Last post on May 03, 2008 at 6:47 PM
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Car Buying, Car Warranties
#32 of 40 Re: He canceled it. [euphonium]
Apr 29, 2008 (12:29 pm)
The F & I guy tried to block his move by saying they couldn't cancel because the premium for it was tied up in his loan contract with the bank. Upon reciting the RCW statues on Insurance and showing his business card (Insurance Agent), the dealership gave him a return premium check.
Actually, if he did finance the service contract, the check should have gone to the lender. I wonder if they still had the loan paperwork and adjusted the numbers to take out the service contract?
#33 of 40 Re: He canceled it. [151ranch]
Apr 30, 2008 (2:05 pm)
You are right. When he told me they returned the premium, I took it to mean he got a return premium check. Twas better to rewrite than pay interest on a non existing EW. Thank you.
#34 of 40 Re: He canceled it. [euphonium]
Apr 30, 2008 (4:19 pm)
Extended Warranties have been very profitable for the dealers and that is why when I bought our new car, I passed on the EW
Not directed at you because I have seen that posted here by 100 different people, and it is really not a reason not to buy a warranty. With that philosophy I guess you could say that we make money selling cars to so you probably should not buy it either.
Are you saying that if the dealer did not make a profit on the warranty then you would buy it? If so then you do see value in them, just not the same amount of value as the guy trying to sell it to you.
This is not a hokey sales pitch, it is something I truly believe. In my entire career I have never heard a good reason not to buy a VSC. I have heard 1000's of reasons why people won't but never a good reason.
The big trend here seems to be to self insure, put the money you would have spent in a savings account each month. Well thats a great plan if the car runs with out a problem long enough for you to get your money saved, but at $20 a month savings it takes along time to save enough money to pay for anything major.
I am a strong believer that if $20 a month puts a strain on your budget then you need the VSC more then any one.
I don't begrudge or get mad at people who don't, its just the way it is. We run 40-50% penetration each month and that is good. I guess a plus is that we get people all the time trading a car they can't afford to fix. If they had the warranty then we would have not got the sale, and those people 9 times out of 10 then buy a warranty.
#35 of 40 Re: He canceled it. [joel0622]
May 01, 2008 (8:41 am)
My best reason to not buy a service contract is that chances are that you won't use it, or use it enough to get a decent return on your money. The vast (and I mean vast) majority of people who come through my service department that have service contracts either A) haven't had need of the contract or B) the problem they have is not covered. And a good number of people even trade in their vehicles before the warranty is up-giving no use to the service contract at all.
#36 of 40 Re: He canceled it. [mitzij]
May 01, 2008 (10:19 am)
"My best reason to not buy a service contract is that chances are that you won't use it, or use it enough to get a decent return on your money. The vast (and I mean vast) majority of people who come through my service department that have service contracts either A) haven't had need of the contract or B) the problem they have is not covered. And a good number of people even trade in their vehicles before the warranty is up-giving no use to the service contract at all. "
A decent return on that money is not what is important... It is the insurance that I won't have a $3-4000 engine rebuild or tranny out of my pocket. With the complex systems on many vehicles now, a major repair could be expensive. The peace of mind for me is worth a portion of the cost.
A) They have used the peace of mind, but not the repair portion of the contract.
B) Only purchase a factory backed plan that covers almost everything, such as GMPP Major Guard. There will be few things not covered. The factory backed plan most likely will be there.
Most of the factory plans are transferrable...so, if I were buying a used vehicle and it had some time and miles left on the factory plan, it would be a more desirable vehicle that a similar one without anything.
Last 2 vehicles I purchased plans on... '00 Jeep GC Laredo...plan cost $1000 or so for 2 additional years. It paid $around $450 for a new waterpump. So, my 'insurance cost' was about $275 a year after the 36/36K warranty was used up after 24 months. As many repairs as the Jeep had under warranty, I was not about to keep it without one and it was less expensive to cover it that way than to bite the bullet and trade it after 2 years and take the worst hit on depreciation.
'04 Envoy XL SLT, proving much more reliable than the Jeep, at least so far. Paid around $1600 for 60 month, 90K mile GMPP major guard. So, far it has paid about $100 in repairs. Insurance factor is $400-$500 per year. I'll take that expense instead of risking a much higher bill IF it needed a major repair.
Again, I don't expect to get rich off the savings either way. I just like the decrease in risk by having this 'insurance'.
#37 of 40 Re: He canceled it. [joel0622]
May 01, 2008 (2:44 pm)
The purpose of Insurance is to prevent a financial catastrophe.
VSC deductibles make the balance due less than a financial catastrophe.
Extended Warranties have been very profitable for the dealers is another way of saying they are overpriced for the coverages afforded. That overpricement includes a very generous commission which can be more than the net profit on the car sale.
#38 of 40 Extended Warranty
May 02, 2008 (7:06 am)
I generally feel that it is best to just start off with the Factory Warranty. During that first 3 years and/or 36K miles you'll get a pretty good feel for how the car handles. If your car spends a lot of time in the shop, then sure go snag an extended warranty as your factory one is about to expire. Otherwise, I say, save the money for the extended warranty, and continue on your way. The key is having money in the bank to cover expenses.
In my history of buying cars... I haven't found the need to buy an extended warranty yet.
'96 Talon - Water Pump 5K - Factory overtorqued the bolts, Ignition Coils under warranty 32K. Front Brakes at 30K. I liked to drive fast! heh Ignition coil issue freaked me out, so i sold the car with only 50K miles on it. (Nothing quite like having a car stall on the freeway) It started to leak oil at around 45K, and I decided I had enough of that.
'00 Cougar - A Couple of recalls, the Sunroof rails broke (originally they used plastic rails, replaced with aluminum.) under warranty. Outside of that, rear brakes at 82K miles (Back in February). and when I traded it in last week it needed a new battery most likely. Battery would be dead on cold mornings heh. This car was in a front-end collision at 3K miles, that required a few replacements in the engine compartment. Was a little worried after that, but wasn't in a position to sell it and get a new one. However, it held up great.
'06 chevy equinox - One Warranty repair so far, rattle in the dash.
Back in college, I had a Ford Escort that blew its engine on the way to class the day after an oil change. *sigh* That lead to the purchase of the Talon! I was like the 3rd or 4th owner of that car though.
I don't put a ton of miles on my cars, but in the 14 years of owning cars, an extended warranty would have never really helped me out. That's my reasoning for not getting one.
Now that I own a big old $30K truck, my thinking will change, but I have 3 years to figure that out!
#39 of 40 Re: He canceled it. [euphonium]
May 02, 2008 (10:13 am)
My take on Insurance is to prevent a financial event past my pain threshold. That event may not be a 'catastrophe'.
If you pay list price at the dealer for the extended warranty, it probably is profitable for them. Looking at the pricing on gmoutlet.com, discounts run 20-30% depending when you buy the coverage. I'm would guess other on-line discounters are in a similar price range.. At that price there is probably a reasonable profit for the seller, but less than 'very profitable'.
May 03, 2008 (6:47 pm)
You might NOT want to do it that way.
Depending upon who backs the extended service plan, some have requirements. Such as it needs to be 1K or at least 30 days before the expiration of the factory warranty (ie: have 30 or more days of factory warranty remaining and be below the 36 or 50K in mileage)
Some require a pre inspection and any pre exsisting conditons are NOT covered.
In addition, some also have a waiting period once you sign up - 30 days AND 1K.
Just be careful, I have seen many perople buy the 2K warranty only to find out that it ONLY covers internally lubricated components (which is a JUNK warranty and is merely pissing $$ away)
Best bet: get your dealer service advisor/writer/assistant manager to review the coverage. They can best guide you and get you the best coverage for your hard earned money. Most policies sold by the F&I dept of the dealership have the best coverage. STAY AWAY from the internet warranty companies - you usually get the JUNK warranty or one with limited coverage or limited re-imbursement.
I have directed many of my clients to the proper warranty/coverage and they have given me many thankx for pointing them in the right direction.
You really do "get what you pay for"