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Smart Shopper Honda Extended Warranties Pricing and Info
3113 messages, Last post on Dec 02, 2009 at 8:10 AM
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Replying to: wisemoney (Aug 27, 2008 3:46 pm) Oh, I agree with you. $1,500-$2,500 is a poor deal. I would not advise anyone to pay that much. If that is the average, that shows my point that the advise Consumer Reports gives is not based on the typical buyers who read this forum and who get a much better price from online dealers like myhondawarranty.com and bernardiwarranty.com. If you had asked for advice on this forum before purchasing your Honda Fit extended care, I would've helped you get the best price I know of ($460) instead of $1,500- $2,000 that your dealer charged you. |
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Replying to: mattgg1 (Aug 27, 2008 10:55 am)
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Replying to: jet10000 (Aug 27, 2008 2:34 pm) "-83% is less than -50% hence displaying the correctness of my original statement, the less you pay the better your return." Thank you for proving my point! However you want to cut it, the "rate of return" on an EW is going to be NEGATIVE for the vast majority of buyers. So do you see how silly it to use rates of return and getting your money's worth as arguments for buying EWs? Your argument is...the online Honda EW is a great deal because you will likely lose 50% of your money instead of 83%. Do you use this same approach when managing your financial investments? Of course, -50% is better than -83%, but it is still huge loss, a horrible rate of return, and not a good financial strategy for anyone! You may want to pick investments that offer a positive return, instead of picking investments with the smallest negative return.
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Replying to: mattgg1 (Aug 28, 2008 5:23 am) That wasn't my argument. You asked me to calculate the return rate on two given numbers because you didn't know the formula to do it. Some people get positive return rates from their Honda Care. I never said it was likely that someone would lose 50%. You may want to pick investments that offer a positive return, instead of picking investments with the smallest negative return. Honda Care is not an investment. It is a transfer of risk as was described earlier. You don't buy it expecting positive returns though you may get them. You're buying a service from someone else who will assume some of your risk. You admitted to buying disability insurance where you have seen regular -100% returns. I assure you I got a better return on my last Honda Care contract than that! Too many people falsely tout the "financial" benefits of an EW by claiming there is a good probability of recouping the EW cost from the vehicle repairs made under warranty. I've never seen anybody state that there is a good probability of recouping the EW cost from the warranty. Where is this being done? By whom? Please provide specifics. People state correctly that should something happen, you will be covered and they will absorb the risk. It's up to the individual consumer to judge whether the coverage is of value to them. Just like you judged the disability policy is of value to you even though you have a -100% return on it thus far.
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Replying to: jet10000 (Aug 28, 2008 5:44 am) "Honda Care is not an investment. It is a transfer of risk as was described earlier. You don't buy it expecting positive returns though you may get them. You're buying a service from someone else who will assume some of your risk." "I've never seen anybody state that there is a good probability of recouping the EW cost from the warranty. Where is this being done? By whom? Please provide specifics." Here are just a few references that you and others have made... "On a car that I'm going to keep for the full term of the EW, I think it's a decent bet that it will either pay for itself or come close" - thebean Is this a specific enough example of someone claiming than there is a good probability of recouping the cost of an EW? "The people who read this forum, who buy Honda Care from an online dealer at a fair price are much more likely to get a better return on their Honda Care purchase than those that didn't seek out the best price" - jet10000 So when you mention getting a "better return", you simply meant that a buyer would get a smaller NEGATIVE return, right? If HondaCare is not an investment, and you can't expect positive returns, then why even discuss "returns"? "The likelihood that you would've gotten your money's worth from a Honda Care on your Fit is so much higher had you gotten the best price of $460 rather than the price you did pay after financing of nearly $2,000." - jet10000 Even at the best price of $460, buyers are still very unlikely to "get their money's worth". So you meant that buyers will LOSE less money when buying at a lower price, right? (Since as you said, you can't expect positive returns or recoup the warranty cost) I agree with you that EWs are not investments, that they are actually a payment to someone else for them to assume the risk of future repairs. Therefore, would you agree that any discussion of "rates of return", "recouping the EW costs" and "getting your money's worth" are not helpful?
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Replying to: duke23 (Aug 27, 2008 8:43 pm) I'm not sure exactly what you mean by this, but if you are "aghast" that some people have an educated opinion against purchasing an EW then perhaps that's where you need to see if from a different perspective. I understand why people buy the EW - it's mainly due to risk aversion i.e. fear of the unknown, often brought on by a salesman who warns you about the risks ahead with expensive auto repair. I get that. I realize there are many stories of how the EW has paid off because breakdowns do occur. But even if you have had the need for that statisticly rare breakdown of your Honda, consider averaging it out over the ownership of other vehicles. It would be very bad luck to have consecutive EW's pay off. On the other hand it would be wise to just say no to an EW and do a good job of maintaining your Honda. Surely you can understand that statistics don't favor a positive payoff for the EW over your lifetime?? That's why the value, if you could call it that, is in comfort or peace of mind - not having repairs taken care of. |
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The new car price paid forum is extremely helpful but this forum here is a little heated. Buying or denying the EW doesn't make one wiser than the other. Buying a new car is not a wise decision after all. A wiser move would be to buy a 3-4 years old low mileage used car and let the first owner suffer the depreciation. Most people did not study finance, so they just call it a good return if they feel they get their money worth. Of course no one expect to sell the EW and make money out of it so there is no return. People don't come here to learn finance so please skip the fancy finance terms. Just present the facts that are relevant and let the potential buyers decide. I drive about 20k a year and I paid $715 for 120,000 6yr coverage ($100 deductible). New car warranty will die in about a year and half and I intend to keep it longer. I have owned different Honda for abut 15 years and the reliablity has been perfect, and I never bought EW for my previous Honda. Buying a German car without EW is suicidal unless you get rid of it before factory warranty expires. In case of Honda, the importance of EW is somewhat less significant. However, all newer cars come with more and more electronic and electrical gadgets. The more of these gadgets installed, the more things that can go wrong. Many of these gadgets are connected to the central computer so if any of these gadgets malfunctions, the computer chip may give you problems. The more advanced the car, the more complicate to repair and the more costly to repair. Dealer's technicians work on it everyday so it is less likely that they overlook something. I can afford $20/mon to cover the last 3 years and I am 99.9% sure that I won't use it. To some it may be a rip off, but I am being ripped off much more by oil companies, insurance, utilites, etc. daily so I am used to it. For those advise against EW, if my car breaks at 36001 miles and beyond, are you going to eat the bill? I don't think so. It is my money, I decide how to best use it. I have a Rolex. Is that a waste of money? Because I carry a cell phone and it tells time. I thank this forum for informing me about on-line EW dealer and I did purchase from one of them. I hope my message will help any potentail buyer to decide. BTY, those advised putting money into a CD FAILED to mention that there is inflation and uncle Sam. At the end of the day, I am not sure if purchasing power is maintained.
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Replying to: sigp226 (Aug 28, 2008 2:41 pm) If my car breaks at 36,001 miles, I'll gladly pay for the repair, and not a stupid warranty company. That is the risk that I took when I bought the car. If I did have an EW, most likely it won't cover the repair. Even if it does, most likely it won't be more than the EW cost. Therefore, you win no matter what happens by not buying the EW. If your car is so unreliable that the LIMITED COVERED PARTS break down more than the cost of the EW, then I'll suffer the consequences for buying such a horrible car. |
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Replying to: mattgg1 (Aug 28, 2008 8:15 am) Some people will have positive returns and some people will not. Regardless, my original statement was entirely correct that if you get a better price when you buy it you will get a higher return. I have given examples of this as well. If at this point, you do not understand it, by all means, take a business course at your local community college so that they can instruct you on the appropriate calculations. Even at the best price of $460, buyers are still very unlikely to "get their money's worth". You state that because you have a very narrow definition for "money's worth" meaning only the money paid out by Honda Care for repairs. In regards to Honda Care, my definition of the phrase includes the following: 1) Direct payments by Honda Care for repairs to my vehicle. 2) Any roadside assistance paid by Honda Care during the term of my contract. 3) Any car rental paid by Honda Care during the term of my contract. 4) The value of Honda Care assuming the risks for repair costs which I would no longer be responsible for during the term of my contract. I have determined that 1-4 added up, I do get my money's worth, have gotten my money's worth in the past and will continue to get my money's worth in the future. As I have previously stated, this determination of value is dependent on an individual's personal evaluation and is not the same for every person. You are trying to convince everyone that your evaluation is the evaluation that everyone should make. That is not the case. At this point, I see you are just arguing semantics and I have been very clear and will not continue discussing these points with you at this time.
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Replying to: jet10000 (Aug 28, 2008 3:55 pm) This is absolutely correct if you're talking about the most reliable cars. I'm willing to bet that my Honda Fit won't have a single breakdown during the EW period. And 99% of the time I guarantee you that I'm correct. This is the reason why an EW is not worth a single penny to me. The 8 year 120,000 miles 0 deductible HC EW is NOT WORTH a SINGLE PENNY because I don't bet on unlikely breakdowns. I bet on reliability. |
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