My 2002 Mazda has 51,300 miles on it, and is now out of warranty. There’s a company called Warranty Registration Center that wants to sell me an extended service contract for 4 years or 100,000 miles. On the phone with the salesperson, the price went down from $3490 to $1715 with a 0%
financing arrangement over 18 months. It’s supposed to be a bumper-to-bumper contract that pays for every repair except normal
maintenance and tires, with a $100 deductible.
I checked with the Better Business Bureau, and this company has had “many” complaints – about 320 over 36 months, some resolved and some not, all kinds of categories.
So is it a total scam, or is it worth the money for this kind of service insurance? I do expect to keep the car for at least 4 more years.
Any advice?
Put the $1715 in a seperate bank account and call it the “car repair account”. Then if something breaks, you’ll have the money to repair it. If not, you’ll have the money for a nice vacation.
Why give the money to them to hold in case you need some of it…and keep if you don’t? Instead give the money to yourself to hold in case you need some of it…and keep if you don’t?
I would avoid a contract like this anyway. Often you will find that many reasons pop up to deny coverage and that 100 dollar deductible means 100 for EACH complaint. Take it in for 5 problems and you’ll get hit for 500 dollars at a minimum IF they cover all of it.
Have continued problems, take it back, and there’s a good chance the cause of the problem will be something else; therefore, another 100 deductible per complaint.
That many complaints over 36 months may or may not be justified when compared against the total number of contracts sold. That’s hard to say without analysis of each complaint since a great number of people always assume (a bad word) that an extended warranty will cover everything coming down the pike. When reality hits, and after failing to ever read one paragraph of the contract in the first place, they get mad and blame the warranty company for their shortsightedness.
Your 02 car only has 51k miles over 6 years. Continue this trend over the next 4 years and you’re only looking at a total of around 85k miles. Your Mazda should still be in great shape 4 years from now.
My suggestion is take 1715 dollars and place it into an interest bearing account. Leave it there and use it if you must for a major repair if one crops up. My feeling is that unless you abuse the car that 1700+ dollars will still be there in 4 years. JMHO anyway.
While most people advise against extended warranties in general, it is important to distinguish between those offered by the car’s manufacturer and those offered by companies like “Warranty Registration Center”.
The non-manufacturer warranty companies will almost always find a way to weasel out of paying a claim that they are supposed to pay under the terms of the contract. Hence, they are scams–as verified by the BBB. And, a number of these companies have gone out of business, thus leaving their customers totally out of luck.
If you feel the need for an extended warranty, you should see what Mazda has to offer. It may well be more expensive, but at least they are likely to honor the terms of the warranty. And, if you don’t like what Mazda has to offer, then do as mountainbike advised, and open a special little bank account with the same amount of money, in case of the need for expensive repairs.
It’s the best legal scam in the business. See if you can get it for a buck. You can take a chance without them and see if nothing breaks or take a chance that they will pay if something does break. The risk is the same. The biggest complaint is that they didn’t pay. If you bought a warranty for everything you owned, you couldn’t afford anything you own.
They tried to screw you for $3500 to begin with and they are STILL trying to screw you for $1700…How many shots at your wallet are you going to give them? The guy on the phone will get half of that money and the dealer who fingered you will get a piece too…
lets think… lots of complaints, and you wonder if its a scam. yup, it is.
how much do you figure you’d spend on repairs in the next 2 1/2 years?
1750 would cover a whole lot dont you think?
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 $500 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
First off…extended warranties are just a very expensive insurance policy. You’d be better off putting that money into a savings account.
Also is the contract for 100k miles or just TO 100K miles (i.e. 48k more miles)?? I’d pretty much gurantee you it’s the later.
Now this is the kicker…You say you checked with the BBB and there are numerous complaints…Then WHY are you even considering buying a extended warranty from them?? If you still thinking of buying it then why did you even check with the BBB.
Thanks everyone who replied to my question about extended service contracts. Just writing out the information helped me realize that it is a bad deal. All of your responses gave me the extra evidence in case I doubt my intelligence!
You made a good decision! In a previous post on this subject I related that of 11 major household items (stove, fridge, tv, etc) I kept track of all breakdowns that occurred outside the factory warranty for the time covered by the extended warranty. The repairs came to $104, while the cost of the various extended warranties on these 11 items would have cost about $1200!!! As mentioned by various posts, thes warranties are great for the people who sell them. The only time to go for them is when a manufacturer is introducing an unproven technology on the market, like early microwave ovens with touch pad controls, which were very troublesome.