Extended Warranties

[2000 GMC]

I plan on buying an extended warranty.  Has anyone bought one from companies like dealerdirect.com or warrantydirect.com?  If so was it difficult to find someone to accept the warranty and did they pay up right away?  Some say you don't need it but if the transmission goes out just once it pays for it self.  Thanks in advance.  

 

Just read a post on reving engines.  If this happened after the warranty it might get pretty pricey if it's the tranny...

[CapnDean]

IMHO:

 

 Extended warranties are not cost effective.  Why?

 

For starters: Warranties usually cover manufacturer defects.

 

I am one of those that believes that if it is a true manufacturing defect, it will surface somewhere in the first 12K miles or so.  Beyond that, and you are looking at a maintenance issue or even an abuse issue.  {I am not saying that a failure NEVER occurs beyond the first 36K miles...I am just saying it is not 'likely' to.}

 

Secondarily:  Extended warranty companies often go to great lengths to avoid responsibility for problems:  E.G.  At 50K your engine blows and they are asking you to "prove" that you changed the oil, never let her overheat, never revved it too much etc....  In an engine replacement they are going to make it tough on you and try to weasel out if possible.  If they didn't, who wouldn't be blowing their engine at 99K miles in exchange for a new one?

 

Third (arily):  In many instances the portion that you pay out of your pocket is enough to fix the problem yourself or at a non-dealership repair facility:  Example:  A new engine at the dealership is a $3500 job.  If I go to McMurtry's machine shop (David builds awesome racing engines) I can get a good chevy V-8 for less than $2000 pretty easily.

 

So...whats to say that the warranty guy doesn't do the same?

 

Fourth:  In order to stay in business, the extended warranty company has to make money.  If they aren't making money...

 

Look at what they are betting on.  They are betting that you WON'T have a major mechanical problem and that they WILL get to keep your money.  I figure that shows that the odds are in YOUR favor if you DON'T get the warranty.

 

BTW:  This logic is flawed if you try to use it with regard to liability insurance:  In the warranty case...you only stand to lose the cost of repair,  in an auto accident, you could lose much much more!

 

Just my humble opinion.  I'd rather take that chance than get ripped off!

 

CapnDean

[astroracer]

Just like CapnDean said... keep your money. Take what you were going to pay for that GOD awful Warranty Rip-off and put it in the bank. Or better yet, start a Money Market fund and MAKE some money with it. Then, if anything does happen, you can cover it.

Take the factory warranty and be happy with it. I quarantee you will never see the benefits from an "extended" warranty that you pay through the nose for. All you have to do is be late on one oil change and they can void it on you. If you take the time to read the fine print the only thing they will "quarantee" is that THEY keep your money. Mark