X-tended Warranty

I know - the insurers make a killing. But, I am risk-averse after my last experience, both within and out of warranty repairs. Having said that, does anyone have any wisdom on extended warranty administered by (a) Toyota and (b) Warranty Direct? Would be for 2006 still under factory warranty.

When I bought my Toyota I was asked if I wanted an extended warranty…My comment then and now was/is…I am buying a Toyota why would I need an extended warranty??? … they smiled and left me alone…if you can afford the $$$ the advice you will get from many is …regardless of the make of car put your money in a high interest bank account and you will be better off.

Instead of buying the extended warranty, put the money in a certificate of deposit that expires when your first warranty expires or later, depending on your risk aversion. That’s you repair fund. If the warranty seller charges $2000 that means they think that the average Camry (for instance) will cost them about $700 during the extended warranty period. You, on the other hand, have about $2100 after 2 years assuming a 5% APR. If you are about average, you have $1400 left over.

 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 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

Generally I don’t see the value of an aftermarket warranty. Will they pay up? You never know. You can lose a lot more on bad investments than you can lose on car repairs.

In general as posted over and over buying extended car warranties is not usually a prudent financial move. However if it gives you piece of mind it is worth every penny. I personally would always get the manufacturer branded extended warranty. Third parties have a nasty habit of going out of business. They also annoy mechanics to no end as the repair needs to be “approved”. Usually the folks how do this are not around often so your poor mechanic has to waste part of their day fighting to get through and then getting repair “approved” by people who don’t want to pay.

On the other hand extended by Toyota its your dealers problem it is their product. You know you get quality OEM parts and none of the major makers are going out of business.