New cars are so complicated now, that for the first time, we’re considering a mfr. extended warranty. We already decided to forgo any dealer warranties, since we will unlikely keep the car in the same location as purchase. I read prior CC posts on extended warranties, but most were for appliances, so checking again.
• Can you (did you) negotiate the price on the manufacturer warranties?
• Can you initially forgo the warranty, then purchase before the standard new car warranty expires (presumably for a slightly higher cost later)?
• Any third-party warranties worth it?
• For anyone who used their extended warranty, were there numerous roadblocks to do so (i.e. meticulous maintenance records)?
FWIW: We are considering the Subaru Forester which has good reliability history. We average only 7-8,000 miles per yr. so the standard time limit will occur well before the mileage limit, and typically keep a car 15+ years.
I would only buy the plan offered by the manufacturer, never from a 3rd party provider. They go out of business, the dealer may or may not accept what they are willing to pay or their coverage at all, and so on. Look online and you can find plenty of bad stories.
If you buy the Subaru-issued plan I think you can buy it from any dealer. Look online and sometimes you can find offers from dealerships that are willing to make a better deal than your local dealer. A good place to look are forums for Subara owners. Several years ago I owned a BMW and bought the extended coverage as my warranty was about to expire. It wasn’t cheap and yet I ended up ahead. Also after that I decided never to buy a BMW again, just lease Which I did twice. But the extended warranty was easy to use; if it was a covered repair the dealer fixed it just like they would have under the initial warranty.
Huge huge mark ups. Ask what the oem msrp is and only pay that. Have them show you. Some mark them up 3-4x.
You can also buy a third party from a reputable company like JM&A. They are not going out of business - they run Toyota in the SE - Southeast Toyota. I work for a car company - I bought from them vs the oem (not mine) I bought a car from.
Some cars today are excessive in repair cost.
But many new dealers will overcharge on these - except in Florida where by law it’s msrp. In fact you can check with a Florida dealer to see the cost of your elw to make sure you are not getting robbed.
Less dealers are marking up high now as they need to move inventory but if finance is selling to you vs the sales guy - that’s how they earn a living.
As one would expect, extended warranties are on average profitable for the organization choosing to sell the extended warranty. I’ve never purchased one on a car, including for the car I bought 2 months ago. However, I can see why some might favor them. The main scenarios where I would expect them to be desirable to a consumer are below.
Buyer has additional information that extended warranty seller does not, such that buyer expects car to be less reliable than extended warranty seller, making expected value of purchase positive. This could apply to a buyer who knows they are rougher on their car than typical drivers or lives in an extreme climate.
Buyer may not be able to afford repair costs. Some type of repairs could cost $10k. Many persons do not have enough extra cash to support this type of expense.
Improved peace of mind for buyer is worth the expected financial loss. Many don’t want to deal with finding a mechanic for repairs or will sleep better knowing that they are protected if something goes wrong. That is financially valuable to many persons, particularly when buying a car believed to be less reliable.
That said, answering your earlier question, you can negotiate on the price of a warranty when buying a car. I’d recommend thinking in terms of the net out the door price after everything you want, and trying to minimize that, regardless of which individual components total are higher/lower than alternatives. There may be roadblocks with service records and other factors, like you mention. It’s good to read through the terms, as they differ with different sellers and different makes.
We bought an extended warranty when we bought our prius prime hybrid because it’s so expensive replacing electronics and we keep cars 15+ years. The monitor of the car alone is $$$$ to replace. We bought a 10 year/100,000 mile warranty and don’t drive much. So far, no claims.
Our warranty was the only one recommended and offered by dealer. They said if anything is wrong, they do repairs and State Farm immediately reimburses them. Customer gets no bill. No need for wrangling about reimbursements.
My husband Almost always insists on an extended warranty - we tend to buy certified used cars. While I hate to spend the extra $,
I think in most cases the extended warranty paid for itself. Doesn’t take long for a car repair bill to add up.
We’ve had manufacturer extended warranties on three of our last four cars. The first two were on Honda minivans. We bought the warranties separate from the cars (within the first year- you usually have until the regular warranty expires) and searched for the best price. Both of those warranties paid for themselves. One of them had the purchase price of the warranty prorated to us after the car was totaled, and the other was transferred to the new owner when we sold the car to a friend. We did not have an extended warranty on our Subaru Forester, but a leaking head gasket and an AC repair would have been covered and would have paid for the warranty. Also had a transmission failure but Subaru had extended the warranty on the transmission and they covered it.
We bought the manufacturer extended warranty (8yrs/125k) on the new car we have also. Again, shopped dealers for the best price and did not buy it from the dealer where we purchased the car. We will see if it also pays for itself.
It’s never been a massive difference between repair costs and the cost of the warranty, but I really like the peace of mind.
It may have not been a massive difference for you, but there is a massive percentage difference on average. For example, among the tens of thousands of persons filling out the CR survey, the totals were as follows – only 31% of extended warranty expense was recovered on average. One can reduce the magnitude of the expected loss by getting a good deal on extended warranty and making sure to not do anything that invalidates your coverage, but on average one should expect a significant loss unless they have additional information that the extended warranty seller does not.
Average Extended Warranty Cost – $1214
Average Extended Warranty Savings on Repairs – $377
Regarding the Forester in particular, note that the new models are expected to be more reliable than the older ones, particularly compared to pre-2020 generation. Among all models and makes of new cars, the Forester is the model with the highest predicted reliability score in CR.
Never bought one and everything is negotiable. So yes.
Go to sites like Car Edge and watch some of their videos. There is most likely one on warranties. You will learn a lot on how to buy and negotiate and how to spot mark ups when sitting with the finance manager.
We had friends mention that they bought extended warranty for the first time due to all the bells and whistles on new cars, especially electronics. We skip them, but we will study our option at next car purchase.
A question would be, if you thought that the car would be so unreliable or expensive to repair during the time period of the extended warranty, would you consider a different car that did not have that estimated repair expense?
IF I recall correctly, I’ve only purchased extended warranties twice, and in both cases (almost miraculously) they worked out really well.
The first time was for a Subaru Legacy. The transmission got messed up (by someone pouring something that didn’t belong there in the engine oil), and they replaced something, maybe the transmission.
Another time it was a Honda Odyssey. I didn’t use the warranty, but I sold the car to good friends of mine, and was able to transfer the warranty. They definitely got their money’s worth from the warranty.
Which I did twice. But the extended warranty was easy to use; if it was a covered repair the dealer fixed it just like they would have under the initial warranty.