Extended Warranty on used cars, Yah/Nay?

[Regular_John]

Posted this in the negotiating a used car thread, but it's not getting much traction over there.

So CP, what's your experience/opinions on extended warranties on a used car?
We're looking at a 2012 Mazda2 with 51,000km. The price of the warranty/protection plan is about $1,200-$1,500. The car has 1 year left the original factory warranty, so we'd be adding 4/5 years onto that depending on which one we get.

In the past my opinion has always been that extended warranties (particularly on electronics) is fairly poor investment. But when it comes to auto-repairs it's not hard to wrack up $1,500 when something goes. Even two minor problems in 5 years time would hit $1,500 pretty easily.

So are used car warranties as useless as a best buy protection plan, or is there some merit in purchasing them?

[Slava]

I generally hate extended warranties, but I just bought a truck and my wife was insistent. Plus, because that warranty is basically pure upfront cash for the dealership they were willing to negotiate on other things, so I guess there is that.

Car trouble is the worst, but now I can't help but hope that something costly goes wrong just so I feel like I got my monies worth!

[BlackArcher101]

All depends on what company will be covering this extended warranty. Is it 3rd party or a true extension of the manufacturer warranty?

[btimbit]

My experience with car warranties: Buy it and you won't need it, don't buy it and you will need it.

Depends on the car really. I'm not really familiar with the Mazda2 so can't really comment on that. I know it's built on the Ford B3 platform which has a solid reputation but no idea if that translates to the Mazda.

What does the warranty actually cover? Some dealers and car lots offer BS 3rd party warranties that don't cover key things, like major engine or drivetrain components. Others will cover regular stuff like the original factory warranty. If the car is from a reputable dealer you should be alright, but ask outright what it doesn't cover to get a clear picture. Whether or not it's an extended factory warranty or a 3rd party warranty is key too. Some 3rd party ones are OK, but most aren't.

If it is a proper warranty, I'd say go for it. Better to have and not need than to need and not have.

[Regular_John]

It's the Mazda Protection Plan straight from the dealer. It appears to cover most things except the basic "wear & tear" parts, light bulbs, break pads, upholstery, etc.

I am leaning towards getting it, just wondering if anyone has any first hand experiences, good or bad with having bought one.

[MrMastodonFarm]

Just me and I'm sure an expert will come in and laugh or say different but for $1,200-$1,500 I'd go with it. That's not much considering you'll be entering into things failing territory.

[btimbit]

Found the brochure, what it covers is on the back page

http://www.mazda.ca/MciWeb/pdf/parts...re_en_2011.pdf

That looks worth it to me imo.

[Swarly]

I won't buy a car without it, I bought a '09 car from a dealership in 2011 that was just about to pass the 60k normal warranty that came with it, spent 2k on a super extended warranty and ran into trouble about a month later, the transmission was shot and needed a full replacement, they set me up in a rental and it ended up taking 6 weeks for a new transmission to be located and shipped (from overseas), never had to pay a dime, without warranty they told me it would have cost about $12k in total. Overall a very reliable car and never heard of that problem on any others like it.

[darklord700]

When you have 1 more year of warranty left, I wouldn't buy one. The only time I think you should buy one is when a large repair bill will cripple your finance. But for a car like the Mazda 2, I doubt that will be the case for most people.

Extended warranty is not a get out of jail free from repair option. You still need to pay for normal wear and tear like brakes and tires.

The only chance you'll win in this case is if major components fail like the transmission or engine fail. $1500 is a lot of money for a small car like Mazda 2.

In my 20 years of owning everything from 15 year old cars to brand new car, I have never seen a repair bill that's over $1500. That $1500 repair was for the heating system when they had to take apart the dashboard to fix. Other than that, it was the timing belt and water pump that came close to a grand but that's probably normal wear and tear and won't be covered by extended warranty anyway.

If you didn't feel comfortable buying a used car without extended warranty, you would be better off buying one that you're comfortable with. Some thing like a Corolla or Civic, I know they are boring but I highly doubt you'll be that unlucky to get hit with a tranny or engine repair bill with those cars.

[Dion]

I always buy used and have never bought an extended warranty. I tend to check the vehicles maintinence history with the dealership to make sure the oil was changed at proper intervals and if there were any other repairs done under warranty. If you can, get a copy of the Lemonaid Guide to see what reliability issues the vehicle you are looking at possibly has.

http://www.lemonaidcars.com/

Those above 2 things will give you an indication if an extended warranty is worth buying.

[kevman]

Only insure things you can't afford to replace.

You might get lucky with an extended warranty if your car breaks down (or unlucky I guess) but in the long wrong someone is losing money when a middle man is involved.

I'd pass. If you're worried put that $1,500 aside and start your own small item "insurance" account.

[MoneyGuy]

Kevman is right. You insure things whose loss would devastate you or your loved ones, but not little things. Self insure those.

On one forum I go to someone actually suggested women should be able to insure against - I'm not kidding - the purchase of tampons.

[Bill Bumface]

If they sell the warranty for $1500 it is covering the average cost of repairs on that vehicle for the term, a commission for the sales person, overhead to run their office, and profit for the warranty company.

It's buying a lottery ticket. Sure you might win on the odd one, but over your lifetime, the vast majority of people will lose.

We have two out of warranty cars at our house. Driving cars that old I know that having a reserve fund to deal with proper repairs is a part of that equation.

[pylon]

Factory extensions are well worth the money IMO, 3rd party, they can be a crap shoot, but on certain vehicles they are better than nothing.

It is amazing how the people who are hugely anti-warranty, all of a sudden have revisionist history the second they are on the hook for a $5000 transmission repair.

"Oh, I am sure I bought the warranty."

"Sorry sir, my records indicate you didn't."

"Well I would have bought on if you offered it to me, so now what? You owe me a transmission."

"Actually I did, see this form with your signature on it, that says you declined 'x' warranty at 'x' price, that would have completely covered this repair?"

"Car dealers are crooks! You guys are scammers!"

I have that conversation at least a couple times a year.

Also, those claiming extended warranties are pure, up front profit for the dealer, you couldn't be more wrong. The average industry markup on a factory extension is about $600. Also the amount of people that have the discipline to self insure, is very, very low.

[pylon]

I would also like to add, if a warranty is ever being offered to you, whenever possible take exclusive coverage over inclusive coverage, there is a massive difference.

Factory warranties are exclusive. Meaning they cover everything on the car with the exception of a list of exclusions. There are many 3rd party exclusive options now available, and most of them are typically very good. And in some cases as good as a factory warranty.

Inclusive warranties only cover the items listed on the plan, nothing more. Those are the ones that gave aftermarket warranties a bad rap.

[sa226]

For me there are a number of angles that go into a decision like that. On the surface as a rule I despise extended warranties. Why sell something that you should stand behind and then try to upsell that some more with an invisible product that essentially says that this product might kind of break in a really expensive way. Logically I hate the idea, but real world ish, I kind of get it.

But also, Is this vehicle historically reliable? What is the cost of the vehicle? What percentage of the value of the vehicle is the warranty? 1200-1500 isn't that much in the grand scheme of things. What is the cost of peace of mind?

Also, you can't play mind games like "Well Alice and her husband Derek got almost the same car and a warranty for 1000$ less!!"

If all in the price works for you and you are comfortable with it, then that is what you are looking for.

Also, an extended warranty is absolutely an item to negotiate over...ie: If I go for this warranty can you include this....

[photon]

Originally Posted by sa226

If all in the price works for you and you are comfortable with it, then that is what you are looking for.

I think this is mostly it; it really depends on the person. Each person's comfort level and value they place on a certain kind of peace of mind is different, so the decision is individual.

In general I'm not a huge supporter of extended warranties, but with my current vehicles I've had enough of repairs for this lifetime so my next cars will have warranties (either new, or extended if they're a bit older), and won't be owned by me by the time they go out of warranty.

[GreenLantern2814]

Originally Posted by sa226

For me there are a number of angles that go into a decision like that. On the surface as a rule I despise extended warranties. Why sell something that you should stand behind and then try to upsell that some more with an invisible product that essentially says that this product might kind of break in a really expensive way. Logically I hate the idea, but real world ish, I kind of get it.

But also, Is this vehicle historically reliable? What is the cost of the vehicle? What percentage of the value of the vehicle is the warranty? 1200-1500 isn't that much in the grand scheme of things. What is the cost of peace of mind?

Also, you can't play mind games like "Well Alice and her husband Derek got almost the same car and a warranty for 1000$ less!!"

If all in the price works for you and you are comfortable with it, then that is what you are looking for.

Also, an extended warranty is absolutely an item to negotiate over...ie: If I go for this warranty can you include this....

If someone told you the product you were buying was never going to break, you would not believe them and you would not purchase from them. Cars are machines made by man. They will break.

To the OP: How much money have you budgeted for repairs? The other posters are right, if you have 1500 bucks you can squirrel away, don't bother with the warranty. If you're operating on more of a shoestring budget, take the extra 15 bucks a month on the payment.

[Slava]

Originally Posted by pylon

Factory extensions are well worth the money IMO, 3rd party, they can be a crap shoot, but on certain vehicles they are better than nothing.

It is amazing how the people who are hugely anti-warranty, all of a sudden have revisionist history the second they are on the hook for a $5000 transmission repair.

"Oh, I am sure I bought the warranty."

"Sorry sir, my records indicate you didn't."

"Well I would have bought on if you offered it to me, so now what? You owe me a transmission."

"Actually I did, see this form with your signature on it, that says you declined 'x' warranty at 'x' price, that would have completely covered this repair?"

"Car dealers are crooks! You guys are scammers!"

I have that conversation at least a couple times a year.

Also, those claiming extended warranties are pure, up front profit for the dealer, you couldn't be more wrong. The average industry markup on a factory extension is about $600. Also the amount of people that have the discipline to self insure, is very, very low.

I should clarify my comment about this being upfront cash. It is upfront cash though because in say 99% of the cases the vehicle you bought has been looked at and is fine for the time being. The warranty is paid for today and then maybe used down the road (or maybe not). Regardless though, the dealer has been paid today.

I do agree with you about the usefulness of these warranties as opposed to say a warranty on some electronics. On the vehicle there are some things covered that seem like wear and tear to me. Like the drive train. Sure, you shouldn't have a problem, but after 75000-100000 kms who knows.

[Fozzie_DeBear]

Is it transferable? And are you planning to sell the car within the extended warranty period?

If so it'll make your car more attractive in the sea of used Mazda's