Warranty....keep it or dump it??????????
Cruising
Joined: Mar 2008
Posts: 10
Likes: 3
From: Largo fl
Vegas Vette is right. Extended warranties are basically insurance. Insurance cost is based on average expected claims * an expense factor (cost to process claim) + a profit for the company writing the policy.
If the cost of an extended warranty is $1500 - that means the company expects an average policy to have 1330 in claims (with a $70 expense of handling policy/claims 5%) and a 100 profit. Of course an average means some people will have more claims and some people will have less.
In any case if you have the 1500 in cash when it is time to pay for the policy, and you put the money in some form on interest paying account (like an ING savings account- paying ~4% today) you would most likely come out ahead (since on average the warranty would pay out less then this amount). Of course in the law of averages says that some people will have all of the money left ($0 spent) and others could have spent more then the average. But the fact that you save the profit and the expense load at a minumum puts you ahead on average...
anyway just my $.02, but remember if there wasn't profit in it, a business wouldn't do it.
If the cost of an extended warranty is $1500 - that means the company expects an average policy to have 1330 in claims (with a $70 expense of handling policy/claims 5%) and a 100 profit. Of course an average means some people will have more claims and some people will have less.
In any case if you have the 1500 in cash when it is time to pay for the policy, and you put the money in some form on interest paying account (like an ING savings account- paying ~4% today) you would most likely come out ahead (since on average the warranty would pay out less then this amount). Of course in the law of averages says that some people will have all of the money left ($0 spent) and others could have spent more then the average. But the fact that you save the profit and the expense load at a minumum puts you ahead on average...
anyway just my $.02, but remember if there wasn't profit in it, a business wouldn't do it.
Pro
Joined: Apr 2005
Posts: 749
Likes: 3
From: West Yarmouth MA.
Vegas Vette is right. Extended warranties are basically insurance. Insurance cost is based on average expected claims * an expense factor (cost to process claim) + a profit for the company writing the policy.
If the cost of an extended warranty is $1500 - that means the company expects an average policy to have 1330 in claims (with a $70 expense of handling policy/claims 5%) and a 100 profit. Of course an average means some people will have more claims and some people will have less.
In any case if you have the 1500 in cash when it is time to pay for the policy, and you put the money in some form on interest paying account (like an ING savings account- paying ~4% today) you would most likely come out ahead (since on average the warranty would pay out less then this amount). Of course in the law of averages says that some people will have all of the money left ($0 spent) and others could have spent more then the average. But the fact that you save the profit and the expense load at a minumum puts you ahead on average...
anyway just my $.02, but remember if there wasn't profit in it, a business wouldn't do it.
If the cost of an extended warranty is $1500 - that means the company expects an average policy to have 1330 in claims (with a $70 expense of handling policy/claims 5%) and a 100 profit. Of course an average means some people will have more claims and some people will have less.
In any case if you have the 1500 in cash when it is time to pay for the policy, and you put the money in some form on interest paying account (like an ING savings account- paying ~4% today) you would most likely come out ahead (since on average the warranty would pay out less then this amount). Of course in the law of averages says that some people will have all of the money left ($0 spent) and others could have spent more then the average. But the fact that you save the profit and the expense load at a minumum puts you ahead on average...
anyway just my $.02, but remember if there wasn't profit in it, a business wouldn't do it.
If you are handy and possibly daring then dump it and mod away. The warranty isn't going to last forever anyway. When something breaks you have the forum to research and find a fix.
Burning Brakes
Joined: Jun 2004
Posts: 1,240
Likes: 2
From: Cedar Rapids Iowa
I bought my Major Guard warranty for my 2002 C5Z in 2004 for $700. That was an easy decision. I have had about $1500 in repairs during that period so the warranty was definitely a good buy. My current GMPP warranty expires this August and if I want to renew it will cost me about $2500 for 3 years. That is a much more difficult decision. My inclination right now is to not renew the warranty and take my chances.
Administrator
Joined: Jun 2007
Posts: 66,409
Likes: 2,061
From: Bel Air (by way of Fort Worth, TX) Maryland
St. Jude Donor '12 thru '21
I bought my Major Guard warranty for my 2002 C5Z in 2004 for $700. That was an easy decision. I have had about $1500 in repairs during that period so the warranty was definitely a good buy. My current GMPP warranty expires this August and if I want to renew it will cost me about $2500 for 3 years. That is a much more difficult decision. My inclination right now is to not renew the warranty and take my chances.
Administrator
Joined: Jun 2007
Posts: 66,409
Likes: 2,061
From: Bel Air (by way of Fort Worth, TX) Maryland
St. Jude Donor '12 thru '21
Vegas Vette is right. Extended warranties are basically insurance. Insurance cost is based on average expected claims * an expense factor (cost to process claim) + a profit for the company writing the policy.
If the cost of an extended warranty is $1500 - that means the company expects an average policy to have 1330 in claims (with a $70 expense of handling policy/claims 5%) and a 100 profit. Of course an average means some people will have more claims and some people will have less.
In any case if you have the 1500 in cash when it is time to pay for the policy, and you put the money in some form on interest paying account (like an ING savings account- paying ~4% today) you would most likely come out ahead (since on average the warranty would pay out less then this amount). Of course in the law of averages says that some people will have all of the money left ($0 spent) and others could have spent more then the average. But the fact that you save the profit and the expense load at a minumum puts you ahead on average...
anyway just my $.02, but remember if there wasn't profit in it, a business wouldn't do it.
If the cost of an extended warranty is $1500 - that means the company expects an average policy to have 1330 in claims (with a $70 expense of handling policy/claims 5%) and a 100 profit. Of course an average means some people will have more claims and some people will have less.
In any case if you have the 1500 in cash when it is time to pay for the policy, and you put the money in some form on interest paying account (like an ING savings account- paying ~4% today) you would most likely come out ahead (since on average the warranty would pay out less then this amount). Of course in the law of averages says that some people will have all of the money left ($0 spent) and others could have spent more then the average. But the fact that you save the profit and the expense load at a minumum puts you ahead on average...
anyway just my $.02, but remember if there wasn't profit in it, a business wouldn't do it.
I love my C5, but it is NOT an investment. I have 2 mutual funds, a Roth IRA and 2 savings accounts and keep plenty of cash in both. I had a C5 Mag Red Vert that developed a 4 figure problem almost every month that I had it. I traded it for my current Vette and (knock on wood) I haven't had an issue with it since I have had it. It was still under factory warranty when I bought it and I paid $1900 to extend to GMPP Major Guard and although I have never had to use it, I can't put a price on the peace of mind I get out of it.
If you are going to mod the car or plan to keep it for a lifetime, its not your DD or number of other valid personal reasons, then extended warranties are truly a waste of cash for you.
My savings priorities are more focused on buying a new house and saving/investing for my retirement. I can buy another Vette when the '04 is out of warranty.
