Extended warranty: yay or nay? More...
06-20-2006, 10:14 AM
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Extended warranty: yay or nay? More...
A buddy has an old Pontiac Sunfire that's on the way out. She's about to purchase a 2003 Toyota Rav 4. It was owned my a grandma, so it's only got 9000 miles on it. The rear seat and clock still had the plastic from the factory on them.
So the car has barely been driven since it was purchased new 3+ years ago.
The extended warranty that this Nissan dealership has offered her (the car was traded in there) covers the engine and drivetrain. It's good for 4 years or 48K miles, and will cost $1130.
However she drives her car roughly 30K per year. So this warranty would expire around Xmas 2008, a year and a half from now.
My thoughts are that it may have some bad seals in the AC system based on how little it was driven for 3 years (speculative). But it's also a Toyota, which means that it should be able to run for years with little or no maintenance. And based on how many miles she puts on cars every year, I don't really think the extended warranty is worth it.
Should she purchase the extended warranty?
So the car has barely been driven since it was purchased new 3+ years ago.
The extended warranty that this Nissan dealership has offered her (the car was traded in there) covers the engine and drivetrain. It's good for 4 years or 48K miles, and will cost $1130.
However she drives her car roughly 30K per year. So this warranty would expire around Xmas 2008, a year and a half from now.
My thoughts are that it may have some bad seals in the AC system based on how little it was driven for 3 years (speculative). But it's also a Toyota, which means that it should be able to run for years with little or no maintenance. And based on how many miles she puts on cars every year, I don't really think the extended warranty is worth it.
Should she purchase the extended warranty?
06-20-2006, 10:55 AM
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3rd party warranties make money by paying out less than you put in
That's after the dealer takes their cut, of course.
Manufacturer warranties make money by keeping the owner loyal.
Given this, I'd say skip the warranty because a group of smart businessmen ran the numbers and said that there's no way her cost will exceed her savings.
Manufacturer warranties make money by keeping the owner loyal.
Given this, I'd say skip the warranty because a group of smart businessmen ran the numbers and said that there's no way her cost will exceed her savings.