Are extended warranties worth the cost? (rental, insurance, vehicle, credit)

[Drago45]

Current warranty is about to expire (full warranty, still have powertrain for another 25k miles) and debating whether to purchase an extended warranty. I was surprised to see that Ford offers a warranty up to 150,000 miles...although they cost is pretty high (2500).

[Labonte18]

It depends.. I will always spring for the 100k/5year extended warranty from the dealership, so long as it's through the manufacturer.. Why? Well, my theory is that if I finance it for 5 years, I do not want to be making payments on something that doesn't run. I've bought 2 new vehicles and did it on both (powertrain only), even though the first one I financed for 5 years, the second for 4.

This was in '97 and '05, before Chevy offered the 5yr/100k powertrain warranty standard (Which they've now done away with).. I think they were right around $1k extra.

On the '97.. Worth every penny. They had to replace 1 transmission under the manufacturer warranty, and 2 under the extended.

On the '05.. It was a loss.. The only thing they had to touch on it was the Cam/Crankshaft Position Actuator Solenoid. $100 part and 5 minutes to install.


Now, what you're talking about is a different situation.. If that extended warranty comes through the manufacturer.. What mileage does the original powertrain expire at? what extension are you getting for that $2500? If it's an additional 100k.. I can see that being worthwhile. If it extends it from 100k to 150k.. I'd say that's a little too high and I wouldn't do it. $2500 is only about $500 less than the cost of rebuilding a transmission.. So, you'd almost have to have an engine detonate for that to be cost effective.

BUT.. If you're still making payments on it.. To me, that changes things. Again.. Do you want to be making payments on something that isn't running?

So.. There's no short answer here. There'll be people replying after me (or perhaps before, i've been typing for 2-3 minutes) that say that any extended warranty is junk and a waste of money. And, most times, they're right. It's those times when they're NOT right that's hard to gauge. My experience on the '97 is atypical, the experience on the '05 is more typical.. But, to me, it was worth the $1000 for the insurance and my peace of mind. Would it be for you? Well, that's something only you can answer.

I probably would NOT consider it if the warranty is not through the manufacturer. I don't trust those "service contract" places.

[metalmancpa]

In 2008 I purchased my still current 2007 Chrysler 300C AWD Hemi used with 18,000 miles on it. A few months ago, with 215,000 miles on it I needed a PCM, Crankshaft sensor, and diagnostics done for which the charge was $1,500. My cost was the $100 deductible.

My bumper-to-bumper lifetime Chrysler OEM warranty I paid $2,000 back when I purchased the car is keeping the 300 running still. So of course in my case I'd say the warranty was well worth the cost. I've used it I think 5 times, spending $500 in deductibles whereas without it would have either cost me thousands upon thousands of dollars or I would have gotten rid of the car.

[dude_reino]

No. If they were, the warranty companies would not make a profit.

[notnamed]

Depends. The industry is of course geared so that it averages out costing more than they are worth. If you're buying from the bottom rung of reliability like a Chrysler it could definitely make sense.

Route 66 which is offered by many credit unions can be a good deal. $1395 for 5 years/100k for most vehicles with no deductible and rental car coverage while repair is being performed. Treated us well on a prior car.
https://penfed.org/Route-66-Extended-Warranty/

[Nlambert]

I'm on the fence with this one. I will only purchase an extended warranty if the following conditions are met:

1) The vehicle I purchased is brand new
2) The extended warranty is through the manufacturer. If it's offered as a third party extended warranty through the dealer I wouldn't touch it with a ten foot pole.

My wife and I (when we were uneducated to the likes) purchased an extended warranty on a used Mistubishi Diamante back in 2001 from the local Toyota dealership for $2,500. It was supposed to cover everything according to the finance manager. He neglected to tell us that "everything" really meant everything mechanical inside of the engine and transmission. That was it.


Less than 5k miles, the O2 sensor failed. Warranty didn't cover because they classified it as electrical. A few weeks later the thermostat housing started leaking. It was classified as part of the cooling system and wasn't covered despite being bolted to the engine. A few weeks after that the heater core began leaking and we got the same runaround. We traded the car pretty quickly. We have rejected any extended warranty offers after that.

[CrownVic95]

Originally Posted by dude_reino

No. If they were, the warranty companies would not make a profit.

We have winner!

There IS a short answer - and it doesn't depend on anything.

There will always be hard luck individual cases and stories where buying an extended warranty paid off for them, in that instance. Just like there will always be stories brought back from Vegas about hitting a big jackpot at the slots. For every one of those stories, there are 10 - or 20 - or 100 - where the got they same return on the investment that they would if they set fire to it.

It's simple mathematics....probability and expectation. The answer is always NO.

[jaypee]

It also depends on the car make/model.
I wouldn't buy it for a Toyota but would seriously consider one for a, say, Range Rover.

[acercode]

Never. It would be like handing your mechanic $2500 to keep even if nothing goes wrong with your car. Sounds dumb, doesn't it?

Fact is, most ext warranties are never used and those used would've been cheaper to pay out of pocket.Only way to come out ahead is if you experience two or more major problems such as engine and transmission failures. But then why buy a car you don't trust to make it til 100k without problems?

Only way I would even remotely consider one is if it covered the second 100k miles instead. But they would never go for it because they know that statistically the first 100k is always the most reliable period of a cars life which is why they often charge 2-3 times for anything after or don't offer one at all.

The only ones who think ext warranties are a great investments are warranty salesmen. Believe me if rocket ships can fly humans to the moon and return them safely then cars can certainly go 100k miles without a catastrophic problem.

[City-duck]

Originally Posted by acercode

The only ones who think ext warranties are a great investments are warranty salesmen. Believe me if rocket ships can fly humans to the moon and return them safely then cars can certainly go 100k miles without a catastrophic problem.

How do you know anything has landed on the moon? Because you saw it on tv? Can you explain how they got the person on the moon to record the landing footage? D'oh!

I used to have my own retail store and e-commerce business. Selling extended warranties was like printing money. Out of 3000 people that had bought it, less than 50 made any use of it. The result? Thicker pockets for you.

Something I'm not above doing is selling extended warranties. If the buyer needed to use it, I just gave them a brand new replacement (small electronics). The fact that less than 2% of buyers utilized their ex warranty made it impossible for offering it to be a losing proposition. They win and I win. I also win because of the duration of time between them buying the warranty and claiming it allows the money to be held in an interest bearing account. Compounding FTW.

Of course as a consumer you could care less about this. Every time I am the consumer side of the deal I never opt for any extended or protection plan mumbo jumbo.