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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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#64 of 2873 It seems that most people misunderstand by david1973 Jul 19, 2003 (1:42 am)
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.
#65 of 2873 Insurance by jsylvester Jul 19, 2003 (8:43 am)
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.
#66 of 2873 by q45man Jul 19, 2003 (12:15 pm)
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.
#68 of 2873 WIll this one pay claims??? by Henry Aug 07, 2003 (11:29 am)
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
#69 of 2873 Henry by redline65 Aug 07, 2003 (6:43 pm)
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.
#70 of 2873 Makes sense, redline - by zueslewis Aug 07, 2003 (6:58 pm)
No way I'd even consider it.
#71 of 2873 can i cancel my extended warranty? by ambetkatindig1 Aug 08, 2003 (10:39 am)
I'm not intending to but I just want to have an idea.   Are there any fees to pay for?
#72 of 2873 by kcram HOST Aug 08, 2003 (1:45 pm)
Hi ambet   Any cancellation provisions and requirements should be in the contraxt you received when you purchased. Every company is different in terms of how they handle cancellations - some pay in full, some pro-rate.   kcram Host Smart Shopper and FWI Message Boards
#73 of 2873 can i cancel my extended warranty - a response by 2crnot2c Aug 08, 2003 (4:15 pm)
In the case of WG, the contract is of no use. I cancelled withing their 60 review period. Even though the contract mentions that I should get back all the money I spent, the reality of the matter is that I am stil waiting to see 1 cent.   Once money has left your hands, do not expect that you will see it again.

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