I have an 02 BMW 325ci convertible with 75,000 miles. I have my dealer extended warranty is running out Aug 31 and when I took the car in for service a few weeks ago, I started to get the sales pitch for extended warranties from other companies. I’ve read on this discussion board that these warranties tend to be nothing more than a scam. Is it worth it for vehicles with expensive repairs, such as this BMW?
They are not quite a scam. These so-called warranties are actually insurance policies and, if you think you have a claim, you deal not with mechanics but with insurance agents who may be difficult.
Even though BMW repairs tend to be more costly than average, so would your insurance premiums be particularly expensive. The actuaries know their stuff. A few people will be able to recoup their premiums, most will not.
Since you have done a bit of research you know how most members of the panel feel about such contracts. Be it VW or BMW, you pays your money and you takes your chances.
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 peop;le 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.
I agree with the others that it is not a scam. The insurer will meet their end of the bargain if you show that your problems weet the requirements defined in the contract. But the cost is high. You could put the money for the extended warranty into the bank and start your own insurance fund. It should be about twice what an insurance company expects repairs on your car to cost - you’ve got a safety factor built in already. And after your hypothetical extended warranty expires in a few years, take a vacation with the remainder.
I dont know if the people who have negative opinions about extended warrantys actually worked with these programs as a tech or a service advisor. I have worked with these programs as a Tech for BMW and GM,so thats where my input comes from.I did not experience problems with the warranty company dissapearing as some claim.I did not have problems with getting my work approved. There are two postings on this forum today where one man spent $6500.00 dollars on the AC systems of his two Toyota’s no warranty.Another man needs $3000.00 in repairs to his BMW Z4 no warranty.Expensive repairs happen and I have seen these plans benifit people tremendously. My experience is primairly with GMPP and RYAN extended warranty.In the end you need to do the numbers and make your educated decision.This is my experience as a tech who actually worked with these programs.If it means anything I did not buy a extended warranty for my 2004 F-150 Ford. I cant afford the warranty and I couldnt afford to put a transmission in I’m living on a prayer.I don’t suggest others do the same,but if the moneys not there.
The transmission in my 2003 Olds Silhouette failed at 56,000 miles - way past the iriginal warrant. But GM gave us a 60/60 extended warranty as an inducement to buy an Olds in 2003 after they announce the demise of the marque. It paid off; we got a $3500 new transmission for free. But that’s the only time in over 30 years of driving when an extended warranty would have paid off.
If you want the peace of mind that comes from an extended warrantee, see if the company that sells you car insurance offers that product. Your insurance agent will get less of a cut than the car salesman would, and he will be easier to deal with on a claim than the companies that sell through car dealers.
I also agree that it is insurance, and like other insurance you need to decide if you need it. It is likely that you will pay more in the long term if you buy the “warranty” but you will potentially avoid having unexpected large repair bills (if it’s covered). IMO, if you can afford the warranty, you can also afford to put enough cash aside to cover any expenses; but not everyone if willing to do that.