessive compliance with all of the service requirements, it became incredibly expensive to maintain. Every time the check engine light came on I knew I was in for a bill for thousands of dollars. After one of the turbos failed (requiring pulling the engine and replacing both turbos, “just to be safe”) I couldn’t take it anymore and traded it in.

      I did like the car so I replaced it with a new E-Class sedan. But this was the only car purchase I ever made where I sprang for the extended OEM warranty. At $3600, it seemed like a bargain. I’m still glad I have it.

    • 0 avatar

      I left the Benz dealer with the factory 100k mile warranty… I figured it was one repair if I blew something up, and the Benz warranty looked reasonable.

  • avatar
    Fred

    When I bought my Acura they wanted to sell me the ext warranty. I told them I had no problems with my Audi, so are you saying the Acura is less reliable than the Audi. I mostly got silence, but I also didn’t get the ext warranty. Good thing because after 6 years and 60,000 miles I haven’t had a problem.

    • 0 avatar
      28-Cars-Later

      They tried the same on my Toyota, I said the whole point of buying a Toyota was that I didn’t need an extended warranty.

    • 0 avatar
      indi500fan

      Anybody know what the spiff is to the dealership / sales guy for peddling one of these?

      • 0 avatar
        toronado

        usually $50-$100

        • 0 avatar
          Kendahl

          We bought our Toyota van used from a Subaru dealer. Their F&I guy tried to sell us an extended warranty for $3,000. We declined. He disappeared for a few minutes and, on his return, offered it for $1,500. My wife’s attitude was, “If he was willing to sell it for $1,500, he should have offered it for that to begin with.” We still declined.

          My advice about European brands is to lease. If you must buy, get the longest, most comprehensive, extended warranty available directly from the manufacturer. No third party warranties. Get rid of the vehicle before the warranty expires. These are not vehicles you want to keep and maintain for twenty years.

          • 0 avatar
            28-Cars-Later

            Your wife is spot on.

          • 0 avatar
            krhodes1

            If you can afford to buy one new, you can afford to fix it indefinitely. The expensive part is depreciation, not repairs.

            The whole “get rid of it before the warranty ends” thing absolutely baffles me. So what if something breaks and it cost a couple grand to fix? My lowly 328i wagon cost me a GRAND A MONTH for four years straight to buy in the first place. Having been paid for more than five years, it owes me nothing. If I have to fix something, so be it. IN five years, other than scheduled fluid and filter changes, it has needed a battery – at nine years old. Just the salestax and excise taxes on a new BMW over the first 3 years are enough to pay for repairs for a decade in my state.

    • 0 avatar

      VW dealer tried to sell me the EW. I replied I’m leasing the car for 36k and it was factory the whole time….whaaat ? And, then, I’m giving the car back to you.

  • avatar
    JMII

    I worked for a company that printed the brochures that were used by the F&I department to sell these warranties. As a result I often had to proof read the copy. Based on that alone I would never buy one. Pretty much everything that actually wear out on cars (batteries, brakes, etc) is listed as “not covered”. Now the top of the line (aka Platinum, Diamond or whatever) plan tends to cover more stuff. However, like the cost of the car itself, the dealer tries to hide this figure into the monthly payments. What I found most ironic was the biggest customer we had for these scammy warranty brochures were Toyota dealers.

    On the flip side we have Doug and his infamous CarMax Bumper-2-Bumper warranty on his Range Rover… man he made out like a bandit on that one.

    Checking the forums for common issues is best way to learn about this stuff. And the trick is waiting long enough to see what issues pop up. Buying a truly new car is a massive leap into the unknown. Take my C7 – the biggest failure point is the 3LT leather dash bubbling up. Guess what is NOT covered by GM? Yep interior trim. Also the widebody C7s have issues with wheels cracking – again not covered. Now if you get the extra wheel insurance they will replace the wheels… but with the same faulty ones as before – gee thanks GM. I have a manual transmission and thus avoided the A8 shudder issue, but now the Colorado / Canyon have the same problem thus they are off the list to replace my aging Dakota.

    • 0 avatar
      Syke

      CarMax is one of the few places I’d consider such a warranty. And if my used EV ends up coming from there, yes, I’ll take a couple of year’s worth. ICE engined cars? Nah!

      • 0 avatar
        Kyree S. Williams

        I had a very good experience with the CarMax MaxCare warranty on a 2011 BMW X5, five years ago.

        https://www.curbsideclassic.com/cars-of-a-lifetime/coal-2011-bmw-x5-xdrive35i-cursed-wheels/

  • avatar
    Syke

    Having just received today’s robocall regarding “my car’s extended warranty situation”, I seriously question if anybody actually buys these things? Just the constant pounding (I average 3-4 calls a week, all with a fake number) and cheesiness I would think would be enough to put any potential customer off.

    And yeah, you’re going to be real interesting in warranting an 18 year old Civic Si with 174k, and a 12 year old Sedona with 143k on it. The odds that you will seems to be one huge guarantee that you’ll refuse to pay anything. I can’t see how you’ll make a profit off of me if you’re honest about paying.

    • 0 avatar
      sgeffe

      A few Saturdays back, I started getting those about every fifteen minutes from numbers within one of my local exchanges, so I blocked that exchange on my landline. This went on for about ** five ** hours!!! I almost called AT&T Customer Service to see if they could do anything, but I figured I’d become all the more enraged having to translate Sanskrit or Hindi!

  • avatar
    DM335

    I used to be in the car business, so I have experience selling and now buying extended warranties. For myself, I would only buy an OEM (factory-branded) extended warranty. I wait until the factory warranty is nearly expired and then buy the coverage that comes closest to my best guess of how long we will keep the car. I am definitely a believer in getting the extended coverage.

    I had a Toyota several years ago with a power side mirror that started to fold in slowly. The dealer ended up replacing both mirrors under the extended warranty. They would have been over $700 each. With so many electronic features and sensors, it doesn’t take much for a repair to exceed the price of a warranty.

    We did sell some third-party warranties on some older used cars that were not the brand we sold new. There are some reputable third-party companies and sometimes there’s no other choice, but read the coverage carefully. Talk to someone in the service department about their experience with the third-party provider.

  • avatar
    Car Ramrod

    Makes sense to me. We never had extended warranties on our Hondas, but when we bought a used Volvo I added the OE warranty a short time later. Turns out one dealer in Rhode Island prices the warranties best– it paid to shop around. It still wasn’t cheap, but the vehicle is complicated and we rack up miles. The vehicle plus the warranty was still cheaper than competing vehicles we considered given Volvo’s higher depreciation.

    So far we’re at 60,000 miles and it’s already saved me the ridiculous $900 it would haver cost to replace a couple of O2 sensors and upgrade the software.

  • avatar
    tankinbeans

    That reminds me, the factory warranty on my 2011 Kia, which I haven’t owned in 8 years, is set to expire. The little post card says I’ll soon be doomed.

    Is there any difference between the factory backed extended warranties (are these effectively the ones that are slapped on “certified pre-owned” cars) and the guys in the adverts?

    Speaking of, does “certified pre-owned” really mean anything, or is it just another ploy to part a mark from his money?

    • 0 avatar
      CadiDrvr

      Same here! I’ve leased all but one of my Cadillacs, yet I’ve never received anything for it.

      I’m currently being innundated with calls/postcard/letters for the 2018 Escalade I returned last month, as the lease was up.

      Wonder when the calls/postcards/letters will start when I take delivery of the 2021 Escalade, which will most definitely be leased.

    • 0 avatar
      RHD

      It officially means that the dealership certifies that that particular vehicle has had a previous owner, and the cost of documenting such essential information makes your car more prestigious than a run-of-the-mill used car.

  • avatar
    petey

    I think extended warranties are garbage. Do you really think the dealer is going to offer them if it doesn’t make them money.
    The way I see it, 5 years of factory warranty is as good as it gets for the big ticket items. Any longer is just a gamble. Put money aside for repairs, and buy a vehicle you can afford to repair if needed.

  • avatar
    USAFMech

    “Do the math.” And… this is where you lost everyone. Few are interested and fewer are capable of doing the statistical analysis (mean failure rate, mean time between failure, etc) or financial analysis (risk premiums, the cost of downtime, etc) to properly assess the warranty as a financial instrument.

    If you assume a rational, competitive market (stop laughing), then this is an actuarial game. And if the warranty company makes money by being slightly more right than wrong (20%? 30%?), but they can socialize losses across a large install base, then it would be reasonable to assume that the extended warranty is, by and large, a good idea for most individuals/families.

    The rest of your advice, however, is good, solid caveat emptor. The devil is certainly in the details with these things.

    For my own anecdote, I bought my last third-party extended warranty not because I knew Scumbag Joe, the CEO of ScamCentral Warranty, Inc., but I did know the VP that reported to him.

  • avatar
    ToolGuy

    Related:

    tl;dr: If you have the choice between selling/trading-in your vehicle at 95,000 miles or 105,000 miles, do it sooner (I *think*).

    Typical used car dealer wants to buy the typical warranty to go on your vehicle when they sell it (because their typical customer wants it). Their typical warranty company won’t sell them their typical warranty* if the vehicle is over 100K miles. So your vehicle is worth (a lot) more to them at 99,999 than at 100,000 [step function].

    I think I learned this long ago (was barely on the wrong side of 100K) but didn’t learn it very well and it may have changed. So anyone who knows what’s what is welcome to chime in.

    [*I see that some companies offer warranties which start over 100K, but I imagine they are significantly more pricey than the ‘standard’ deal.]

  • avatar
    Carlson Fan

    Extended warranties are such a racket. Never turned one down and had it come back to bite me, but have purchased and never used or got screwed when I did try to use it. My favorite was the home warranty that didn’t cover the repair of the ice maker. What??????? $400 bucks to fix plus the $400 worthless home warranty I paid for. Then the jokers had the gall to call me and ask if I wanted to extend it. Add in also what I spent on the worthless home inspection which should have caught the the ice maker that wasn’t working before we took ownership of the home. Didn’t spend money on one of those toilet flushers either with my last home.

    I just tell people trying to sell me an extended warranty that all the money I save by not purchasing I use to fix things when they break. The look on their face is always priceless!!!!……LOL

    I didn’t flush money down the toilet on a home inspection w/the last house I purchased as either. My realtor was so proud of getting me a free home warranty at closing because I told him I wasn’t;t wasting my money none

    • 0 avatar
      Kyree S. Williams

      Those home warranties aren’t worth the paper they’re written on. The sellers of my house provided one. I thought I had a slab leak, which turned out to be a leaking washing machine spigot that was letting water puddle under the staircase. But as soon as the warranty company said they’d charge me a $100 deductible for making the claim, charge $120 for sending someone out to look at it, and cover $250 in repairs, I immediately canceled it and got a pro-rated refund.

      I think it is ill-advised not to get a home inspection, though. The secret is just to pick a competent inspector (don’t just go with whoever your or their realtor suggests), and make sure you get in writing what’s being inspected. If you have a home that’s not on the water grid because it has its own septic tank and well, make sure they’re actually going to inspect that.

    • 0 avatar
      Scoutdude

      For most people a home inspection is a smart investment. Of course there are states where there a zero licensing requirements and anyone can call themselves an inspector.

      The average person isn’t going to climb up on a roof and see the real condition of the roofing material and flashing, or get in the crawl space to see if there are pests, damage from a leaking toilet in the past or shower ect.

      In my state if you don’t choose to have an inspection I’ve still got to include the MLS inspection addendum where you sign that you are opting not to have an inspection to make the MLS happy. The state requires a separate from where the buyer states they understand and accept the risk of purchasing a home w/o an inspection.

      That state form is somewhat due to lobbying on behalf of those licensed inspectors. The MLS form is to cover Brokers and Brokerages from clients who look to sue anyone involved in the transaction when a defect that was not obvious later reveals it self.

      Something like a ice maker not working is not something that I would expect an inspector to find, now the supply line to it leaking or showing signs of previous leakage is something that they will be expected to find.

      The inspectors I recommend create very detailed reports that can total 30-40 pages including lots of detail pictures showing the good, the bad and the ugly.

  • avatar
    Kyree S. Williams

    I bought a fully loaded CPO 2017 Volvo XC90 T6 Inscription this past Friday. The CPO program already extends the original warranty by an additional year and unlimited miles (which would have put me at July 2022), but I went ahead and extended it to ten years (July 2027) and unlimited miles. With an engine that’s both turbo- and supercharged, all-wheel drive, air suspension and all manner of safety aids, I’m sure it will incur upward of $10,000 in warranty repairs, which made the cost to extend the CPO warranty (a third of that) worthwhile for me.

    And I’m not even stuck with it. If I sell it private-party, I can either transfer the warranty to the new buyer or receive a pro-rated refund. If I trade it in or it gets totaled, I get a pro-rated refund.

    The version of CarMax’s MaxCare that I had five years ago (on a 2011 BMW X5) was also the real deal. It was underwritten by a company called The Warranty Group, and it covered about $9,000 worth of stupid repairs (the car was cursed) in the four months I had it.

    I agree that many third-party warranty companies are complete bogus, though. It pays to scour the forums for your particular car make and model and see which warranties people are buying. You might even be put in touch with a dealer somewhere else in the country that’s willing to give you a good deal on a quality third-party warranty.

  • avatar

    I’ve bought an extended (or non-OEM) warranty sometimes and not others. The best experience where I purchased one was with the ’84 Shelby Charger I owned. Bought the car used in ’85 and figured it was most likely owned by a “younger” individual and perhaps had been “mistreated”. The dealer from whom I bought the car was trustworthy as proven from past dealing with him. He offered a warranty and I bought it. I want to say it was “mileage limited” which is not unusual. The car always used oil – quart every 800 miles or so. I got used to adding a quart so no worries.

    About 10k before the warranty expired I checked with the dealer’s shop on what could be done and, more importantly, would the warranty cover the possible solution. Got an answer that seemed reasonable. They found there was blow by and needed to put in new valve guides. The warranty covered everything but the $35 deductible and paid for itself in that one repair. Found out later that the possible contributing factor was that the original owner had changed oil only once in 18k miles.

    My current warranty on a used 2013 Charger was possibly a mistake on my part. I reacted based on fear instead of reason. It didn’t cost a ton, but I will most likely never need to use it.

  • avatar
    FAHRVERGNUGEN

    I used to design and market warranty insurance for a large insurance intermediary.

    The easiest way to tell if this stuff is overpriced is based on the commission, or the percentage of the premium that gets paid by the insurer to the intermediary.

    Needless to say it can be a real money-maker for an intermediary. Never pay full price for any third-party or retailer warranty insurance; on average, based on volume, the only ones who make out well are the intermediary and the producer who landed the account.

  • avatar
    petey

    You know something is fishy when you decline the extended warranty, and then they offer it to you at half the original price.

    The problem with living in a first world society is that we cannot even think about taking a risk anymore, and instead, use cash money to make us feel better.

    Nothing is worse then having to buy insurance, for your insurance. Its ridiculous in my opinion.

  • avatar
    Kenn

    My first experience buying a new car, a Honda Accord Hatchback, was in ’85. The salesman was pushing the extended warranty, saying the Honda warranty was for only “1-year or 12,000 miles.” I insisted I wanted to take the extended warranty brochure home to read, first. I got lots of pressure from the salesman, then another salesman, then the sales manager. I insisted, and they finally relented.
    When I first opened the Honda owner’s manual, I found that the factory warranty was for 2-years or 24k miles. The extended warranty would start after year-1, would have a $50 deductible for each part replaced, would cover either disassembly or reassembly – but not both – of a warranty procedure, and showed a long list of parts not covered. Obviously, this is why the sales team didn’t want me reading the brochure. In the following years, I’ve continued to find no reason to trust anything any car salesman says or tries to sell (‘talk about “Joe Scumbag”).

  • avatar
    nrd515

    I bought one aftermarket extended warranty on my 2 year old when I bought it ’79 Trans Am. Day one, the fusible link blew and the dealer (Pat Clark Pontiac in Vegas) fixed that no problem. Then about a day later, the A/C compressor blew up, and I mean blew up, and even with the extended warranty that stated it covered the compressor and clutch, etc, they refused to cover it, and wanted like $500 to fix it. I sat in the showroom and told everyone that came in what BS they were pulling, and a lot of people walked right out. The service manager threatened to have me arrested for trespassing, then I was just plain threatened. The boss, who I assume was Clark himself, came up to me all red faced and told me he was going to have some of the techs come in and drag me out to the street. I told him, again and again, “You’ll be on TV tonight, and it would be cheaper to do the right thing and fix my car!”, because previous TV publicity really hurt other dealership’s business when their shitty practices were exposed. After a lot of hours, I won. I never took my car back there for anything. I found a decent independent place for most things and used another place for carb and engine problems. Other than a partially plugged fuel line causing a nearly 2 year surge issue (I don’t know what the black stuff was in the fuel line, but when the oil companies started putting injector cleaner in the gas, it melted whatever it was and the fuel filter (External) caught it and plugged almost immediately), the car was very much trouble free. When I sold it, I regretted it instantly, and when I see it with it’s really nice new candy apple paint job and new wheels and tires, I wish I had the cash to buy it or another old T/A, a pre ’79 one would be really fun to have.

  • avatar
    Moparmann

    I have received several “Final Notices” to extend the warranty on my 2012 Fit, which is well past the 3 year limit, (although it only has 21K on it). I’ve always rejected ANY extended warranty that runs concurrently with the manufacturer’s warranty, and I’ve got an earful of issues from a friend, concerning the uselessness of a home repair warranty. “Caveat emptor” :-)

  • avatar

    I had a client who bought EW from a used car dealer on a Volvo wagon with 80k miles or so. Gets a week out, the valve belt snaps, hilarity ensues. Used car dealer says use EW. EW company refuses…here’s the scam-INTERNALLY LUBRICATED PART. We sue dealer, and EW company sends direct to client (despite correspondance) a check for $1k, which was a “good faith payment” and oddly exactly the $1500 max pay out less a 1/3 legal fee which of course they sent check to client directly to interfere with… We then sue dealer, and pull a good Judge, who after hearing the EW company’s chicanery and the refusal of local used car dealer to do right by local resident, decides that the warranty is valid, as while it wasn’t an INTERNALLY LUBRICATED PART that failed, the other part that failed, the belt, then took out an INTERNALLY LUBRICATED PART, so the car dealer is still responsible, even though his warranty also excluded the ILP…once we got a Judgement, the dealer actually paid. … On another note, I once scam-baited an EW company for giggles while stuck in traffic. After two “pre qual” people, I was elevated to The Closer….short answer, the EW was $380 per month….for which you can get a factory warranty, and it comes with….a new car. I’d buy the warranty from the auto company but that’s it…..and even Acura pulled a fast one on me, when the shift solenoid died, and they said no warranty, the solenoid is not….wait for it…an ILP……….

    Literally, they are insuring the reciprocating mass inside the block, which near as I can tell, never fails if you change the oil….which would also be cause to exclude coverage.

  • avatar
    DOHC 106

    An extended warranty can be a mixed bad for sure. I remember owning a Mercury Tracer 1.8 automatic and Ford offered me an extended warranty. I declined it. My car suffered a burnt valve problem because of poor engineering on Ford’s part. Of course everyone has seen what they did with the Fiesta and Focus. I purchased an extended warranty from my credit union for roughly $700 when I financed my 2007 kia optima automatic. It was worth every penny with no deductible. $900 fuel tank, $1000 air conditioning compressor, $ 600 alternator, and other problems before it hit 100K miles. I always thought the dealerships were too high for their extended warranties, but that depends on the individual. If the dealership fixes everything as stated then its worth every penny no matter how much you pay. Then again if a dealership cares about it reputation, customer satisfaction is king.

  • avatar
    Avid Fan

    I am sure Hell has a sub-basement for telephone scammers and car warranty callers. The ones who should be forced to clean their toilets are the home warranty bastards. When you get fired from your car warranty sales job for falling asleep in the boss’ office with a needle in your arm, you can go into home warranty sales.

  • avatar
    PSX 5k Ultra Platinum Triple Black

    My parents bought a new Grand Prix GTP (with the most complicated dohc v6 ever built) in May 1996. Being a car guy I begged my dad to wait and buy the 1997 GTP, but he didn’t. Luckily, they bought the GM extended warranty, because the car was a total pos. My mom kept records of the repairs, and it went to the dealership 50 different times for issues in the 6 years they owned it before it was done. The car wasn’t problematic due to negligence, my dad maintained it impeccably.

    The GM extended warranty ran out at 100,000 miles, so my parents purchased a 2nd extended warranty which turned out to be worth the money. For awhile the GP went in for many more repairs covered by the 2nd extended warranty. Yet after $12,000 in repairs the extended warranty company declined to cover any further repairs. The warranty was for 3 years, 36,000 miles, yet it also had a financial limitation as well, $12,000 regardless of time or miles.

    They got $1,000 for that Pontiac when it limped into the Toyota dealer, didn’t buy an extended warranty.

    We did buy 2 more Pontiacs, I miss Pontiac.

  • avatar
    pwrwrench

    Here’s the two cents from Joe’s independent garage. Any extended warranties we had to deal with were a PITA. They were run like the worst “insurance” policies. Not only were there exclusions, deductibles, and co-pays the Ext Warranty companies had their own ‘suggested repair times’ (often known as flat rate).
    Our shop was told that the warranty would pay about 35% of the repair price which did not even cover the cost of the parts. The customer(s) did not want to cover the difference. Hey they had a “warranty”.
    So you end up with an angry customer and a frustrated shop. We were not the high priced spread. No one was buying boats or motorhomes.
    I read some of the warranty info given to the car owners. It did not disclose the severe underpayment. That was only discovered after the car was already repaired and gone.
    And I also get solicited for extended warranties on a vehicle that is 25 years old that I sold nearly 10 years ago.

  • avatar
    mike1041

    @Kendahl. Do you loan out your wife. Mine always looks at me and says we should have that even before price is mentioned. I figure she’s cost us about ten grand for extended warranties over the years. This on Honda’s and Toyota’s. Of course there has never been a claim
    Doomed to overpay. She’s a salesman’s dream buyer.

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