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Need fatherly advice on purchasing a warranty!

I purchased a 1-owner 2004 Prius with 53,000 miles in MD in march 2011. I know the powertrain warranty on the prius is 5y/60k miles. Which means, the warranty on this baby ran out in 2009. The hybrid warranty is 10y/135k as MD is a CA emission state. Due to the fact that this is a first year production of the 2nd gen prius, this car has had a history of being in and out of the dealership mechanics (I bought it from the same dealer who sold it to the original owner, who traded in the car) for electrical and electronic problems. The 60K mile scheduled maintenance is coming up and the rear tires need to be replaced. I am a young professional and this car was a great buy for the price, but my budget is stretched and I want to be judicious with what I spend on the car. I want to keep it well maintained, but dont want to spend unnecessary money. Given this situation, what is your advice on buying a powertrain warranty on the car? DO I need it? I hope to keep the car for a while if it works out well.

What are the details of the warranty? Who would you be buying it from? How much? How does it define powertrain?

Companies that sell extended warranties are in not business to lose money. You didn’t give a cost? Coverage? Company? or any details needed to give you an answer. In general, no they are not a good idea because the warranty could cost more over the period you own the car than the repairs is needs. This is what the company banks on to make a profit.

These warranties don’t cover tires, brakes, struts, and just about any normal wear items. They are so full of exclusions that many repairs aren’t covered.

Your best practice is to know the maintenance needs of your car, check the owner’s manual and maintenance schedule. Once you know the maintenance requirements pay attention to them and follow them.

An extended warranty is an insurance policy and a rather expensive one at that. The company that issues the warranty is betting that it won’t have to pay for repairs on the car. You are betting that you will not be out any money if the car needs an expensive repair. If this Prius is doing well now, the bugs have probably been worked out. My suggestion would be to put what you woud pay for this warranty into an account and let it grow interest.

I would put the cost of the warranty in your savings account, use it for repairs, you’re (VERY) likely to be $$ ahead.

If you decide to buy a warranty, make SURE (read the fine print) it covers what you want it to cover, and only buy a Toyota factory-backed extended warranty. Others will be cheaper, but often prove to be worthless.

If it is an aftermarket policy (not Toyota), I would be skeptical that you would ever collect on any repairs. I would even be skeptical of a Toyota extended warranty. The dealer will check your car out and tell you whether the problem was due to neglect or normal wear and tear. If they believe either to be true, you will not get the repair paid for. It is likely that will be the case. Someone posted in another thread that he had an extended warranty and several repairs were denied because of neglect or normal wear. If you put the money for the extended warranty (or even half) in a savings account, it will be available if you ever need it. At least you control it and have it for your use if you never need it.

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

So the consensus seems to be skip the warranty and put the money in the bank. I was inclined to decide this way and your comments just made me decide.

Thank you so much for the advice, exactly what my father would have said if he lived in America or knew how to drive a car :slight_smile:

"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."

That’s not really how it works. They will take a loss on an individual warranty, but take in more from the entire population of warranty buyers than they pay out.

So the consensus seems to be skip the warranty and put the money in the bank."

Spend it on something fun. You’re not going to get meaningful interest from a bank. With interest rates low and the dollar being deliberately inflated (Quantitative Easing II), the bank is the last place you want to put your money.

My advice is read the fine print very carefully, and pester the seller with questions to the point of annoyance. The warranties usually cover things that are pretty reliable on most cars–eg. the engine, suspension, drive train. They often don’t cover (or fully cover) the PCM (computer), and other electrical components that are high dollar to fix. Will the electronic displays on the dash be covered if they act up? Probably not.

Plus with a Prius, you’re into another grey area with the batteries and extra electronics, which may not be covered at all. Will a firmware update to fix a drivability problem be covered? Probably not. Will you get a loaner if the car is in the shop? Another question to ask.

I'd Purchase A Warranty Only From The Manufacturer, In This Case It Would Be A Genuine Toyota Warranty, And Only If Geared Specifically To The Hybrid Prius.

The cost of this warranty might scare you off. Often these warranty offers aren't worth the money, but on a vehicle that's known to have expensive problems or on a vehicle that is suspect it could pay. People pay hundreds of dollars every year insuring their vehicles and may never make a claim, but it's good to have if needed. A warranty or insurance buys peace of mind. I like that.

You need to know specifically what's covered and what's not and if there's any deductible or diagnostic fees. You'd want a warranty that is just like the original new car warranty,which is where the phrase "extended warranty" comes from.

Get the prices and the details and post them here if you'd like. To say a warranty is a good or bad idea without any details, particularly cost, is unfounded. Get some details. You'll ultimately have to decide if the warranty is worth the cost.

Have you got more than one vehicle ? One thing I don't like about extended warranties on cars or appliances, or anything that you own multiple units of is that it ties up your money on just one of them unless you buy more policies. With my luck it would be the one item that I don't have coverage on that would break. So, if you've got multiple cars you may be better off "self-insuring" your "warranty" or saving your money.