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Re: Extended warranty Posted by Ari [Email] (#2847) [Profile/Gallery] (more from Ari) on Thu, 17 May 2001 09:31:22 In Reply to: Extended warranty, DJ Greenfield, Wed, 16 May 2001 16:27:35 Members do not see ads below this line. - Help Keep This Site Online - Signup |
First off, know what you're buying - as Baab says, it's just insurance. Over thousands of cars, the premiums taken in by the company are greater than the cost of repairs. If it wasn't, they wouldn't do it. So for the average vehicle, the $1000 for the warranty is more than they expect to pay out.
However, you don't own 1,000's of cars - you own one. You buy insurance for two reasons - first, because it makes you feel safer. Nothing wrong with that. Second, it allows you to control costs. Say you don't buy the warranty, and in the life of the car it only needs $500 in repairs. Great! But suppose something really bad happens, like the tranny explodes or the timing chain breaks, and you're looking at $3K 0r $4K in repairs. Do you have the wherewithall to write that check? By buying the warrantee, you pay some money up front to know that you've limited your liability to the cost of the warrantee, and anything the warrantee doesn't cover.
Frankly, chances are you won't spend as much on the car as the cost of the warrantee. But there is a chance you may spend a lot more. By buying the warrantee, you limit your downside. Chances are very good that your house will never be destroyed by fire, but the downside is so great that you buy insurance against it.
So get the warrantee if you want the peace of mind that you've limited your out-of-pocket expenses. But if cash flow isn't a big issue for you, and you can take the chance of a hit, the warrantee isn't a good investment.
Of course that depends a lot on the warrantee. If the warrantee doesn't cover what you need fixed, it's worthless. READ that FINE PRINT. Does it cover all labor and parts? Seals, electrical, the works? Will it replace that water pump or alternator, or A/C compressor AND recharge the system? If it just covers the engine but not the accessories, you could be looking at a big bill. So make sure it covers what you need covered.
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