Because, at least with the warranties I’ve been privvy to, the service needs to be authorized with the warranty company before you start, else they won’t pay. That’s part of the scam - they’re hoping for those below-deductible repairs so they can make extra profit on the deal.
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Several years back, Edmunds estimated that 50% of the extended warranty cost was sales commission. They used that to estimate the cost of repairs in their True Cost to Own tool.
But the service writer needs an estimate first, if the vehicle needs a light bulb replaced and the repair cost is $49 on a contract with a $100 deductible there is no reason to call in the claim.
Would an auto repair shop charge one customer $49 to replace the light bulb and charge the next customer $100 for the same repair because they have a service contract?
Yes. This is pretty much standard with any insurance type contract…even Medical. Medicare and medical insurance companies have contracts with the providers for negotiated prices. And they will even differ from one insurance provider to another.
Please kindly give me the name and contact information for the good warranty company that was well worth the coverage and paid for everything so I can get that one. Thank you.
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In this example there is no insurance involved, when the repair cost is below the deductible amount, then it is a “customer pay” transaction. Calling the insurance company for a $49 claim would be pointless.
If this is the 2006 ? vehicle then an extended warranty will be a waste of money . The price of the warranty will most likely be more than your vehicle is worth.
Heck yeah, this is the 2006 Toyota Corolla with 145,000 miles on it. I just paid to get new motor mounts and new suspension control arms and now it runs quiet and smooth like new. If I can get the transmission and engine to last or be under warranty, I will consider keeping this car another 10 years lol. It’s ugly looking with faded paint though which is why I’m considering wrapping it. I was thinking about getting a new economy car but this pandemic just recently got me furloughed from my job.
IF you can find a place that would give you a “policy”, I doubt it would be worth the paper it’s printed on…
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Well if the “policy” isn’t worth the paper it’s printed on and wouldn’t be honored, I certainly wouldn’t want to waste my money on it, when I could use that money for other things. I think the OP’s point though, was that there are some “policies” that are worth the paper they are printed on, and some that are not, depending on what company is administering the “policy.”
I tend to think if you have the cash (not financed) for an extended warranty…you’re better off keeping that cash in the bank just in case you need it for a major repair. That way you keep control of it instead of handing it off to some place that may not be there if you need them. Or may not cover the repair.
Just my two cents.
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Your car is too old and has too many miles in it. Just about anything that goes wrong is wear and tear. I have a hard time believing any serious warranty would cover anything. An engine with 150,000 miles on it would likely be considered used up, and a limited warranty might get you 10% to 20% of a used engine and Installation.
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I’ll give you a “policy” free of charge, and it’s worth a lot more than the electrons it’s printed on. My “policy” is to keep a car until it is completely used up, then to junk it and buy something else. Your 2006 Corolla is nowhere near “used up” and could easily last for another 10 years/100,000 miles with minimal repair costs. I see Corollas of this generation for sale on Craigslist all the time with well over 200,000 miles–some with the odometer maxed-out at 299,999 miles–and still running well. Clearly these people did not spend thousands of dollars a year to keep these cars running, and neither will you.
Put the money you would have spent on a so-called “warranty” into a bank account, and use it to pay for the occasional repairs that this vehicle will require. I guarantee you will come out ahead if you do this.
I wouldn’t recommend a service contract for your vehicle, if you are able to manage the repairs for your vehicle, that is to not over pay or perform unnecessary repairs, you would be lucky to break even.
As far as “not worth the paper it is printed on”, that is greatly exaggerated. The original post for example, an undesirable service contract company will provide a replacement engine and pay $80 per hour towards the repair. This doesn’t meet the vehicle owners expectations but it is better than no vehicle. The vehicle owner is required to pay for oil, coolant, transmission fluid and refrigerant on all but the best service contracts. This is a $3,000 repair, more than the cost of the contract and more the value of a sheet of paper.
Obviously there are better warranties then others. And some people have actually used these warranties and saved themselves a lot of money. But I still won’t buy one.
The vast majority of people who buy them never recoup the money paid for them (even with the 50% discount). I’ve been offered extended warranties on new cars/trucks since they’ve been around. I figured I’ve saved myself thousands of dollars by not buying one.
If it gives you piece of mind…great. But what gives me piece of mind is the fact I didn’t throw money away on buying one.
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I’m no lawyer but I’m pretty sure you can name the 2 warranty companies here. People say all the time, Toyotas are great, Chevys are terrible.
I guess I probably won’t be getting a service contract, then. But I know if something major does die on my car like the engine or transmission, that I probably won’t be able to afford fixing it out of my own pocket, and will have to look for another car, much as I love mine, the first brand new car I have ever owned.
Probably a little off topic, but I had a 85 Dodge van that developed a shudder between 40 and 50, depending somewhat on throttle and road conditions. Transmission guy said it was the torque converter lockup mechanism and that he could replace the torque converter or for $50 (1990 dollars) he could disable the lockup, which is what I had him do.
Many people don’t know that it’s not unusual for the dealer that sells the service contract to have right of first refusal for repairs. Meaning that if you buy a car at Main Street Ford and the car is at my shop with a coolant leak, I have to call Main Street Ford and have them release the repairs to me. Last summer we were out of town for a baseball tournament when another family had the transmission in their Tahoe fail. They called their service company, and the car had to be towed 150 miles home to the selling dealer instead of a shop in the town where we were.
Well…not exactly in those words, but there are instances where that happens. For example we have a fleet account and their service and repairs are managed by a third party company who approves/declines repairs and negotiates(argues) pricing. Now we don’t usually charge labor to change an engine air filter or brake bulb. But when we submit to this company we have to click on parts items and labor operations. Under the menu there will be a box for “replace air filter .3 hours” so we obviously do.
It’s all about expectations and knowing what you’re getting, isn’t it? I imagine the service contracts at a Lexus dealer are probably higher quality than the ones I see too often from “Joe’s Used Cars.” And I think many people are too greedy and gullible to understand what they’re buying. Last summer a customer came in with a used Ram 2500 they just got for a good price because the dealer knew it “needed a little work.” But the dealer sold them a service contract that would “cover all the repairs” now and in the future. By the time found the coolant leaks, bad ball joints and wheel bearings, and other stuff the estimate was over $3000. Called the service company, they stated they contract was not valid until 30 days after the date of purchase and now that they know about these preexisting faults they won’t cover them in the future.
As for the Jeep in the shop with a hyrolocked engine, the customer is now responsible to us for $456 in wasted diagnostic fees, $408 for the difference in labor from what the contract will pay, $250 parts handling fee for dealing with an engine shipped to us that we’re not making anything on, and a couple hundred in ancillary parts not covered. That’s over $1100 she has to spend in addition to her deductible. Is that better than nothing?
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I’m not the one you need to convince…My 09 Focus has 206k on the clock, and I do most of the maintenance on it myself. It’s due for an oil change in approx 2500 miles, front tires, pads, and rotors will need to be done before the winter, so I’ll probably get that taken care of in late September or early October. I was responding to @D.J