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Interesting concept in extended warranty policy (1 Viewer)

Brian Perry

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I have a 1999 BMW that will be reaching the end of its 4-yr 50,000 mile warranty in November. Many people have warned me that owning a BMW out of warranty is a scary proposition and have suggested that I buy an extended warranty.
I came across a company -- Link Removed -- that offers a 7-yr, 125,000-mile bumper to bumper warranty for my car for around $1,400. The interesting thing is if you don't make any claims during the coverage period you will get 100% of your money back. I think this a great concept that could/should be offered for any type of insurance. Let's say I have a fairly minor $400 repair bill. While it would be covered, I might think twice about claiming it since I would therefore give up the chance for the 100% refund. Obviously, if I blew the engine or was staring at a $8,000 bill, I would make a claim.
Has anyone seen programs like this, or have any thoughts about extended warranties for cars? I guess my main concern with this company is whether they will be in business in a few years.
 

Jay H

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My big question on warrentees outside the manufacturer, is who does the service, do you get to take your BMW to a garage of your choice or theirs? Can you take it to your dealer for service? Dunno, I would have to get recommendations on garages from similar car owners before I would sign up to any ext. warrentee and find out from them in writing whether you can take it anywhere you want to.

That's like the first question I'd get answered. You're right that getting a BMW serviced out of warrentee is a costly proposition unless you learn how to do it yourself, which is kind of what I'm doing now with my '97 328i. I am now familiar with my brakes, pads, rotors, bleeding. I've already done my oil a whole bunch of times and soon, I'd like to replace my fuel filter and perhaps my spark plugs.

Jay
 

Brian Mansure

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Jay...
You have a car?!?
I thought you rode your bike everywhere. :D
Sounds like a pretty good deal if you can get your car worked on by an ASE certified mechanic of your choice.
I believe another popular and well talked about extended warranty company online is Warranty Gold.
They state on their website you get to choose who works on your vehicle. Check out,
http://www.warrantygold.com/faqs.asp#1
Good Luck.
 

Bill Balcziak

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Remember that if you have a single claim on that warranty policy, you don't get your money out of it until you have $1401 worth of work done. If your car is that likely to need a major repair, doesn't it make sense to put the $1400 toward a new car?

I can't see the benefit of paying $1400 up front against potential problems. [If you're relying on anecdotal evidence of problems with BMWs, then you're just playing into the warranty company's hands. If BMWs were that unreliable, nobody would buy them. You'll hear the exact same stories about every single car ever made, and it's a dubious basis for buying an outrageously expensive add-on warranty.]

--------------------------

Consider the math on extended warranties:

You buy an extended warranty for your next 5 cars at $1400 each (without factoring in inflation): $7,000.

Using the average of my last five cars' out-of-warrranty repairs as an anecdotal guide, you'll get one new transmission ($1,900) and 7 medium repairs (7 @ $400 each) for a total of $4,700 in covered repairs.

Assuming there's no deductable or other out of pocket costs, you paid $7,000 to cover $4,700 in repairs.

--------------------------

These warranty companies are like Las Vegas casinos. They always win. You might be a guy who gets more repair work than you pay for, but you are going to be the exception. No matter how many people reply to this thread saying they got a new engine this or a new transmission that under their extended warranty, you can be assured the majority of people lose a lot of money buying these warranties.

There's a good reason these warranties are the most profitable item a dealer sells. So if you're convinced your POS BMW is about to blow, unload it and spend the warranty money on something reliable.
 

Howard Williams

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Bill:

I'm pretty sure the $1400 he paid was for the full 5 year period, not $1400 each year. That really kinda messes up your point. I think.
 

Jay H

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OK :)
'97 328i w/ about 39k miles on it.
I do bike everywhere, but only started bike commuting in March-2001. :) I also do alot of hiking so typically,that's where my mileage goes into. Driving to the Catskills or the ADKs and also some shore trips and stuff...
Bill makes some good points.. Another thing I'd wonder about is even if you get 100% of your $1400 back in 7 years, you gotta hope that the company is going to be around in 7 years...is it an internet-only firm and do they disclose their books and stuff... Ya never know these days...:)
Jay
 

Bill Balcziak

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For what it's worth, I decided about 15 years ago to never buy an extended warranty for anything I own. During those years I have had one significant TV repair ($300) and a couple of minor gotchas for a total of about $500 total out of pocket.

If I purchased extended warranties on all of the products potentially covered under such agreements (cars, TVs, VCRs, applicances, camcorders, PCs, etc.), I would have spent $5,000-$15,000 on warranties. By refusing all warranties, I've pocketed the money and have easily paid for every out of pocket repair with the interest on the money I didn't spend on extended warranties.

Again, people will always be happy to tell you about the time their camcorder broke and the extended warranty paid for the repair, but they won't tell you about the $5,000 they spent on extended warranty coverage for the other 25 items that never needed a dime's worth of repair work!
 

Bill Balcziak

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I'm pretty sure the $1400 he paid was for the full 5 year period, not $1400 each year. That really kinda messes up your point. I think.
Howard, I don't know what post you were reading, but my post clearly said, "You buy an extended warranty for your next 5 cars at $1400 each." (That's why I made reference to my last 5 cars.)
I might be stupid, but I'm not that stupid. ;)
 

Howard Williams

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For what it's worth, I decided about 15 years ago to never buy an extend warranty
I was of the same persuasion for 25 years until this year.

I bought a 99 Mercedes Benz S-420 this February. I got an extended warranty too. 3 years, 45k mile for $1500. I was very skeptical about it but I did it anyway. I did a little research and many people said the big problems with E.W. is the coverage and who works on your car. Mine is very generous about what's covered and who can perform the work, but here is where my skepticism really comes in. Fixing things on this car is pretty expensive. Just fixing the driver side seat belt tensioner is about $500. A window regulator repair is a couple of hundred. The auto climate control repair is in the thousands. I can see me getting way more than $1500 worth of work done over a 3 year period just for minor stuff. The deal seems too good to be true. I think there's a catch in there somewhere that I am missing. I guess I'll find out what it is when I make a few claims.
 

BrianB

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For what it's worth, I decided about 15 years ago to never buy an extended warranty for anything I own. During those years I have had one significant TV repair ($300) and a couple of minor gotchas for a total of about $500 total out of pocket.
Generally, I agree. For electronics & general home items, it doesn't generally make sense. Cars are much more expensive for maintenance than the average TV unfortunately - I think a decent extended warranty (if you plan to hold onto the car for more a year or two) make much more sense in that specific case.
 

Scott Merryfield

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The Lincoln-Mercury dealership made us the same offer on my wife's 2000 Mercury Villager (full refund if we do not use the extended warranty). I decided to take them up on their $600+ offer (I had repeatedly refused to purchase the extended warranty until they offered these terms).

This was the first time I had ever been offered these terms on an extended warranty for any product. I figured that it was a low-risk gamble to take under these conditions.
 

Ryan Wright

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These warranty companies are like Las Vegas casinos. They always win.
Not always. Most of the time, but not always.

I rarely buy extended warranties. I do, however, buy them on vehicles if they are fairly inexpensive. I also bought one for my RPTV, since you can't exactly ship a 400 pound TV somewhere to be fixed and in-home service around here is a joke. (Main reason I bought it: The third time they have to send a tech out, they'll just give you a new TV instead. The one company that does repair service around here is so horrible that if something ever happens to my TV, I'm virtually guaranteed a new one - these guys can't even fix a damn toaster.)

I bought a New Beetle for my wife last year and bought the extended warranty. They started at $2500 and I continued to refuse coverage until it got down to $1200. At that price, I bit. Bumper to bumper, no deductable as long as it is serviced at the dealership. This was a used car and I've already made more than $1200 in claims against it. First, the driver's side window motor broke. They fixed it. Then the passenger's failed completely. They replaced it with a newer model - the motors on my particular Beetle were redesigned for later years due to high failure rates. Then, the driver's side motor failed again and shattered the window while it was inside the door. (They also replaced it with a newer model) Finally, my wife took the car in yesterday to have them replace the gas door solenoid - it died and we couldn't get the gas door opened.

I still love the car. It's no big deal to take it in and they give us a loaner every time. Well, I have to fight them for the loaner, as they like to claim that rental coverage isn't included, but it is, and I always get my way. We just drop it off and drive around on their dime for a day while they fix our car for free. If I had to pay for these repairs, I'd be pissed, but the way I see it, by the time the warranty expires I'll basically have a brand new car. No problems here!!

Oh, the coverage also includes a wear and tear provision. If something wears faster than it should, they'll replace it. I'm thinking of asking for new tires here in a bit, mine are starting to get old (yep, they're covered).
 

Carl Johnson

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If I could go back and pay $1400 for a bumper to bumper 7 year/125,000 mile warranty, I'd be on it in a heartbeat.
Even if you would have bought the extended warranty there's a real good chance that they wouldn't have have covered your damages. Without the service records they would have claimed that the engine failure was your fault due to lack of scheduled maintnence. The same thing happened to my parents a few years ago when the engine locked up in their Volvo.
 

John Garcia

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Just fixing the driver side seat belt tensioner is about $500
Seatbelts are a SAFETY item, and should be covered for FREE. All parts and labor were covered for mine when I had a problem (Nissan), no questions asked, for the life of the car.
 

Keith Mickunas

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Brian, I'd get that warranty. I know with some, you can also get some of your money back if you sell the car before the warranty ends. I bought one to increase the pathetic VW warranty (before '02 it was 2/24,000) and while it cost a bit over a grand, and it has a $50 deductible, I think it was worth it. With new cars, minor problems can be costly. If one of the computers go, it ain't going to be cheap, and aside from a minor leak most AC repairs are going to run $500 and up.

And to the other VW owners out there, due to the notoriously high failure rate for the window regulators, you can often get those fixed out of warranty without much trouble. Still, before my normal warranty runs out I think I'll slam the door a whole bunch so maybe I can get the new ones.
 

Todd Hochard

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Buzz,
I guess the big lesson here is to follow the owner's manual recommendation to check your oil at every fill up.:emoji_thumbsup: Hard lesson to learn. I'd bet valvetrain noise at startup would have been a good precursor to that failure.
I don't do warranties, either. I figure, if the product sucks that badly, I simply won't purchase it again. I own two Hondas (well, one is Acura, 4yr/50K bumper-bumper), so I don't really feel worried.
I guess a warranty that gives you all your money back if you don't use it isn't so bad. BUT, will the company still be around down the road?
Todd
 

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