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New Car Warranty

I’m planning to purchase a new 2011 Subaru Outback. Will probably keep this car for 8-10 yrs. Am considering purchasing the factory extended waranty from Subaru for $1,700. Is this a wise move?

My '97 Outback had no out-of-warranty repairs until it was over 10 years old, and even that repair was minimal. My '02 Outback had one very minor out-of-warranty repair at the 8 year point, for a total bill of something like…$125.
Shortly, I will be getting my 2011 Outback and, based on my past experience, I do not plan to buy an extended warranty for the vehicle.

No. Almost half the fee is a sales commission. The balance has a built-in profit of up to 10% for the insurer. The rest (about 50%) is how much it will cost to repair all the 2011 Subaru Outback’s until the warranty expires. You could be one of the unlucky few that has enough problems to make out on the deal, but that is not likely. Put the $1700 in the bank and use it to repair the car. After 8 years are up, take a nice vacation with whatever is left over.

Take $1,700 and invest it. When the warranty period is over you’ll have a nest egg growing to deal with out of warranty repairs.

How long is the initial warranty? 3 yrs? How do you know you’ll have the car longer than that, it could be totaled in an accident, then what happens to the $1,700? I’ll bet you wouldn’t get it back.

Put the money in the bank.

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

No, it’s not a wise move. It’s just another $1,700 profit for the dealer. Odds of you ever collecting on the extended warranty are slim at best.

Financing the extended warranty by lumping it in with the purchase price makes it even less of a wise move, and makes the warranty cost much more.

use the 1700 dollars to pay down your car loan…loan interest is much more than you can earn with current bank interest

And if you look at the fine print I’ll bet it says UP TO 100K miles or x-years…which ever comes FIRST…

If any vehicle I ever buy costs me more then $1700 in repairs before it reaches 100k miles…I’ll NEVER buy another one again. Chances are extremely good that you’ll never recoop the $1700. Forget the extended warranty…It’s just a very very very high priced insurance policy.

New vehicle warranties are never a good idea. Put the money in the bank or pay down the vehicle note. How do I know? I used to sell new motorhomes on the weekend at the RV dealer where I worked. The new RV warranty costs just under 2k and most customers bought it because most RV repairs are very costly. The first half of the money was split among the salesperson and the dealership and the other half went to the warranty company. I understand this is a common practice at all dealerships or something like it. My boss used to call it “free money”.

You’re handing $1700 over to someone so that IF something happens for a few more years after your manufacturers’ warranty expires AND it meets their “terms” they MIGHT give some of it back to you?

If you’d like to feel like you have warranty protection, put the money in a seperate bank account and call it the “warranty account”. Then if you need it you’'ll have it, and if you don’t need it you’ll STILL have it. Why hand it over to them?

Other than being in agreement with everyone else that you should keep your money let me say that you should be aware, in case you’re not, that extended warranties do not pay for maintenance or wear and tear items.

This means fluids, filters, adjustments, clutches, brakes, belts, and things of that nature.
Some policies also have deductibles on each repair and each instance.

They also often make you jump through a series of hoops to get anything done and this is especially true of non-factory affiliated warranty companies.

What part of the plan is attractive to you chasmayfield?