Prepaid maintenance and extended warranty


#1

I just bought a 2011 Suburu Outback. Dealer is offering a 36mo/45000 prepaid maintenance contract for $1424. Worth it?



Also an extended warranty to 84mo/75000mi for $2167 with deductable $50. Worth it?



And a interior/exterior protection for $1299. Includes deadening road noise 30%, removal of dings and dents and repair of leather interior. Worth it?


#2

I don’t think any of these are a good idea. 36mo/45k miles is oil changes and tire rotation. Most cars go 100k without a problem. Check consumer reports to see if this car has any long term mtc problems, A/C, tranny etc and then you can make a better decision. Interior/exterior is a waste. Road noise should be good without this dealer add on and ding/dent will be covered by insurance. ALL CRAP!


#3

The extended warranty likely costs the dealer around $1000 and the balance is markup/profit.

Two things on extended warranties

  1. Never consider buying unless backed by car maker, eg Subaru here
  2. They are completely negotiable. My sis in law was offered a 8yr/100k bumper to bumper on a used Honda Ody van from Honda for $3000. She stated it was only worth $1000 to her and they accepted.

Interior/exterior plan is not worth $100. Skip. The company backing that will fold before you can collect.

Never prebuy anything in life. If the dealer goes out of business guess where your $1424 goes, thin air…I learned the hard way with $1000 in home heating oil pre bought by 25 year old company, never delivered and went out of business.


#4

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. 

Prepaid Maintenance: is going to far more expensive than you will get from most independent mechanics and not likely to be any better.

     Dealers are no better (or worse) than independent mechanics for almost anything you might need done on your car.  They will almost always charge more per hour and often more for parts and supplies.  They also tend to look at repairs a little different than the independent. 

A dealer may well recommend work that strictly may not be needed, but could be connected to the problem or maybe replace a part when a little repair would fix it ALMOST as good a new.  

There is no need to bring your car to the dealer for any service other than service that is going to be paid for by a recall or original warrantee.  During the warranty period be sure to have all required (as listed in the owner's manual) maintenance done and to document all maintenance work.

I suggest that most people would be better off finding a good independent (Not working for a chain) mechanic. 

Note: Never ever use a quick oil change place. They are fast cheap and very very bad.

Good Luck


#5

Thanks for the reply and good advise.


#6

Thanks for your reply and good advise.


#7

Thank you for your reply and good advise.


#8

I don’t like to pay in advance for services. The dealer has your money up front on the prepaid maintenance contract while you could have the money invested and earning interest. If the dealership goes under or changes hands, will the contract still be good?


#9

Thank you for your reply and good advice.


#10

Prepaid maintenance.

You will be locked into their service and you will likely be pushed to have additional, not covered, maintenance done.

Look for a local INDEPENDENT mechanic. Ask your friends neighbors and co workers for recommendations. I am sure you will find a less expensive mechanic and one that is less likely to try and sell you additional, not needed, work.

Look at your owner's manual.  It should give you a list of maintenance items you should have done.  It is important that you have all of those items done.  1st because it is needed for long reliable life of your car and to keep the new car warranty in force.  2nd because it really is needed.  It is cheaper to do the maintenance than to pay for the repair bills

One addition. It seems many manufacturers have removed the recommendation for changing the automatic transmission fluid. I strongly recommend changing the automatic transmission fluid along with cleaning the filter, at 30 - 40,000 miles intervals. Spend a little now, save a lot later.

extended warranty

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


#11

I am normally against such products, but the price of the prepaid maintenance seems pretty reasonable to me. I usually get my new cars serviced at the dealership. However, you don’t have to. You can shop around for better maintenance rates, which might be cheaper than $1,424 over that span of time.

I stay away from all extended warranties, and that interior/exterior protection plan is pretty worthless. Trying to make a claim would be a major pain, especially on something as hard to define and substantiate as road noise.


#12

Go to your service department, and ask them to give you estimates of each service interval, what they will actually be doing, and how many services this will actually be, and compare the total price to how much they want to charge you for the pre-paid offering.

Then take you money, and stuff it into a bank account, and use that over the next 3 years instead.

The purpose of prepaid maintenance plans is to ensure that your car only comes to their dealer for the first 3 years of its ownership, and that allows them to ding you for extra services above and beyond what their prepaid plan covers. This means that you won’t shop around for lower prices in the future. All good news for them.

BC.


#13

I disagree somewhat with the people telling you that pre-paid maintenance is bad. It MAY actually be a decent deal. To tell, look in your owner’s manual and add up all the maintenance services at the dealer’s price and also at the prices of an independent shop. It may just be that $1424 is a discount off this price. I have a hard time believing that it would be, but sometimes these places will provide a discount because they get your money upfront and can get interest off of it, AND they know a certain % of the buyers will move, sell the car, or wreck it at some point in that prepaid period, and there will be services paid for that they do not have to perform. So sometimes you can get a significant discount on this.

In a similar vein, a local tire shop / service chain (AAA owned) offers lifetime parts+labor guarantees on most of their repairs. I know an owner of one of these places, and his explanation was simple. The majority of the parts they replace they can buy with lifetime parts guarantees, and so their only cost if they have to redo the work is labor. They find they get a lot of extra business with that guarantee and only a small % of the parts need to be replaced again before the owner gets rid of the car.

Sort of like how Toyota used to offer lifetime guarantees on their suspension repairs here… of course they stopped offering that when they started having a lot more suspension problems.

But in all cases, make sure you check to see that the service provider is in good financial shape and not likely to go out of business.

Oh, and the extended warranty is a terrible deal, and that interior/exterior protection is as well… There is no way they actually deaden road noise that much, so its only real value is ding/dent repair and leather interior, and I’d bet they have some way out of doing some of that work… or some severe restrictions…

Think of it this way - if spraying a coating on the bottom of the car really cut down noise 30%, don’t you think the car companies would be doing it already? Those coatings would only cost them $20-30 per car, tops, and would give their vehicles a much more premium feel…


#14

Here is my rough math for the 45K contract: $600 or less for 30K service and 8 tire rotations/balances at $30 per occurrence. This convinces me going ala carte to my favorite trusted mechanic is cheaper. 75K contract might include a spark plug change out in addition to the other services, still cheaper ala carte.

This info is based on my local (not necessarily cheap) mechanic in my area and what I have done with my Subaru.


#15

No, no, and no. You can get your maintenance work done anywhere. It will consist of changing oil and filters as required. Extended warranties are typically a bad deal for the buyer, but a great deal for the dealer. He gets to keep half of the up front cost. The last one baffles me. Is it an insurance policy or work that will be done up front? Maybe it’s a combination.


#16

You would be better off puting that money into a “Vehicle maintenance Fund”. Really, buying a new car like that, 1)you have the manufacturers warranty. By the time that is up, you should have enough saved up to either buy a new car cash outright or to pay cash outright for any repairs that might arise (i.e. blown engine or trans axle)… 2) its allot like paying rent when you could buy. Why make payments to someone, when, ultimately in the end, you have nothing to show for it but a bunch of check stubs. When you buy a new car, your saved up maintenance $$$ "transfers to the new car!!!


#17

One exception to the advice offered above, and the ONLY reason I would ever purchase one of these “special” plans. In early 1985, I purchased a 1984, brand new, left-over Mazda B2000 pickup truck (for $5000 from a large dealer who had a LOT of them). I already knew that there were problems with this manual transmission, made by Ford, and so I paid an extra $500 for a plan which would cover this component. Over the next 150K miles I drove this vehicle, the transmission had to be replaced/rebuilt TWICE, so this plan paid off for me very well. I then sold it to a friend who drove it another 150K, and at 300K it was sitting in the middle of a field in southern California, abandoned.
Had I not done any research, I would have paid a lot more than this $500 for transmission work, of course, but had I not found a problem like this, I never would have bought this kind of plan. Nor will I in the future. By that same token, I probably will never purchase another new vehicle (and have not done so since that time), as Tom and Ray suggest. Let someone else deal with the depreciation and headaches (such as the one this, otherwise fine, vehicle had).


#18

Good advice. When microwaves first came out I was shopping for one in 1980 or so. The Sears salesman tried to sell me one with an early version of a touch pad control. He also tried to sell me on the extended warranty at $40 which would cover the touch pad. He said these pads had a high failure rate and he even owned one himself, with the extesnded warranty of course. He had the pad replaced several times!

If we had bought the pad model, I would have bought the extended warranty. Instead we bought a dial-controlled Toshiba restaurant/commercial model which lasted from 1981 till 2002.


#19

It’s good it worked to your advantage, but you are the exception to the rule. Say it pays for 10%, even 25% of the people to get it - there’s 75% to 90% of the people left that it doesnt’ pay for. On average it doesn’t pay, and in a big way.

This only applies to manufacturer-backed warranties. A good case can be made that most third-party warranties are a complete waste of money because of the difficulty collecting on what would seem to be ligitimate claims.


#20

ABSOLUTELY NOT. I’ve done the math… and checked out costs with a certified Subaru mechanic. Even assuming you do drive enough to accumulate 45,000 miles in 36 months, total cost for all these services would be less than $1,000 . The plan costs $1,324! I was given a cost comparison sheet by my sales person that implied all these services would cost over $2,000 without this maintenance plan, so it looked like a really good deal. When I got home I looked closer and found this isn’t true. For example: it lists an oil-change required at 3,750 miles (and other intervals) costing $39.95. At 7,500 miles (and other intervals) a tire rotation is required in addition to the oil change? in that instance the oil change plus tire rotation (per his comparison-sheet) costs $159. Oil change $39.95 + $119.05 for a tire rotation??? That doesn?t make sense. And there were other, similar weird and unlikely costs. What a rip-off! I had been convinced by the salesperson to buy the plan, now I have to try to get my money back. DO NOT PURCHASE THIS PLAN.