Extended Warranties

hyundai
chevrolet
tahoe

#1

I have been hounded (really) with letters and emails about extended warranties. I have a 2004 Chevy Tahoe 2WD that runs great, it does have 126200 miles which, I guess is alot. My question is, is it worth it to get a extended warranty, priced at $1850 but only covers a max of $6000, that doesn’t seem to work for me. Has anyone gotten one of these and is it worth it. It is from Warranty Direct.



Thanks all


#2

An extended warranty on a six year old car with 126k miles is a scam. Keep your money in the bank.

Twotone

PS: If you google “warranty direct scam” is is one of many links you will find:


#3

These third party extended warranties typically try as hard as they can not to cover you. As you said, the car runs great, and the $1850 would be better in a budget for car repair. If you want a warranty to help you sleep better at night, look for one by GM.


#4

Extended warranties are a waste of money, and seldom cover anything that is likely to break. Put the $1,850 in the bank. If something breaks you’ll have the money. If nothing breaks you’ll still have the money.


#5

This question gets asked a lot. The basic scam works like this. They incorporate, buy databases with contact information, and proceed to “hound”* people to buy these warranties (which legally aren’t even warranties, but rather “service contracts”). They rake in the premiums for awhile, then when the claims begin to pour in, file bankruptcy, incorporate under a new name in a different state, and begin the cycle all over again.

Some of these companies are semi-legit; however, the “warranty” will be written to exclude anything expensive which is likely to occur to your vehicle. They have done the research and know what to exclude. These things are chock-full of loopholes allowing claims to be denied on grounds that you were negligent or failed to perform proper “maintenance”.

If you MUST have an extended warranty, buy it through the manufacturer, but bear in mind that when the vehicle reaches the age/mileage where you really need the warranty, it will be ineligible. They aren’t in business to pay your repair bills, they are in business to make money. I concur with the others, put your money in a savings account, if you need it, its there, if you don’t need it, you can put it towards your next vehicle when the time comes. If you give it to some warranty company, it will just be gone.

*Quite recently, they were “hounding” people with robo-calls, constantly. But I guess enough states attorney generals’ finally put enough heat on them…at least I haven’t gotten the “your warranty is about to expire” call for several months now. I guess they’ve moved to emails and direct mail. That speaks volumes to how profitable these things must be to these companies.

P.S. I am not speaking specifically about the company you mention, I am speaking about these “Extended Warranty” companies in general.


#6

Well any car can have major expensive repairs.

The profit to the salesman and company is usually over 50%. So for every $1,000 you spend the insurance company has less than $500 to pay for repairs or they will loose money, something insurance companies do not do. Some people will get nothing back and some will get a lot more than they pay.  Most will get far less. In addition you need to keep in mind that the insurer has worded it to eliminate as many expensive things as they can.

Remember that the seller is out to make money and they get to write the rules and set the price.  They are not going to sell them at a loss so one way or another they are going to have you pay more than they will pay out.  

Would you gamble with a car dealer who gets to set all the rules and knows all the odds?   

Your decision has to do with the value of the piece of mind it gives you. If that is worth the cost then buy it. Don't expect it to cover everything however, most are written to keep cost down and exempt what they know will cost them money. 

Good Luck


#7

I get junk mail all the time. You can stop it if you like:

http://donotmail.org/form.php?id=50

This signs you up on a petition to stop junk mail. If there are enough signers, we might get a do not mail registry.


#8

Some people like the dealer extended warranties…

Personally I don’t like any of them…they are nothing more then a very very expensive insurance policy.

126k miles is NOT that much…my 05 4runner has 170k miles.

Keep the money…keep up the maintenance and keep driving it for 5-6 more years.


#9

Anyone notice the google ads at the side and bottom of the page?


#10

JEM is right on the money. I used to sell motorhomes on the weekend and extended warranties were part of the “package” even though I don’t like them. Here is how an extended warranty works for the most part:

You pay them $1850. The salesman gets $450. The company gets $600. The warranty provider gets $800.

You pay the deductible for any service which usually pays for the repair. In effect the “extended warranty” is worthless. My boss always said, “It’s free money”.

Put the money in the bank instead of buying an extended warranty.


#11

That’s the flag right there. Any warranty which has a deductible is not a warranty.