Extended Warranty - Complete Waste Of Money

The risk / reward ratio on these warranties is about the same as the local casino. Of course there are a few winners, but the house nearly always wins. I have purchased new a 1990 Corolla, 1997 Geo Prizm, 2001 Chevy Prizm and my wife purchased a 1999 Corolla (rental return) before we were married in 2002. All told, if we had purchased warranties on all vehicles, our wallets would have been robbed of approximately $5,450.

Here is my calculations:

Warranties purchased - 4

Cost - $4000

Financing Interest - $2,000 (Or opportunity cost if you pay cash)

Total Premium & Interest $6,000

Of course I would have saved $550 (Starter 97 Prizm $300 and Belt Tensioner $250)

Net LOSS $5,450

THE STEALERS ARE SCREWING YOU AND YOU DON'T EVEN REALIZE IT.

My experience is that the warranties could have been for 200,000 miles and the stealers would still be money ahead unless it included maintenance.

The 1990 Corolla went to the ex-wife and she traded it in at @ 130,000 miles. To the best of my knolwege it went to the stealer with the original battery.

The 97 Prizm has 267,000 miles on it. Looks like crap because two teenagers have learned to drive with it, the weak link was the starter (3).

The 99 Corolla has 226,000 miles and looks / runs like new.

The 01 Prizm has 150,000 miles, looks and runs like new.

It wouldn't have been a net loss today because today they they offer you to refund most of your money back at the end of the term if you don't use it.

1990, 1997, and 1999 models aren't using the same technology of today. I used to be a DIY. Had an '88 myself for 17 years and over 300k miles on it. Never saw a dealership once, and bought it with 20 k miles on it. Did ALL my own work. I tend to keep my cars for over 5 years so to me it would be worth it. Just a personal opinion. How many of you naysayers own an 06 or 07? Say you have one with antilock brakes, side air bags, sunroof, cruise control, and a host of other gadgets. You'd feel you could tackle the 4 or 5 computers on board controlling all that stuff 3 or 4 years from now if something went wrong? You couldn't if you didn't have the right equipment to "talk" to the onboard electronics as well as engine management. And car computers aren't cheap- over $2,000 for some of them. Sure the quality is there and it's a good bet you probably won't have a problem with it being a Toyota, but like I said, you do get a refund for not using it. Just my 2 cents....

An extended warranty is insurance and insurance companies don't loose money. My older daughter paid about $1500 when she bought her '99 Sunfire and the timing belt broke causing her to buy another engine. NOTHING covered uder that waste of money.

It wouldn't have been a net loss today because today they they offer you to refund most of your money back at the end of the term if you don't use it.

 

Interesting dilema, say you purchase the warranty for $1,400 ($1,000 + Interest). Now my starter goes out, repair will be $400.

Do I submit on my warranty to lower my net cost of purchasing the warranty to $1,000 ($1,400 - Starter)?

Or

Do I pay the starter repair myself, get my warranty money back? In this case, I paid $400 interest and $400 for a starter repair for a total of $800.

Can you submit for reimbursement for a repair you previously paid? Say you have a major repair whereby subission under warranty is a no-brainer, can you get reimbursed for previous repairs you paid yourself by hoping to get your money back for the warranty?

It wouldn't have been a net loss today because today they they offer you to refund most of your money back at the end of the term if you don't use it.

 

Interesting dilema, say you purchase the warranty for $1,400 ($1,000 + Interest). Now my starter goes out, repair will be $400.

Do I submit on my warranty to lower my net cost of purchasing the warranty to $1,000 ($1,400 - Starter)?

Or

Do I pay the starter repair myself, get my warranty money back? In this case, I paid $400 interest and $400 for a starter repair for a total of $800.

Can you submit for reimbursement for a repair you previously paid? Say you have a major repair whereby subission under warranty is a no-brainer, can you get reimbursed for previous repairs you paid yourself by hoping to get your money back for the warranty?

Warranty says if it's an emergency repair, then yes, you'll be reimbursed, otherwise the dealer will be doing the repair. Towing is covered. Trip interference is covered. In the case of the one I get, you'll even get a rental- no charge to you. I'm not sure where you're going with the previous repairs. Previous to what? This is a warranty for a new car purchased within the first 24k miles of ownership and in my case lasting up to 6 years or 100k miles.

 

But here is something interesting I found out today. I bought a new Corolla in July. Purchased a Platinum warranty in December. My car got totaled 3 weeks ago. Toyota is giving me almost a full refund for the warranty.

...and you won't pay $1400 for this....it's a few hundred less, and I get the one with no deductible.

Towing is covered. Trip interference is covered.

 

In the case of the one I get, you'll even get a rental- no charge to you.

I

'm not sure where you're going with the previous repairs. Previous to what?

My car got totaled 3 weeks ago. Toyota is giving me almost a full refund for the warranty.

...and you won't pay $1400 for this....it's a few hundred less, and I get the one with no deductible.

Towing / TI / Rental - Great!

Previous ... Say I buy the car in 2006 and my starter goes out in 2008. I have to decide whether to use my prepaid warranty (and forgo the $1,000 refund in 2012) or pay $400 in 2008 and preserve my refund for $1,000 in 2012.

Why isn't Toyota refunding the entire cost?

You are paying $262 interest (8% over 6 years on $1,000) so I was off when I said $400. Original Warranty $1,000 + $262 = $1,262. Even if you are paying cash for the car and warrany (prepayment), you could have invested the $1,000 and earned $200.

Well, it is safe to say that Toyota increases their profit margins by selling extended warranties. If less people purchased EW's, they would need to raise MSRP's. So please, everybody purchase a EW. You may come out ahead. Gosh, you may even get a subisidized weekend stay in Barstow.

Towing is covered. Trip interference is covered.

 

In the case of the one I get, you'll even get a rental- no charge to you.

I

'm not sure where you're going with the previous repairs. Previous to what?

My car got totaled 3 weeks ago. Toyota is giving me almost a full refund for the warranty.

...and you won't pay $1400 for this....it's a few hundred less, and I get the one with no deductible.

Towing / TI / Rental - Great!

Previous ... Say I buy the car in 2006 and my starter goes out in 2008. I have to decide whether to use my prepaid warranty (and forgo the $1,000 refund in 2012) or pay $400 in 2008 and preserve my refund for $1,000 in 2012.

Why isn't Toyota refunding the entire cost?

You are paying $262 interest (8% over 6 years on $1,000) so I was off when I said $400. Original Warranty $1,000 + $262 = $1,262. Even if you are paying cash for the car and warrany (prepayment), you could have invested the $1,000 and earned $200.

Well, it is safe to say that Toyota increases their profit margins by selling extended warranties. If less people purchased EW's, they would need to raise MSRP's. So please, everybody purchase a EW. You may come out ahead. Gosh, you may even get a subisidized weekend stay in Barstow.

....yeah, then when your struts went out around 60k miles you could shell out a few hundred for them, if a CPU went out that might be a grand or two, um, yeah throw in that starter, too, and the likelyhood of a starter being your only problem in six years is pretty slim....look, I'm not pushing these things and I realize they're not for most people, but for someone who doesn't have a mechanical aptitude it really isn't a bad deal, they are a lot better than what a lot of other companies are offering. That's what Im trying to point out. I've seen people buying useless warranties at the dealer where I used to work. Personally I've no time for the DIY thing anymore...job and family take up a lot time so I opted for it. If it affects Toyota's MSRP in a way that doesn't suit you, too bad...

Why isn't Toyota refunding the full price??? Probably for the same reason why you can't drive a 3 month old car back onto the lot and expect to get the full retail value back on a trade...

....yeah, then when your struts went out around 60k miles you could shell out a few hundred for them, if a CPU went out that might be a grand or two, um, yeah throw in that starter, too, and the likelyhood of a starter being your only problem in six years is pretty slim....look, I'm not pushing these things and I realize they're not for most people, but for someone who doesn't have a mechanical aptitude it really isn't a bad deal, they are a lot better than what a lot of other companies are offering. That's what Im trying to point out. I've seen people buying useless warranties at the dealer where I used to work. Personally I've no time for the DIY thing anymore...job and family take up a lot time so I opted for it.

We are talking about a TOYOTA where your chances of anything significant breaking are slim & none for the first 200,000 miles. Struts, Brakes, tune-ups are all maintenance and not covered. As I mentioned, my 4 Corolla / Prizm's and only two had issues the first 100,000 miles (50% chance of collecting anything).

If it affects Toyota's MSRP in a way that doesn't suit you, too bad...

It affects me in a positive way, so please keep buying the EW's!!!

Why isn't Toyota refunding the full price??? Probably for the same reason why you can't drive a 3 month old car back onto the lot and expect to get the full retail value back on a trade...

Someone said if you don't use the EW, you get your money back. It is a fair question why someone did not get all their money back.

Struts are covered. Local Goodyear garage wants $700 to replace front struts with wheel alignment.

Struts are covered. Local Goodyear garage wants $700 to replace front struts with wheel alignment.

I checked the Toyota web site, I admit more is covered than I expected; however, struts do not appear to be covered. Strut rods are covered under the suspension category, no mention about strut assemblies. Strut rods are the solid connectors to the strut assemblies on the rear suspension and I would expect them to last 1,000 years.

The GYB struts that came std on my Prizms & Corollas go 150-200,000 miles, not the 60,000 miles you would expect from Gabriel or Monroe. In fact, it is highly unlikely any of that stuff will wear out within the 7 year / 100000 mile warranty which really is a four year / 64,000 mile warranty after subtracting the factory warranty.

My information is coming from the actual EW warranty book they send you that spells out what's covered and what's not. I'll quote from the book

"The items listed below are not covered by platinum agreements.

Accessory drive belts; body panels; brake linings; pads and shoes; rotors and drums; bumpers; carpet; chrome; clutch friction disc and pressure plate; dash cover and pad; door trim; handles, and fabric; filter; fluids; glass (including windshields); headliner; heating hoses, lines and tubes; hinges; hybrid vehicle battery; hybrid vehicle battery module/pack; interior and exterior trim and moldings (including but not limited to cup holders, ash trays, covers and vents); lamps;; light bulbs; nuts, bolts, clips, retainers, and fasteners; paint, rust and corrosion damage; seat covers; service plug; sheet metals; shiny sheet metals; spark plugs; structural framework and wells; hybrid system main relays; tires; vacuum hoses, lines and tubes; weather stripping; wheels and rims; winshield wiper blades (rubber component)"

My information is coming from the actual EW warranty book they send you that spells out what's covered and what's not. I'll quote from the book"The items listed below are not covered by platinum agreements.

 

Accessory drive belts; body panels; brake linings; pads and shoes; rotors and drums; bumpers; carpet; chrome; clutch friction disc and pressure plate; dash cover and pad; door trim; handles, and fabric; filter; fluids; glass (including windshields); headliner; heating hoses, lines and tubes; hinges; hybrid vehicle battery; hybrid vehicle battery module/pack; interior and exterior trim and moldings (including but not limited to cup holders, ash trays, covers and vents); lamps;; light bulbs; nuts, bolts, clips, retainers, and fasteners; paint, rust and corrosion damage; seat covers; service plug; sheet metals; shiny sheet metals; spark plugs; structural framework and wells; hybrid system main relays; tires; vacuum hoses, lines and tubes; weather stripping; wheels and rims; winshield wiper blades (rubber component)"

Good luck with your warranty. Be sure to check back and let us know if your vehicle required extended warranty work, whether that work was covered and whether it was worth your investment.

Just curious if someone has sold a Toyota vehicle with a extended warranty still remainig. Presumably it would be a selling feature if it is transferrable, but did it help anyone get a better price for the vehicle? If so, how much more do you think you sold the vehicle for? Did you have to use the warrany coverage? If so, what would the repairs have cost you if you paid yourself?

My hunch is that you are still in the hole on your investment, but if you sold the vehicle prior to expiration of the warranty, possibly you recovered a portion of your investment.