Author Topic: Extended Warranty? (Read 3521 times)

sailor723 · « **on:** September 20, 2011, 10:20:58 am »

I know the general feeling about extended warranties around here (and generally agree with it). We are being offered a variety of "protection plans" from BMW and are wondering if any of them might be worthwhile given some reliability issues and that repair costs can be substantial on these cars. A 6/160 warranty is $2799 and a "Full Maintainence" plan ranges from 1195 for 3/60 to as much as $6495 for 6/200 ....4/80 is $1795. As "scheduled maintainence is included I'm assuming this is stuff like bulbs,brakes,hoses,belts etc.

Gardiner Westbound · « **Reply #1 on:** September 20, 2011, 10:59:41 am »

Quote from: sailor723 on September 20, 2011, 10:20:58 am

I know the general feeling about extended warranties around here (and generally agree with it). We are being offered a variety of "protection plans" from BMW and are wondering if any of them might be worthwhile given some reliability issues and that repair costs can be substantial on these cars. A 6/160 warranty is $2799 and a "Full Maintainence" plan ranges from 1195 for 3/60 to as much as $6495 for 6/200 ....4/80 is $1795. As "scheduled maintainence is included I'm assuming this is stuff like bulbs,brakes,hoses,belts etc.

How long do you intend to keep the car? How many miles will you put on it? Are you hard on a car?

My general rule is never own a German car out of warranty, unless you really get off on cold sweat nightmares. The BMW new car and extended warranties and maintenance plans seem to be poor value. The new car warranty is significantly shorter than some competing cars, the extended warranty seems overpriced, and the prepaid maintenance plans are just plain nuts.

The BMW new car warranty is 4/80. That makes your 6/160 extended warranty really 2/80, not good value for $2,800 - especially if there are onerous deductibles, exclusions and gotcha clauses. There's no need to buy it now. You can wait until the manufacturer's warranty is about to expire. Then you will have superior negotiating leverage, a better grip on the risk of owning the car without warranty, and first hand knowledge of the dealer's and manufacturer's integrity. In the unlikely event it's a good, reliable BMW perhaps you'll chance going without a warranty, if it's a bow-wow maybe not. Then there's the possibility it might get stolen or written off in an accident as happened to a correspondent here recently. The insurance company will not reimburse you for unused prepaid warranty, nor will a purchaser if you sell or trade early. My recommendation: Put the money into a four year GIC.

Prepaid maintenance contracts are crazy. The BMW dealer will do the absolute minimum, perhaps an oil change every 15,000- 20,000 kilometers. If you intend to keep the car for the long haul the interval is excessive, but he already has your money. How will you know if he is really inspecting all the things called for? What are you going to do if you discover he seems to overlook things that need doing, does everything on the cheap, or goes out of business? Again, he already has your money. Tell the salesman to throw in free scheduled oil changes as part of the car purchase. Nothing prevents you from having the oil changed more frequently by the dealer or an indy shop.

ovr50 · « **Reply #2 on:** September 20, 2011, 11:01:36 am »

I would wait to decide closer to the end of your regular warranty period. Costs a couple bucks more, but gives flexibility in case you do not keep it over 4 years.

2latecrew · « **Reply #3 on:** September 20, 2011, 04:00:09 pm »

Can you beat the Casino slot machines on a regular basis?

The house always wins. Yes some individual player/owner might win the jackpot but its more than offset by the 100s of other suckers pouring their money into the machines/warranties and getting nothing in return.

The odds are stacked in a big way. BMW knows the failure rates very well..you do not. BMW knows the projected cost of repairs very well you do not.

Where is the thread on the ford Maintenance plan ? Most of the wear parts under the plan are projected to last beyond the life of the plan or will cost a fraction of the plan cost to be replaced. 1195 buys a lot of bulbs and wiper blades

tpl · « **Reply #4 on:** September 20, 2011, 04:19:12 pm »

I would not pay for any extended warranty or prepaid maintenance on a BMW or anything else.

I WOULD search around for a reputable indy BMW specialist near you and start cultivating him by having him do intermediate oil changes between the once a year BMW dealer services.

How easy this will be in the Maritimes I have no idea.

johngenx · « **Reply #5 on:** September 20, 2011, 04:50:46 pm »

$2800? Ouch!! Warranty prices are high now.

I had a 72/160K bumper-bumper on my last Mercedes, (98) and the retail was less than 1/2 that.

Mercedes did about $12K in warranty work on my car between 80 and 160K. I spent about $3K in non-routine repairs between 160 and 250K. The car cratered in the 80-160 period, and most of the warranty work had improved and updated parts, making it pretty solid to 250K.

Zombie · « **Reply #6 on:** September 20, 2011, 05:05:24 pm »

My rule is If you don't have enough confidence in the product that it requires you to get an extended warranty don't get that product.
I say skip it, you will likely know if your car is a lemon well before the original warranty will be up and there is no amount of warranty available that will compensate for a car that is always in the shop.
But I also don't drive a Germain car so this might not be good advice.

sailor723 · « **Reply #7 on:** September 20, 2011, 08:26:55 pm »

Quote from: ovr50 on September 20, 2011, 11:01:36 am

I would wait to decide closer to the end of your regular warranty period. Costs a couple bucks more, but gives flexibility in case you do not keep it over 4 years.

The catch is that the price increases by $750 if you buy it more than 30 days after delivery of the car. Still might make sense. At least by then I should nknow if we are planning to keep the car and if it has "issues"

Triple Bob · « **Reply #8 on:** September 20, 2011, 08:30:37 pm »

That seems very expensive.

I know a lot of people in the UK that buy older BMW's and BMW will sell you an annual warranty for about £500, which is worth it IMHO, especially on the old V8's. But nearly $7K is daylight robbery.

sailor723 · « **Reply #9 on:** September 20, 2011, 08:55:17 pm »

Quote from: Turbo Bob on September 20, 2011, 08:30:37 pm

That seems very expensive.

I know a lot of people in the UK that buy older BMW's and BMW will sell you an annual warranty for about £500, which is worth it IMHO, especially on the old V8's. But nearly $7K is daylight robbery.

7K is for the 6/200 "Full maintainence plan"..... the extended warranty (2/80) is something separate and is $2800.

Gardiner Westbound · « **Reply #10 on:** September 20, 2011, 09:36:39 pm »

Quote from: sailor723 on September 20, 2011, 08:26:55 pm

The catch is that the price increases by $750 if you buy it more than 30 days after delivery of the car. Still might make sense. At least by then I should nknow if we are planning to keep the car and if it has "issues"

The $2,800 sounds suspiciously like MSRP. It isn't worth that, let alone another $750. It's a pressure tactic.

They're going to have your money for four years before they have to spend a dime honoring the warranty, and maybe not even then depending on the deductibles, weasel clauses and their integrity!

Extended warranty profit margins are humongous. There's lots of negotiating room.

Cord · « **Reply #11 on:** September 21, 2011, 03:08:29 pm »

Quote

Extended warranty profit margins are humongous. There's lots of negotiating room.

There's a difference of about $600 from cost to MSRP on a PremiumCare Ford warranty. I guess whether or not $600 is considered humungous depends on your point of view.

I find it interesting that there is very little discussion about whether a warranty product is good or bad on its own merits. But there is lots of talk that dealer markup automatically makes them bad. Does that mean that a warranty purchased at cost becomes good?

The fact is that once again, the posters here have nothing in common with the average car buyer. The fact is that waiting until the warranty is up before buying an extended warranty means that no one will buy a warranty no matter how much they would like one. People buy them on a new car because they can include them in their monthly payments. No one has a spare $2,000 or whatever to pay for an extended warranty down the road.

And the old "the house always wins" argument only applies to the population as a whole. It does not apply to every individual. Spend some time in the service department of the most reliable brand you can think of. You will find lots of people benefiting from their extended warranty. You will have a tough time convincing these people that they wasted their money. And I can guarantee that they won't give a damn that over the entire population most people won't see the same benefit. Again, the average buyer is not as savvy or as indifferent to risk as the typical poster here. Lots of people place a huge premium on peace of mind. This is opposed to the typical poster here that would never admit to such a personal "weakness."

If extended warranties are not suitable for forum posters, it does not follow that they are automatically unsuited for everyone else.

sailor723 · « **Reply #12 on:** September 21, 2011, 03:31:25 pm »

Quote from: Cord on September 21, 2011, 03:08:29 pm

Quote
Extended warranty profit margins are humongous. There's lots of negotiating room.

There's a difference of about $600 from cost to MSRP on a PremiumCare Ford warranty. I guess whether or not $600 is considered humungous depends on your point of view.

I find it interesting that there is very little discussion about whether a warranty product is good or bad on its own merits. But there is lots of talk that dealer markup automatically makes them bad. Does that mean that a warranty purchased at cost becomes good?

The fact is that once again, the posters here have nothing in common with the average car buyer. The fact is that waiting until until the warranty is up before buying an extended warranty means that no one will buy a warranty no matter how much they would like one. People buy them on a new car because they can include them in their monthly payments. No one has a spare $2,000 or whatever to pay for an extended warranty down the road.

And the old "the house always wins" argument only applies to the population as a whole. It does not apply to every individual. Spend some time in the service department of the most reliable brand you can think of. You will find lots of people benefiting from their extended warranty. You will have a tough time convincing these people that they wasted their money. And I can guarantee that they won't give a damn that over the entire population most people won't see the same benefit. Again, the average buyer is not as savvy or as indifferent to risk as the typical poster here. Lots of people place a huge premium on peace of mind. This is opposed to the typical poster here that would never admit to such a personal "weakness."

If extended warranties are not suitable for forum posters, it does not follow that they are automatically unsuited for everyone else.

All good points Cord. However,given that it's 50/50 that we won't keep the car past 3-4 years and that even if we do the risk in the out of warranty period is probably not over 10K at the outside, I think we'll "self-insure"

Cord · « **Reply #13 on:** September 21, 2011, 03:43:15 pm »

Sounds like a good decision for you.

I want to make it clear that I really don't care if anyone ever buys an extended warranty. I have zero personal stake in anyone buying any kind of warranty.

It's just that blanket statements they are always bad (or always good) are just as as misguided as someone saying that everyone should drive a subcompact or everyone should drive an SUV.

Ex-airbalancer · « **Reply #14 on:** September 21, 2011, 04:16:45 pm »

We did get one with the Prius
It can with 4 oil changes, and road side ass for the life of the warrenty which being down the cost
We usually keep a car about 8 years

ovr50 · « **Reply #15 on:** September 21, 2011, 05:04:42 pm »

"...road side ass..."

Guess it's OK if you're in a hurry, but I prefer mine at home.......

Cord · « **Reply #16 on:** September 21, 2011, 05:11:23 pm »

^^

Ex-airbalancer · « **Reply #17 on:** September 21, 2011, 05:15:30 pm »

Quote from: ovr50 link=topic=75729.msg 742567#msg 742567 date=1316639082

"...road side ass..."

Guess it's OK if you're in a hurry, but I prefer mine at home.......

Any place I can get is fine with me

One time sent off a fax to an engineering firm
In the name I put xxxxx & Ass instead of associates got a nasty fax back

johngenx · « **Reply #18 on:** September 21, 2011, 05:45:03 pm »

Quote from: Cord on September 21, 2011, 03:08:29 pm

You will find lots of people benefiting from their extended warranty.

As I noted in my previous post, Mercedes spent ~$12,000 on warranty work on my car during the extended warranty period. Also, it was not "optional" work that I would not have done had the car not been in warranty. They were repairs required to keep the car safe and on the road. Now, that was retail, but MB (then anyway) paid the dealers full retail for warranty work. That is a huge benefit to customers, as the dealers never quibble over warranty work.

My car was a bit of an oddball, in that the warranty pricing was low thanks to the previous years being quite simple cars, but my particular year had a bunch of new, expensive technology that was not very reliable, chiefly they 722.6 five speed automatic. That alone accounted for $8K of the bill.

We strongly considered an extended warranty when we bought the Corolla, but even though we drive cars for 300K or more, the initial cost was too high considering the reliability of the model and our ability to self insure. In the case of the Mercedes, I was still reeling from spending $30K on repairs and service over 2.5 years on certain other German brand car, and knowing about many of the new parts in the 98 C-Class, opted for an extended warranty.

Extended warranties are not inherently good or bad, and are available as a tool to manage risk. Whether you buy or not has nothing to do with your savvy as a consumer, but simply your ability/desire to be exposed to risk.

johngenx · « **Reply #19 on:** September 21, 2011, 05:48:12 pm »

Oh, one caveat to the above: Factory extended warranties only. Aftermarket warranties are to be avoided.