GM's "Protection Plan"..Anyone have it? Worth it?

Discussion in 'After Hours Lounge (Off Topic)' started by Alf S, Mar 2, 2004.

  1. Alf S

    Alf S Banned
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    I'm trying to help my sister buy a 2001 or 2002 Tahoe or Yukon, her dream SUV at this point, but need advice on extended warranties.

    GM offers various levels of extended warranty plans and the "Value" one seems right for her. However we have no idea what the cost would be...Edmunds.com says you can negotiate with the dealer.

    Anyone have a plan and if so what was the cost..also is there anything to be aware of?

    Also, are there any other non-GM plans worth looking into?

    Thanks for any input you all may have.

    Alfer
     
  2. Brian Perry

    Brian Perry Cinematographer

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    Before laying out the money for an extended warranty, have your sister answer this question: can she afford to pay for repairs herself in the event they are needed? Extended warranties are BIG money-makers for dealers. In other words, if you pay $1,500 for a policy, the dealer expects you to have much less than $1,500 in covered repairs over the time frame involved. Sure, you'll hear "success" stories where someone blew an engine and was glad they bought the warranty, but for every one of those there are dozens of people who didn't make more than $200 in claims.

    If she really wants to buy one, make sure it's an "exclusionary" policy. That means the language in the contract states explicitly what is NOT covered.
     
  3. Bob_Bo

    Bob_Bo Agent

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    Heya Alf,

    Couple of things.

    Your sister may be better off (financially) buying a new '03 or '04 Yukon or Tahoe. Given the current interest rates and promotions, the monthly payment between a used '01 and a new '03 could be as little as 50 bucks a month. Just food for thought.

    Unless your sister does alot of traveling and puts a ton of miles on her vehicle then I'd say an extended warranty would not be worth the expense.

    Current GM factory warranties run 3/36 for mostly everything in the vehicle except maintenance items. Power-train coverage can be a bit more than that ranging from 5/50 to 8/80 depending on the vehicle and the item.

    So, a used vehicle with reasonable mileage may have some existing coverage on it already.

    Aside from all that, as a GM technician, I know folks that both swear by and swear at extended warranties. If your sister gets in a low mileage vehicle, I wouldn't worry too much about extending the warranty. An extended warranty with a higher mileage truck could provide some piece of mind, but the warranty cost is going to be higher too.

    I will say the Tahoe/Yukon has been a pretty reliable vehicle since 96 and the comfort level is incredible in the later model years. I personally own an '03 Yukon and love it.
     
  4. Scott Merryfield

    Scott Merryfield Executive Producer

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    I do not know about the cost of the GM plans, but Ford has raised the price on their extended warranties over the years, making them very unappealing to me. For our last purchase (a 2000 Mercury Villager), after repeatedly refusing to consider an extended warranty the dealer finally made me an offer I'd never had before -- we get all our money back if we do not use the warranty. Since it was put in writing, we bit on the offer.
     
  5. Brian Perry

    Brian Perry Cinematographer

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    I've seen that offer before, but just to clarify, it means not using the warranty at all. In other words, if you paid $1500 and made $300 in claims, you will not get $1200 back. (You would get nothing back.) You must have made $0 in claims to get a refund.

    It's an interesting offer. On the one hand, they are saving money because let's say you had several small (~$100) repairs that you didn't claim so you could keep refund offer alive. But then you incurred a $2,000 expense and were basically forced to use the warranty. You can't go back and claim those earlier repairs after the fact.

    On the other hand, if you don't make any claims and get the refund, they lose %100 of the income from you.
     
  6. DaveF

    DaveF Moderator
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    They still make money from the investment gains while having the customers $2000 for a few years. The plan is almost certainly paid for by the vehicle financing so they make money on the finance charges against the plan cost.

    I was offered a similar plan when I bought my Honda Accord last December. I chose not to take it. $1500 seemed expensive for three years protection on a (supposedly reliable) Honda.
     
  7. Scott Merryfield

    Scott Merryfield Executive Producer

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    That is true. In our case, though, the extended warranty was around $700 for an additional 2 years (extending the warranty to 5 years), so it seemed like a worthwhile gamble. One expensive repair would pay for the warranty, while anything less costly would be a decision on whether we should just pay for it ourselves.

    The vehicle just came off its standard manufacturer's warranty last summer, so we've not had the need to consider using it yet.

    If the cost had been closer to the $1,500 that DaveF mentioned, I would have passed on the offer.
     

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