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Smart Shopper Extended Warranties
2873 messages, Last post on Dec 02, 2009 at 2:13 PM
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Edmunds article: Third-Party Extended Warranty Scams
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In the late sixties early seventies I worked for three Chrysler dealers. First two were salary jobs, and the last one was flat rate. The way it worked was Joe Customer came in for warranty because his charging light was on. A common problem for that era. We knew before we drove it on to a lift that the voltage regulator was bad, but we checked it anyway. Every tech had a high tech voltage reg checker. A paper clip straightened which was connected to both connections on the regulator. This usually turned off the light, and a new regulator was installed in 30 seconds. It was held on by two screws..easy fix. This is when the story gets twisted a bit. Since we have the guy's work order, the service writer starts looking around for old parts. Anything will do. Chrysler insisted that old parts be returned for waranty claims. So all parts left over from regular repairs, were kept to return to chrysler as a warranty repair. We had old engines, trannies, diffs, you name it, t'was kept out back for parts needed to collect warranty claims. So the customer who wanted his charging system fixed was happy, and didn't even know he had his differential overhauled while he was in. In fairness to dealers it should be noted that warranty work time rates were a bit tight. One example would be less than an hour to do a complete clutch R&R including pilot bushing. So I think each one was trying to keep the other from ripping them off. I don't blame those dealers who kept a used parts bin. You always lost money on warranty. These days it looks like the name of the game is buyer beware. Hey,if you can't pay someone four grand to buy a Cavalier, something is very wrong. Anyway I think every buyer feels like the bottom of the food chain. Too bad realy. What do you do when the customer is gone for good. Maybe 8 grand to buy your product will work. I think we might get to see. |
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| Hey everyone. Has anyone purchased an extended warranty for their A4 at the time of purchase or after? I have a 2001 A4 2.8 Quattro that I plan on keeping for a long time and would like to know if it is worth the cost of an extended warranty to cover it to 100k. I have communicated with the finance director at the dealership where I purchased the car and they said that a 6yr/100k extended warranty with $0 deductible would run around $2500. What do you all think is a fair price for this coverage, and is it worth getting, especially considering the dollar amount repairs would cost after the manufacturer's warranty is up. Thanks. | |
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what warranties/insurance it is for. Almost all the time you will not get as much money out as you put in once you factor in the time value of the money ( ie the company you give the money to gets to keep all the investment income). What it does do is limit your risk. In theory you are only on the hook for the 1000 bucks for your policy. In the simplest given 5 people, 4 will make no claims and "waste" their 1000 bucks while 1 of the people will make a claim for 5000 bucks and profit by 4000 bucks. The consumer has to weight the worst case (probably something like the value of the car) versus the best case (zero claims) and decide which end you expect the car to be closer to. It really doesn't matter if you buy a reliable honda or some unreliable make. That reliability gets factored into the how much the policy costs. If all Hondas were bullet proof through 100K miles, it would cost Honda zero cents to off a warranty up to that level and would give them a competitive edge. Whenever you see a manufactor reducing the warranty (happens all the time in consumer electronics) and then justifying by saying there products are so good they don't need a warranty, be afraid. Very afraid:) One advantage of not buying the policy (either from the dealer or 3rd party) at the time you purchase the car is that you get the manufactors warranty period to decide how well the car you bought was put together. Obviously past performance is no guarantee of future results but my experience has been cars that give you problem early on give you problems later in life so in that case buying the policy may be a prudent way to hedge your bets if you don't want to trade it in right away. Of course in exchange for this period you do give up a bit of leverage if you are planning on buying a manufactor extended warrente. |
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Yes, it is true that insurance companies take your premiums and invest them to make additional revenue. In theory, in a competitive business model, those earnings are already calculated actuarily into the insurance rates one pays. The tanking of the stock market is one reason insurance rates have been rising. There is also other factors that are considered in setting rates. Depending on the policy, some vehicles will never make claims due to being wrecked and totaled, the owner dies, the policyholder fails to maintain the vehicle, the vehicle is sold and the warranty is not/cannot be transferred. In my situation, one major repair in 100,000 miles will cover the cost of the warranty. I do agree, that dealing with warranty companies and mechanics are such a hassle (along with the huge losses in the stock market the last few years) that the money in the mason jar in the backyard may be a good idea. |
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If you are a company like Furd, and have increased incentives to $3450 to just move cars, where do you save money [get some back] by paying the dealer and his employees LESS on warranty work........unless the government will bail you out...[No Japanese will do it too much liability] ......finally they are talking about firing 2400 white collars before end of year. [today's news] Their labor and pension costs [mostly unfunded] are killing them as is their lack of productivity. http://www.fordtechs.com/survey.asp http://flatratetech.com/pub102.htm http://flatratetech.com/pub104.htm What does all this have to do with warranty, the unions are in process of organizing technicans. Doubtful that they could cheapen the line more than they already have done......Paper and glue cars are next you really don't need metal. |
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I may be flying without a warranty on my 95 olds Aurora since WG is not paying claims. I must admit that I am a little scared about that possibility. The one warranty I can still get will cost me $1,850 for 2 years. What do yu think guys??? The warranty is from National Auto Care Corporation. Henri |
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| Henry why are you considering a 3rd party extended warranty after the WG disaster? Personally I probably wouldn't pay $1850 for a 2 year contract. Put the money in the bank and use it for repairs for the next 2 years. | |
| No way I'd even consider it. | |
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I'm not intending to but I just want to have an idea. Are there any fees to pay for? |
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