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New Car buying and the extended "warantee" plan - long

Post in 'The Inglenook' started by daveswoodhauler, Mar 6, 2012.

  1. daveswoodhauler

    daveswoodhauler Minister of Fire

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    Well, haven't posted too much due to an array of medical issues in the house, but hopefully now all is in order.

    Anyway, I learned something new about extended service agreements when recently buying a new car, and just wanted to share.

    So, we are trading in the 2002 Forester for a 2012 Outback....met with the finance guy after negotiating the $$ of the car (you know, the three hour ordeal), and anyway...here is what was proposed:

    Base car has a 3 year/36000 mile warrantee....then you can purchase an extended service agreement, which I was confusing for a warrantee for:

    $1600 gets you 5 year and 60,000 total miles....so you are looking at $800/year for years 4 and 5
    $1950 gets you 8 years and 120,000 total miles, so you are looking at $390/year for years 4 though 8
    In addition to this, these is a $100 deductible for each incident/service.

    Everyone with me so far?......so, then, I ask about exclusions...finance guy mentions like 3 things...and I said "thats it"....he says "yup" I read through the brochure and see a few comments about "see contract for list of exclusions)

    So, I get home last night...have "busy head" cause I can't sleep....so I get online and find the contract.....well, there are about 100 items excluded....with the biggie being no radio over $750...well, this car has a fancy stereo, so thats out....now I am leaning not toward buying the plan.

    So I get through the contract, and then visit the sites FAQ section....and here IS THE KICKER.

    I read down the bottom of the page and see "the total amount of your claims cannot exceeed the original purchase price of the contract"...WOW....are you kiddng me???

    So, here is an example:

    Without service agreement....again, not an extended warrantee as I thought:

    3 auto repairs at $800 each after the 36000 miles....total cost to me would be $2400

    With service agreement:

    3 Auto repairs @ 800 each after the 36000 miles....total cost to me would be:

    1st repair paid at $700 (I pay $100 ded)
    2nd repair paid at $700 (I pay $100 Ded)
    3rd repair paid at $550 (I pay $100 and then another $150 as there was only $550 left on the plan)
    So, with the extended plan, my out of pocket costs would be $2400....Why would anyone pay for one of these plans?

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  2. Adios Pantalones

    Adios Pantalones Minister of Fire

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    What a friggin scam. The bottom line is- you would do better to bank that money and use if needed. This isn't insurance at all.

    edit: we are a Subaru fambly. Love the cars. I would guess that all car brands run the same scam.
  3. Jack Straw

    Jack Straw Minister of Fire

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    Thanks for the info. My policy is that I don't by any extended warranties or service contracts on anything. I feel that they are insurance policies that only benefiet the company. If I have to make a major repair on something I pay for it from the money I saved from not buying all of those extended contracts.
  4. jimbom

    jimbom Combustion Analyzer

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    Buy from a different dealer. If they are willing to mislead on the warranty, nothing else they said is worth a fiddlers damn. Tell management why.

    We buy every ten years also. They last well past 200,000 miles with no problems. Subaru is equally well built. Warranty not likely needed.
  5. firefighterjake

    firefighterjake Minister of Fire

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    It's a Subbie . . . they don't break . . . or most don't break for a very long time. Admittedly I did have to have a head gasket job done on my wife's 2003 Subaru Legacy Outback recently at a little more than 100K, but that's really been it other than brakes, tires, oil change, etc. Turns out this was an issue with this and a few years earlier models . . . for about $1,200 though I had the gasket, timing belt, water pump and a few other things done while the engine was cracked open. I hope it should be good for another 100K . . . but we will most likely sell it and get another Subaru in a couple of years.
  6. bostonbaked

    bostonbaked Member

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    I would advise anyone buying a new car to read and understand the book,"Don't Get Taken Every time" by Remar Sutton. You will be in the drivers seat on car transactions for the rest of your days. The game is easy to learn. The industry hated when this book came out years ago. There is much to learn but the techniques will serve you well in the years to come and they carry over to many areas. You'll never leave a showroom feeling like you need a shower again. I never buy extended warranties on anything, pure profit to the seller.
  7. blades

    blades Minister of Fire

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    Never ever use the dealership service extended plans. Most are as list above a scam. 3rd party ones are not too bad but you have read all the way through them first. I used a 3rd party one on my truck when I bought it. The plan was 100k miles forget the year time length. It was a cost of $1200 ( 1999 $) bumper to bumper style. Normal maintenance excluded ( as they all are) In this particular case I saved some $2400 of repairs above the cost of the plan at inflated dealer service charges.
  8. peakbagger

    peakbagger Minister of Fire

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    Many folks dont realize that the finance guy is on commission and is a major portion of the profit on the vehicle. A good finance guy can get a customer to drop their guard down and think that he is trying to do them a favor by selling you all these "wonderfull" add ons. Realistically the need for major repairs on new vehicles is usually a sign of a factory defect that ends up being covered by a Technical Service Bulletin and some sort of factory recall/adjustment.

    My brother has 14 year old subaru outback with 250 K on it. Its beat up and rusted. He has emptied out the contents and has been ready to abandon it once or twice but he ends up getting it fixed and gets another year out of it. About the only routine maintenance might be an oil change. He is currently looking for a new car for better gas mileage but plans to keep the outback until it cant be driven.
  9. begreen

    begreen Mooderator Staff Member

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    Self insure your car repairs by setting aside that same money in a car account. For sure there will need to be some service before 100K (timing belt, brakes, belts, etc.). Most of the more serious costs are after that and part of the cost of owning and running a car. Note, with a new Subie, be sure you only use their fluids, especially the coolant.
  10. daveswoodhauler

    daveswoodhauler Minister of Fire

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    Yeah, it was an eye opener for me....we usually keep our cars for 10 years or so, and our current 2002 has 140,000 miles and has always been relaible never leaving us stranded somewhere.
    Some good feedback from you folks, and I'm just going to place $2000 in the car fund for needed repairs down the line.
    Just don't see how prepaying for service can wor out to ones advantage in any condition. (Begreen, good tip on the subaru fluids....had to replace the radiator at 70,000 on mine, and Im thinking this might have been why)
  11. eclecticcottage

    eclecticcottage Minister of Fire

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    Now, don't get me wrong I LOVED our last car..uh..truck..thing (Baja). It actually inspired our most stolen and used saying (from the biz, Gear 4 Gearheads). but it did break. once. The tensioner pully sheared off. Yeah, that's right, it sheared off-while we were driving. The dealer said they never saw anything like it. We had the warranty and it was all taken care of-I read the heck out of it and never saw that clause (not worth over the original $ of the contract). I wonder if they changed it?

    Just because, here's the pic that inspired me to create "If the mud ain't flyin you aint' tryin (sorry about the watermark, it's from our old site)

    [​IMG]

    I guess I'm assuming this was the subaru warranty you were looking at. If not, check on theirs. We only used it once but it was effortless, very good service.
  12. Delta-T

    Delta-T Minister of Fire

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    "Insurance is the worst bet in the entire casino"....learned this from a Blackjack dealer at the Rio in 2000. I apply it to everything. YMMV.
  13. Freeheat

    Freeheat Minister of Fire

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    Warranty's are just like everything else we purchase. Cheap warranty no coverage. Its usally best to stay with the factory warranty ie Nissan car Nissan warranty. Sounds like the guy is selling a fly-by-night policy, a couple of questions to ask is if fully insured( if dealer goes out of biz do you still have a warranty) Where is it honered? I am in that biz and sounds like the price is high shop on line at another dealer ( preferably another state) and just price compare should be able to do alot less.
  14. firebroad

    firebroad Minister of Fire

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    Some years back, by beloved Dodge Neon developed an oil leak. Cost me $300 to fix the problem, that was a lot of money back then (still is, IMHO).
    The dealership kept repeating that if I had had the extended warranty, it would have been covered. I asked what the price of the warranty was per month, and did the math. I never regretted not getting that warranty.

    The vehicle I had before the one I own now had so many problems and expensive repairs that it was in the shop on average of every three months before I got fed up and traded it in. Again, the extended warranty was pitched. Not ONE of the things that had gone wrong with the previous car, and they were many, would have been covered. Again, I declined. I always make sure I have a fund put aside for such emergencies, and pay myself the premiums.
  15. brian89gp

    brian89gp Feeling the Heat

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    Any warranty you have to pay for is usually not worth it, and any product that actually needs a warranty is probably not worth buying.

    I never buy new cars and thus have never had to consider the warranty before. Its hard to beat the economics of buying a $6000 car, driving it for 100k, then selling it for $4000.
  16. blacktail

    blacktail Feeling the Heat

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    Yes! Driving a car just destroys its value. Starting with a low cost reduces how much can be lost.
  17. rkshed

    rkshed Feeling the Heat

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    Could not agree more!! Let someone else take the 33% hit the second you drive it off the lot. Used is the way to go. That's why we heat with wood. We're frugal New Englanders.
  18. cricketfarmer

    cricketfarmer New Member

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    Whenever I'm asked if I would like the extended warranty, my reply is If I thought your product was so bad that I needed an extended warranty, I wouldn't be buying it in the first place!
  19. firebroad

    firebroad Minister of Fire

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    +1 Said that to an appliance dealer once.
  20. JDC1

    JDC1 Feeling the Heat

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    I usually dont buy the extended warranty. When we were negotiating a deal on a 3 yo F250 w/ the 6.0, a little voice in the back of my mind said to get the warranty. I am glad that I did as the truck had over 10k in repairs in the 2 years that I owned it. I wouldnt buy an esp for a gas car. When we were negotiating on my new truck, the finance guy said he could do a 6 year/100k warranty for $2500. I said no and he immediately dropped the price to $1100.
  21. bluedogz

    bluedogz Minister of Fire

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    1) Because they can finance it at the dealership
    2) Because they don't read contracts

    Possibly both but not necessarily.

    A $1900 purchase on a 5-year note means a payment difference of about $35/mo. or so. If one were to put that $35/mo. into a piggybank that you only break open for major car repairs, that'd be awesome. But nobody does that, do they?
  22. Delta-T

    Delta-T Minister of Fire

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    I do something like that. I put money into different jars for different things. One is for my next car, which can also (and usually does) get used for car repairs. Every month or so I take the money from the jars, deposit into savings account, and leave myself a note in the jar for the amount I deposited.
  23. flyingcow

    flyingcow Minister of Fire

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    Good Post. generally same thing applies with my tractor trailer that i just bought. Might buy an additional warranty on motor/emissions side. Which BTW is several thousands of $$$'. But this is after I talk to my experienced mechanic, outside the shop dealership. 1 cold beer and a plate of Nachos, is money well spent.

    My personal vehicles are usually 2 yrs old when i buy. try to shoot for about half of the major warranty left to go.

    BUT-
    i do oil changes as recommended.

    Air filters are an important and easily overlooked maintenance item!!!

    I drop the tranny fluid/filter every 30,000 miles. A tranny is $1800 plus to replace.

    Coolant exchange about 50,000 miles. It's only a couple of gallons?

    AND a good well trusted mechanic is not expensive, they're priceless.

    On just about everything, we pass on extended warranties.
  24. firefighterjake

    firefighterjake Minister of Fire

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    I do something similar . . . I have a Snowmobile/ATV Ride "account", Vacation "account" and a couple of other accounts I put money into every week. I also sock away money into Savings and when I make a big purchase (down payment on a vehicle, new countertops, snowmobile, etc.) I take the money from Savings and then "pay myself back."
  25. basod

    basod Minister of Fire

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    My buddy in NC is a new/used car dealer. He told me straightup they are only a way to recoup any money negotiated down off the price of the vehicle.
    They finance it at the dealership, making commission not only on the sale of the warranty but the upfront finance cost and resulting sale of the note.

    Buying a reliable vehicle, that any shop can service(not just a dealership) coupled with readily available parts(VW is notorious for long import times) would be my choice.

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