Factory warranties

Are factory warranties a waste of money? I’m going in my dealership tomorrow to make a deal on a 2010 Prius.

You’re talking about extended warranties, right? I never buy them, they’re at least 50% pure profit for the dealer, and if you really want one you can buy it later, rather than at the high-pressure closing. And they will put all kinds of pressure on you. I just tell them “no”, several times.

It depends on what is covered. In your case if the warranty covers the unknown durability of all of the new technology and batteries and high voltage wiring in your car, for which almost nothing is known except by the manufacturer, pay for the warranty. If it just covers the mundane powertain stuff, skip it.
This car does get good reviews. The fuel economy is ridiculous at 51 mpg highway, and given that gasoline is projected to hit $5 per gallon this summer, it just might pay for itself in gasoline cost.

Gasoline is projected to hit $5 a gallon within the next 10 years, and even the most liberal estimate was that of the former CEO of Shell oil who said 2012. Either way, barring some major disaster I find it unlikely we’ll see $5 next summer.

Yes, the extended type. Thank you. This seems to be the prevailing sentiment among my friends. So it is good to have confirmation here in this forum. You hear so many different opinions. Having never had a hybrid , I know the technology of these cars is complicated. I just want to make sure the car and it’s myriad components is protected. Thanks!

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

There are three Prius owners on my floor. All three have fairly long commutes (40-50m each way). The oldest Prius in the group has over 100k miles with no problems. I wouldn’t bother with an extended warranty on any Toyota or Chevrolet (in my case).

When we went to complete the paperwork on my wife’s 06 Sienna, I spent an hour or two saying no to extended warranties, service contracts, interior/exterior treatments, etc. Make sure to settle on an agreed price, not a monthly payment.

Good luck,

Ed B.

They are nothing but a very very expensive insurance policy. They only cover UP to 100k miles…Save your money you’ll be better off.

You probably will never get your money’s worth. About half of the extended warranty is a sales commission. The rest of it is a little more than the average expense for fixing cars like yours in the recent past. The insurers that write extended warranty policies have extensive repair information on Prius cars since they were first built in 1997. If you want to make all the money count, keep the $1500 or so that the dealer wants for the extended warranty in your own bank account. Use it for repairs (not maintenance). After your Prius reaches the expiration of the warranty you did not buy, take a vacation with the balance.

BTW, I had a 5 year/60,000 mile extended warranty on my minivan (it was free to me). It needed a $3000 transmission at 58,000 miles. Sometimes the extended warranty is worth it. But that is the only time in 40 years of driving that it worked in my favor.

Agree, on a cumulative basis, if you buy extra insurance (warranty) with every purchase, you are acting like your own insurance company, but forking out all this dough to a third party.

I have only bought extended warranties twice, for a high efficiency furnace ($200 extra for years 5-10), and for for a GPS at a time when the large displays were probematic. The cost for that was $35 extra when the GPS was $400.00.

Having kept track of all the household and electronic items bought, the situation is actually worse than you point out. Tracking 11 items from the time the normal warranty expired to the end of the typical 4 year extended warranty, I spent $120 or so on repairs that would have been covered by the extended warranty. The cost of those 11 policies would have come to $1150!!!

So the payback on those extended warranties is about 10% for electronics and household hard goods. Sears employees working on commission really push these programs, and my late father-in-law fell for all of them. I assured him his fridge and stove (both with 40 year old technology)had an extremely low probability of needing major repairs in years 2 to 5, and the program did not cover normal maintenance.

I celebrate when any car warranty expires. Freedom is talked about a lot but I seem to be the only one who appreciates it. I didn’t spend all those years in the Military to defend warranties. I did it because I liked greasing planes. Then there was the wonderful paperwork…

You’d be much smarter to take the money you would have given them for the extended warranty and put it in the bank and call the account “my warranty account”. Then if you need the money you’ll have it and if you don’t you’ll still have it.

Extended warrantees are a raelly really bad “bet”. You’re betting that one of the systems covered by the warranty will fail after the regular warranty is expired and before the extended warranty expires AND that the cost of repair will exceed the cost of the extended warranty.

If one of the systems covered by the extended warranty is going to fail, it’s extremely likely that it’ll fail either during the regular manufacturer’s warranty as a premature failure or past the period of the extended warranty due to normal wear. Extended warrantees cover only the period when the probability of needing them is almost zero. And chances of a repair exceeding the cost of the extended warranty are real slim.

In short, save your money.

The extended warranties are not a waste of money, but it is more financially prudent to avoid them.

It really depends on your financials. If you cannot set aside money (no judgments) for life emergencies it can be a prudent move. Also if allows you to keep the vehicle in your ownership longer knowing the warranty is there it is well worth it.

Remember the price is negotiable by at least 50%. They are huge money makers and a dealer will start at double their cost to dealer. But even making $100 one is enough to make a dealer happy ,although they will make you fight for it.

The extended warranties are not a waste of money

Only for the .1% of the people who actually collect… The other 99.9% it’s a waste of money. Compared to other insurance policies…it’s a very very expensive policy…And a HUGE money maker for the insurance company…so much so that the big insurance companies (State Farm, AllState, Travelers…etc) all have separate subsidiaries just for this type of insurance…and it’s by far their highest profit insurance policy.


Good point mountainbike. Mechanical equipment has a failure curve typically referred to as the “bathtub curve”. That means that during the initial first, and second year, there is a higher degree of failure (steep end of the bathtub), due to manufacturing mistakes, bad materials, etc. These failures are commonly called “infant mortalities”, derived from the medical profession.

After that, the failure rate is very low and nearly constant ( slightly sloping upward bottom of the tub) and virtually nothing happens unexpectedly until the “wearout curve” (upward sloping back part of the bathtub) is reached. That is around 150,000 miles these days on good cars. Many years ago it started at 50,000 miles or so.

The extended warranty goes from the end of the factory at 50,000 miles (60,000 for powertrain) to 100,000 miles. This is the flat, low failure part of the bathtub curve, with virtually no failures if the car is maintained properly.

With electrical and electronics, the curve is similar, except that the failure rate remains low once past the initial breakdowns (covered by the 1 year warranty), then finally there is a failure which is hard to predict. Again the extended warranty stops well short of the normal life expectancy of good appliances and electronics. A friend of my wife just had her dryer fail after 20 years of constant use. The Sears extended warranty would have “covered” her from the end of year 1 to the end of year 5 only !!!

Odd, I always thought the medical profession stole the phrase from engineering…

I could tell the Sears lady was working commission when I bought my new fridge last year, she got kinda snotty when I refused the extended warranty.
The normal price was $1500, black friday price was $750. She told me about 2 different extended warranties and the longer one(2 or 3 years I can’t remember) was about half the price that they were selling the fridge for that day(1 was about $150 the other was like $330). I figured since I was getting the fridge for half price, I could afford to NOT buy it in case things went wrong; the money I was saving just on the purchase price could be saved and used if something went wrong.

I once had a Sears salesman beg me to buy the refrigerator I wanted from another salesman because he was going to be fired if he didn’t get his percentage of extended warranties up.

I also had Sears try to sell me a 2 year warranty for $60 on a $56 microwave.

And then, don’t forget, lawyers write these policies to exclude whatever it is you are trying to make a claim for. They’ll claim the breakdown was your fault because you didn’t perform “required maintenance” OR the item in question was a “normal wear-and-tear item”.