buy a warranty?
#1
buy a warranty?
What do you guys think about purchasing an extended warranty beyond the 3 year/36K? Can I expect of lot of expensive maintenance like a BMW out of warranty?
#2
Melting Slicks
While Consumer Reports etc. advises against buying service contracts, I have been buying them for all my cars since the early 90's and the $ benefits received have always greatly exceeded the price of the contract. The best example was our family van, a 1996 Chrysler Town & Country. Contract cost under $1000 and over the life of the contract there were almost $10,000 in covered repairs, including transmission, power sliding door components, pumps, tensioners etc. I purchased my 2013 GS vert a month ago and ended up getting an aftermarket service contract from my auto insurer (Mercury) that is 7 yr / 100,000 miles with special electronics coverage since I have Nav & HUD, with zero deductible for $1525. The GM equivalent would max out at 84,000 miles and cost around $2800. My main concern is that the repair facility be able to bill the insurance co. for approved repairs rather than me pay and then seek reimbursement. Since this is how the contract works it is virtually identical to a GM contract yet considerably less expensive. I have no doubt that it will pay for itself many times over since the car is complicated and repairs are expensive.
#3
47 yrs of Vettes
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I bought a C6 Coupe at the end of '05, and at the same time I bought a little Chevy Aveo to haul around our bullmastiff who wasn't going to fit in the Vette.
About 2 1/2 years after purchase I knew I was going to keep both cars, so I bought GM Protection Plans on both - added 5 years to each original warranty, $0 deductible, Major Guard.
I just sold the C6 (bought a new one), and I still have the Aveo. In both cases I collected more in repairs than I spent on the extended service plans - matter of fact, a couple months ago the Aveo broke a timing belt, bending the vavles and destroying the head. Over $3,000 damage - covered. (A bit ironic, as I really got the plans cause I was worried about the cost of Vette repairs!)
I bought the warranties from Dennis Fichtener at Fichtener Chevrolet in Montana. He gave me a great deal, way better than my local dealer, and he's a pleasure to do business with. I spoke to him a couple months ago when I got my new C6, and he told me the best time to buy the warranty on my new car is just before 12,000 miles, or just before 12 months, whichever comes first - so when that happens I'll be getting a GMPP from him for the new car.
The way I feel is - if you're going to keep the car a long time, you'll get your money's worth. If you don't keep the car that long, the GMPP is a valuable selling point, and in the worst case you can always cancel the policy if you car gets sold or wrecked and they give you back a pro-rated amount. I think it's a win no matter how you look at it.
ps: Dennis is a Forum Member, and always seems to have the absolute best price on the GMPP
About 2 1/2 years after purchase I knew I was going to keep both cars, so I bought GM Protection Plans on both - added 5 years to each original warranty, $0 deductible, Major Guard.
I just sold the C6 (bought a new one), and I still have the Aveo. In both cases I collected more in repairs than I spent on the extended service plans - matter of fact, a couple months ago the Aveo broke a timing belt, bending the vavles and destroying the head. Over $3,000 damage - covered. (A bit ironic, as I really got the plans cause I was worried about the cost of Vette repairs!)
I bought the warranties from Dennis Fichtener at Fichtener Chevrolet in Montana. He gave me a great deal, way better than my local dealer, and he's a pleasure to do business with. I spoke to him a couple months ago when I got my new C6, and he told me the best time to buy the warranty on my new car is just before 12,000 miles, or just before 12 months, whichever comes first - so when that happens I'll be getting a GMPP from him for the new car.
The way I feel is - if you're going to keep the car a long time, you'll get your money's worth. If you don't keep the car that long, the GMPP is a valuable selling point, and in the worst case you can always cancel the policy if you car gets sold or wrecked and they give you back a pro-rated amount. I think it's a win no matter how you look at it.
ps: Dennis is a Forum Member, and always seems to have the absolute best price on the GMPP
Last edited by StuSegal; 07-31-2013 at 01:20 AM.
#5
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St. Jude Donor '12-'13
#6
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Some people make out with extended warranties, just like some people leave Las Vegas with more money than they came there with. Most people do not. The odds of an extended warranty paying for itself are about the same as those taking the Las Vegas trip. The insurance companies know the odds, they are the house, most often they win, you lose. Take your chances. I keep my money in the bank and while I have never bought one, if I had, I would have been like the typical Las Vegas gambler.
#7
Burning Brakes
While I'm not picking on extended warranty holders, I maintain that American men are getting too apathetic, or indifferent about maintaining their own vehicles.
A lot of repairs can still be done by the alert reader.
If a man is just too tool-shy to work on his own car, then self-insure. Set some seed money aside for major repairs, and add to it slowly over time. It's quite unlikely that you will have a catastrophic failure, and before you know it, you will have more than enough dough for repairs that are beyond your ken.
As for the other benefits of the various programs:
Roadside Assistance: You can buy coverage for roadside reimbursement, from your car insurance policy provider. They're not like AAA in the sense that they have their own vehicles to come and tow your car or bring you gas when you need it. Instead, they will reimburse your costs when you call another service provider to come help you. This is actually beneficial because you are able to call any emergency roadside assistance provider and not have to rely on a regional network or local towing company. You can essentially call any of them and recoup the cost later on.
Or get AAA. I've found that the discounts AAA offers on lodging and other offers recoup the cost each year.
Trip Interruption Trip insurance is offered by many major credit card providers. Check your cc provisions.
In short, extended auto protection plans are a boon to the companies offering them, and of dubious true value to the automotive owner.
A lot of repairs can still be done by the alert reader.
If a man is just too tool-shy to work on his own car, then self-insure. Set some seed money aside for major repairs, and add to it slowly over time. It's quite unlikely that you will have a catastrophic failure, and before you know it, you will have more than enough dough for repairs that are beyond your ken.
As for the other benefits of the various programs:
Roadside Assistance: You can buy coverage for roadside reimbursement, from your car insurance policy provider. They're not like AAA in the sense that they have their own vehicles to come and tow your car or bring you gas when you need it. Instead, they will reimburse your costs when you call another service provider to come help you. This is actually beneficial because you are able to call any emergency roadside assistance provider and not have to rely on a regional network or local towing company. You can essentially call any of them and recoup the cost later on.
Or get AAA. I've found that the discounts AAA offers on lodging and other offers recoup the cost each year.
Trip Interruption Trip insurance is offered by many major credit card providers. Check your cc provisions.
In short, extended auto protection plans are a boon to the companies offering them, and of dubious true value to the automotive owner.
#8
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Here is something that I posted a year or so ago on the same subject:
Extended warranties are for people who don't understand the real risk of equipment failure and the economics behind the warranties. I’ve never bought an extended warranty on anything I’ve ever bought. Why? Simply because they don’t make economic sense. An article in Consumer Reports that studied the statistics from reader surveys found that only one in five responders said they had a net savings with an extended warranty. For automobiles 2/3s of the people with extended warranties recovered less than the warranty cost. Most of the other 1/3 recovered what the warranty cost and a few recovered more. Not very good odds in my opinion.
As a mechanical engineer I know something about equipment failure scenarios. A new machine will have a higher than normal failure rate when new because of manufacturing and assembly errors that are inevitable. Sometimes called infant mortality. We don’t have to worry about those failures because that’s what the manufacturer’s warranty covers. So you have a free warranty that covers the entire car for 36,000 miles or 3 years and the power train for 100,000 miles or 5 years. After that time period almost all manufacturing and assembly errors will have been found and repaired and we then enter into the normal failure mode where the failure rate is very low. After a period of use the machine finally goes into the “worn out” failure mode where the failure rate once again begins to rise until the machine breaks. For an automobile the “worn out” failure mode rate begins to rise at around 100,000 miles. So the main reason that an “extended warranty” most often isn’t even used is because it covers the most reliable part of an automobiles life.
As a general rule, you should only insure for those losses that you can’t afford to cover yourself or for which there is an abnormally high and unpredictable risk factor. That’s why automobile insurance, health insurance, homeowners insurance make sense. Most people can’t afford to cover the potential catastrophic losses that these risks present. And the risk is always there. The risk doesn’t change over time. At any moment you may have a heart attack, a drunk driver runs into you, your home catches fire, etc. But automobile failures are not the same as discussed above. They are actually fairly predictable. High when new, low during the normal life and high again as they wear out. A number of people note that the C6 has a lot of costly electronics that can fail. All that I’ve noted above for mechanical failures also applies to electronics as well. In fact it is even truer for electronic failures.
So it really comes down to playing the odds. The people selling the extended warranties know what the risk is that they are taking. They are the house. They have all the statistics. If they are selling a policy for $1500 they know that the vast majority of owners will make claims that are well below that number and that’s how they make money. If you can afford a C6 (of course there are a lot of people out there making unwise financial decisions because they have to have one), you can afford to be the house and cover the potential costs of repairs.
If I needed that illusive “peace of mind” that people are looking for with extended warranties, I would put that money that you were going to spend for an extended warranty into a savings account and use that account to cover repairs. If you buy new, for the first three years I’d put $50 a month into that fund. After three years you’d have $1800 saved and I’d continue to fund that account as long as I had the car. Most likely when you are ready to sell the car, there will still be money in that account that you can use to cover your new car.
Bottom line, the best extended warranty is a savings account.
One of the responses came from 3GenVettes. He wrote:
Since I'm a CPA and analytical analysis is where my bias lies, I have to agree with Walt.
However, I respect the point made by WAwatchnut with regard to A) having the money to make the repairs and B) withstanding the negative impact if expensive.
The greatest opportunity to satisfy the A and B criteria noted above comes from consistently applying the advice from Walt. Each and every time that you pass on an extended warranty you improve your odds of winning. You gain the cumulative amount of savings from every extended warranty avoided putting you in the position to satisfy the A and B elements of risk
Extended warranties are for people who don't understand the real risk of equipment failure and the economics behind the warranties. I’ve never bought an extended warranty on anything I’ve ever bought. Why? Simply because they don’t make economic sense. An article in Consumer Reports that studied the statistics from reader surveys found that only one in five responders said they had a net savings with an extended warranty. For automobiles 2/3s of the people with extended warranties recovered less than the warranty cost. Most of the other 1/3 recovered what the warranty cost and a few recovered more. Not very good odds in my opinion.
As a mechanical engineer I know something about equipment failure scenarios. A new machine will have a higher than normal failure rate when new because of manufacturing and assembly errors that are inevitable. Sometimes called infant mortality. We don’t have to worry about those failures because that’s what the manufacturer’s warranty covers. So you have a free warranty that covers the entire car for 36,000 miles or 3 years and the power train for 100,000 miles or 5 years. After that time period almost all manufacturing and assembly errors will have been found and repaired and we then enter into the normal failure mode where the failure rate is very low. After a period of use the machine finally goes into the “worn out” failure mode where the failure rate once again begins to rise until the machine breaks. For an automobile the “worn out” failure mode rate begins to rise at around 100,000 miles. So the main reason that an “extended warranty” most often isn’t even used is because it covers the most reliable part of an automobiles life.
As a general rule, you should only insure for those losses that you can’t afford to cover yourself or for which there is an abnormally high and unpredictable risk factor. That’s why automobile insurance, health insurance, homeowners insurance make sense. Most people can’t afford to cover the potential catastrophic losses that these risks present. And the risk is always there. The risk doesn’t change over time. At any moment you may have a heart attack, a drunk driver runs into you, your home catches fire, etc. But automobile failures are not the same as discussed above. They are actually fairly predictable. High when new, low during the normal life and high again as they wear out. A number of people note that the C6 has a lot of costly electronics that can fail. All that I’ve noted above for mechanical failures also applies to electronics as well. In fact it is even truer for electronic failures.
So it really comes down to playing the odds. The people selling the extended warranties know what the risk is that they are taking. They are the house. They have all the statistics. If they are selling a policy for $1500 they know that the vast majority of owners will make claims that are well below that number and that’s how they make money. If you can afford a C6 (of course there are a lot of people out there making unwise financial decisions because they have to have one), you can afford to be the house and cover the potential costs of repairs.
If I needed that illusive “peace of mind” that people are looking for with extended warranties, I would put that money that you were going to spend for an extended warranty into a savings account and use that account to cover repairs. If you buy new, for the first three years I’d put $50 a month into that fund. After three years you’d have $1800 saved and I’d continue to fund that account as long as I had the car. Most likely when you are ready to sell the car, there will still be money in that account that you can use to cover your new car.
Bottom line, the best extended warranty is a savings account.
One of the responses came from 3GenVettes. He wrote:
Since I'm a CPA and analytical analysis is where my bias lies, I have to agree with Walt.
However, I respect the point made by WAwatchnut with regard to A) having the money to make the repairs and B) withstanding the negative impact if expensive.
The greatest opportunity to satisfy the A and B criteria noted above comes from consistently applying the advice from Walt. Each and every time that you pass on an extended warranty you improve your odds of winning. You gain the cumulative amount of savings from every extended warranty avoided putting you in the position to satisfy the A and B elements of risk
Last edited by Walt White Coupe; 07-31-2013 at 09:22 AM.
#9
Melting Slicks
Are you talking about a GM warranty or an aftermarket warranty? Aftermarket warranties are generally less reliable...and some are outright scams.
Another consideration... If the warranty you buy is transferable, it can actually add some value to your car if/when you sell it to a private party. A used C6 with a warranty is more appealing than the same car with no warranty...especially if it's a Z06.
Another consideration... If the warranty you buy is transferable, it can actually add some value to your car if/when you sell it to a private party. A used C6 with a warranty is more appealing than the same car with no warranty...especially if it's a Z06.
#10
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St. Jude Donor '08-'09-'10-'11-'12-'13-'14-'15-'16,'19
I bought an extended warranty from an Internet company on my previous car and bought GMPP Major Guard on the Vette.
The Internet company warranty paid for itself, but it was a big hassle to use. The company has since gone out of business.
I bought the GMPP four years ago for $955. I've used it four times. Most of the problems I have had are fairly common ones.
Right now my Vette is at the dealership for a bad harmonic balancer and bad sway bar end links. While the tech was replacing the harmonic balancer, he noticed that the oil pan gasket was leaking. The car will need an alignment after the harmonic balancer replacement. These repairs would cost well over $1,000, and the only thing I have to pay for is gas for the rental car.
The GMPP was a good buy for me. Now it will cost to $1,475 to extend the plan for two years. I have decided not to renew as I think that is too much to pay for two years of coverage. I will assume the risk.
The Internet company warranty paid for itself, but it was a big hassle to use. The company has since gone out of business.
I bought the GMPP four years ago for $955. I've used it four times. Most of the problems I have had are fairly common ones.
Right now my Vette is at the dealership for a bad harmonic balancer and bad sway bar end links. While the tech was replacing the harmonic balancer, he noticed that the oil pan gasket was leaking. The car will need an alignment after the harmonic balancer replacement. These repairs would cost well over $1,000, and the only thing I have to pay for is gas for the rental car.
The GMPP was a good buy for me. Now it will cost to $1,475 to extend the plan for two years. I have decided not to renew as I think that is too much to pay for two years of coverage. I will assume the risk.
#11
Melting Slicks
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St. Jude Donor '10-'11-'12-'13-'14
Certainly, do what you want. If "peace of mind" does something for you, fine. But, as has been mentioned, the companies that sell extended warranties must pay out less than they charge, else they'd be out of business. And the profit on them is actually quite large, so they really pay out a lot less. Therefore the benefit to the buyer is coverage for an expense so large that you could not afford it were it to happen. In which case perhaps you shouldn't own a Vette in the first place.
#13
Melting Slicks
I bought a 3rd party warranty on my 06Z. Car is covered up till 68K miles or 4 years from purchase date which was Dec of 2012. I paid $2k for it and I am about to put that to use. I am taking it in to get the AC bearing fix which consist of a whole new Ac compressor and condensor.
#14
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One week before the factory warranty expired I bought the GMPP for five additional years. I had eight years total. During the last five years I had both window regulators replaced and a seat belt pre-tensioner replaced. I'm sure the GMPP paid for it's self.
#15
47 yrs of Vettes
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Extended warranties are almost always a win for educated buyers. And by educated I mean a few things:
- The buyer must know how long they will keep the vehicle and how many miles they will log on it.
- The buyer must know the length of the original warranty and the anticipated number of years beyond the original warranty they will keep the vehicle.
- The buyer must be sharp enough to buy the extended service plan at a good price (not the bloated price that some dealers try to get).
So no, it's not a win for everyone, but yes, for certain people there is an extremely high probability they will come out ahead. As long as you're smart enough to figure out which category you're in.
#16
Gmpp
I bought my 2012 coupe with 19000 miles 2 weeks ago. The car was
bought by the 1st owner in September 2011. The new car warranty is good
for another 13 months or 17000 miles.
My question is shouldn't I wait till next summer or closer to 36000 miles
before I buy the extended warranty? If I buy now I will be paying for
the extended warranty while the car is still under the new car warranty.
I do realize the GMMP will cost me more next summer. But I can't see
buying coverage that basically I don't new for another year or 17000 miles. Am I missing something here?
bought by the 1st owner in September 2011. The new car warranty is good
for another 13 months or 17000 miles.
My question is shouldn't I wait till next summer or closer to 36000 miles
before I buy the extended warranty? If I buy now I will be paying for
the extended warranty while the car is still under the new car warranty.
I do realize the GMMP will cost me more next summer. But I can't see
buying coverage that basically I don't new for another year or 17000 miles. Am I missing something here?
#17
Race Director
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Stu,
Well, that's a good sales pitch and a lot of people will buy it. Educated buyers - I don't think so.
I say all the smart car owner really needs to know is that these warranties make a huge profit for the people selling them. There's a reason for that. Over the long run, it's better to insure yourself for losses that aren't going to change your lifestyle. Be the house.
JJradtech,
It's worse than that, your power train warranty is good for 50,000 miles and that's were really expensive failures occur. These companies love for you to pay for coverage you already have.
Well, that's a good sales pitch and a lot of people will buy it. Educated buyers - I don't think so.
I say all the smart car owner really needs to know is that these warranties make a huge profit for the people selling them. There's a reason for that. Over the long run, it's better to insure yourself for losses that aren't going to change your lifestyle. Be the house.
JJradtech,
It's worse than that, your power train warranty is good for 50,000 miles and that's were really expensive failures occur. These companies love for you to pay for coverage you already have.
Last edited by Walt White Coupe; 07-31-2013 at 08:17 PM.
#18
Team Owner
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I bought my 2012 coupe with 19000 miles 2 weeks ago. The car was
bought by the 1st owner in September 2011. The new car warranty is good
for another 13 months or 17000 miles.
My question is shouldn't I wait till next summer or closer to 36000 miles
before I buy the extended warranty? If I buy now I will be paying for
the extended warranty while the car is still under the new car warranty.
I do realize the GMMP will cost me more next summer. But I can't see
buying coverage that basically I don't new for another year or 17000 miles. Am I missing something here?
bought by the 1st owner in September 2011. The new car warranty is good
for another 13 months or 17000 miles.
My question is shouldn't I wait till next summer or closer to 36000 miles
before I buy the extended warranty? If I buy now I will be paying for
the extended warranty while the car is still under the new car warranty.
I do realize the GMMP will cost me more next summer. But I can't see
buying coverage that basically I don't new for another year or 17000 miles. Am I missing something here?
#19
Burning Brakes
#20
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St. Jude Donor '13
Dennis Fichtner is the man to buy from.
We made money on our 2001 GMPP, made money on our 2006 GMPP, and are well on track to make money with our 2009 GMPP. Unfortunately.
We made money on our 2001 GMPP, made money on our 2006 GMPP, and are well on track to make money with our 2009 GMPP. Unfortunately.