My First Extended Warrantee Experience

[TheGoodShepherd]

Warranty. With a Y. I'm so green, I don't even know how to spell the word properly.

 

I don't buy vehicles often. I drive them until they become too costly to maintain. So I don't know much about buying cars.

 

But I'm familiar with the Subaru reputation for longevity. I hope it's well-deserved.

 

A finance manager at a local dealership tried to sell me an extended warranty for my Subaru. Tried really hard. Really. Hard. He spoke fast, put papers in front of me with more fine print than I could read in a day, and reminded me of the financial ruin that would likely occur if I didn't have an extended warranty. It was frightening stuff.

 

Then again, if anyone is trying really, really, really hard to sell you something—that something might not be so good for you. One doesn't need to work hard to sell things people really need. Right?

 

I recoiled from the hard sell. Thankfully, I had an idea of what an extended car warranty was. I didn't understand why I needed one so badly, because I was buying a Subaru. (I hope no one is laughing at me now.)

 

Of note: The loan payment without the warranty was written very small and was glossed over. The "low" payment with the warranty was highlighted.

 

I'm not so bright that I can resolve a lot of math under great duress, so I broke out the calculator application on my phone and figured the warranty was adding $2,400 over the life of the loan. Reeling from that, I Googled "do i need extended warranty car" or something, and came upon a short article from Edmunds.com with one basic rule: generally, it doesn't make financial sense.

 

I had to refuse the extended warranty at least three times, because the hard sale returned if I displayed the slightest doubt. My question wasn't so much if we could have afforded the extra payment (we could), but whether or not we needed the extended warranty. The finance manager was clearly perturbed.

 

So, when I finally got home, I rushed to the computer to research these extended warranty things and learn if I had just made a terrible mistake I'd regret for the rest of my life. That's when I came upon a Consumer Reports article that listed the average price of an extended warranty on a Mercedes-Benz as $2,200, a BMW as $2,007, and a Chrysler as $1,525.

 

So I was being sold an extended warranty that would have been considered more expensive than average for a new Mercedes.

 

If I have the money to buy a Mercedes, then perhaps I have a couple grand to throw at an extended warranty without a second thought. But I wasn't buying a Mercedes. I didn't have a large loan making the cost of a warranty small in comparison. The cost seems staggering in relation to what I bought.

 

While the interaction may be relatively short, finance managers would do well to foster some relationship with customers, much the way salesmen do, rather than relying on a single canned approach. Not everyone is going to be pressured or frightened into throwing money away. I won't buy from a pushy salesman; that revulsion doesn't vanish when I step into the finance manager's office. I'm not going to be frightened with my credit score, or APR, or much of anything else these guys are taught to use to close a sale. I can always go somewhere else. And there's this new thing the kids call the Internet: I can find a dozen identical vehiles at other local dealerships in seconds.

 

It's key to remember that the customer is doing the dealer a great courtesy by bringing business to the door. The dealer who does respond in kind can count belly lint, instead of dollars.

 

With this latest experience under my belt, I can say that If this were to happen again, I would walk out. "Tear up the contract, lose my contact information, and don't forget to thank your finace manager." If dealerships hear that enough, they may effect a sales experience based upon teamwork, where a salesman with an established relationship with the customer relates what works and does not work to the finance manager, before the wrong approach costs another sale.

 

I know that in some cases, with certain vehicles, an extended warranty is a damn good idea. And I can appreciate that car dealerships are in the business of making money. I may have bought one had the finance manager been more relaxed and patiently explained the coverage, deductibles, and caveats. In a way, I'm glad he was pushy, because I would have ended up paying far too much for the warranty.

 

Anyway, I'm off to study, because I have other cars to buy. I'm interested in hearing of other experiences similar or dissimilar to mine.

 

One Year With A Carmax Warranty And An Unreliable Used Car

 

Secrets of Negotiating a Car Extended Warranty

 

Extended car warranties: An expensive gamble

Edited July 23, 2015 by TheGoodShepherd

[desertsubaru]

Read through this for some insight.  http://www.ultimatesubaru.org/forum/topic/154653-help-me-not-get-scammed/

[TheGoodShepherd]

LOL. I did, before I wrote my post. They take your money, then get to refuse to provide the services they promised. Bet no one mentioned that at the dealership!

[Fairtax4me]

Of note: The loan payment without the warranty was written very small and was glossed over. The "low" payment with the warrantee was highlighted.

 

Finance trickery. They show you the payment you'll make with the warranty INCLUDED (and already approved for the loan for that amount) rather than having to explain how much extra you have to pay in order to get the extended warranty. It's an easier sell if the price is already figured into your monthly payment. Then when you decline that, they can try to set you up on the insurances (motor club, accidental death/dismemberment, etc .) because even with the insurance extras you'll still have a lower payment than what they showed you with the warranty.

That's not to say that some of those insurance policy's aren't a great deal. Some of them are quite inexpensive. Consider a $100,000 life insurance policy for about $1,000 spread over your 5 year loan term. Less than $20 per month. Just an example, as those can vary widely. Different conversation though.

 

 

 

A major consideration for extended warranty is whether its a factory (Subaru) extended warranty, or an aftermarket. Generally if you're buying brand new, it's going to be a factory warranty. If you're buying Cerified Pre-Owned, a CPO extended warranty will typically be a factory warranty.

Buying used with a 3/3,000 basic warranty, the seller will usually be pushing an aftermarket extended warranty.

 

Cost. Mercedes' basic extended warranty covers you for only 1 extra year (48 months vs included 36) , but the warranty mileage jumps substantially. The second tier option covers you for 2 extra years, but up to 120,000 miles IIRC.

BMW is similar, though I believe BMW also offers a 3 year extension. These longer mileage warranties cost quite a bit more than the standard 1 year extension, so its important to compare apples to apples (time and mileage extension) when comparing warranty cost to another manufacturer. Also consider if you'll drive far enough to make good use of that warranty. If you only drive 10k miles a year, probably just gonna be throwing your money away on a 100k mile warranty.

[TheGoodShepherd]

Well, my friend, the warranty I was offered was certainly longer: 84 months and 100,000 miles. It was NOT a factory warranty. I believe it was a dealer-backed warranty. There again, would I end up like the young lady whose Subaru repairs were being denied? Our driving habits dictate that time is the final arbiter, not mileage.

 

Ultimately, it's a matter of trust. I hadn't had previous experience with the dealership. Because of the hard sell technique, the finance manager didn't come across as trustworthy. My instincts told me, "No!"

 

Again, it wasn't that we couldn't afford it, but that I don't believe in throwing money out the window, or working with people I can't trust.