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Is Extended Warranty Worth It?


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My story. I had never purchased an extended warranty before but after experiencing the prices just for regular maintenence on my SC430, I decided I should get an extended warranty. Just before the new car 48 month, 48,000 mile warranty expired (I actually had 33,687 miles on my car) I went to my dealer (Lexus of Bellevue) and told them I wanted the best extended warranty they had. They sold me a National Warranty Corp Premium Plus, zero deductible, 48 month, 48K miles warranty for $2318.71. Fast forward to today. I now have 43K miles on my car and had my first claim under my exteded warranty. The lift cylinders for the trunk are defective. Never mind that they shouldn't be defective in the first place 'cause I have a warranty that will cover the repair. WRONG. The warranty states....We will reimburse you or make payment to the repair facility for for any mechanical breakdown on all factory installed mechanical and electrical operating parts except as specifically excluded. They go on to list brakes, tire, lights (all the normal wear stuff) and body parts. Guess what. The mechanical lift cylinders that keep the trunk lid open are body parts. What BS. And the final kicker is that my dealer won't stand behind the warranty either. Out of the goodness of their heart they offered to cancel the warranty and give me half of my money back.

Bottom line. I won't ever by an extended warranty again, not to mention a Lexus. Every financial magazine or consumer organization says extended warranties are a waste of money. I should have listened to them. And, Lexus dealers are just like all the others. Don't believe that they are "honest" and would never try to sell you anything that wasn't in your best interest.

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What you should do is take that $2300 and put it in a high yield savings account. Maybe even set up a direct deposit from your paycheck to throw $50 a month in yet. Now you have your own extended warranty. And guess what, there is no expiration date, no mileage limits, no exclusions, no deductibles, and you can earn interest. Heck, you don't even have to use it for one car. How do you think these extended warranty companies make their money. If you drive a Lexus, and you have a couple grand you want to put towards a warranty, put it in a savings account first. They are pretty reliable cars, I'm willing to bet you don't spend $2300 in repairs in the five year limit you would have with some extended warranty. And when you do need repairs. Ask the service consultant upselling you a lot of questions, figure out the math. Ask them what the book time is on the repair, thier hourly labor rate, individual parts prices, and make sure they aren't charging you over retail. When you ask a lot of questions and keep them on their toes, it keeps them honest, and you will save money.

And whats up with half these threads being advertising to sell extended warranties?

Brandon

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