Toyota Extra Care Platinum or Gold

When you buy a IV over a II you get more features. You will have these extras for the life of the car. They are tangible items.

When you buy an extended warranty you are gambling that you might have more repairs than Toyota predicted. The odds are against you. The majority lose.

 

And they are overpriced tangible items, with tons of profit for the dealer to make serious extra money off of us, just like the warranty. We'll pay those inflated prices anyway because we want the stuff.

I saved thousands not buying some items I would rarely use or appreciate, and spent it on something I would appreciate if I did have to use it. Others did/would do the opposite.

In the end everyone is out bucks, and we love our Prii either way. :cheer2:

 

In his analysis of the numbers, Judgeless is completely correct. Insurance is always a "bad bet" for the consumer, meaning the insurance company (Toyota) will show a profit per (car) insured. If they didn't, they wouldn't offer the policy/warranty. As an individual, you might get lucky, so to speak, and have enough in repairs that you would come out ahead. But if you were the owner of, say, 10 Priuses (Prii?), you would almost certainly lose. Even if you won the bet on one car by having a large repair bill, you would have more than covered it by the $10,000 you had spent total on the warranties for all 10 cars.

As Judgeless wrote in an earlier post, insurance makes sense only when the loss to the consumer would be catastrophic if they were uninsured. Life insurance and home fire insurance are two good examples. Insurance is always a bad bet, so the $1000 or so I spend annually to insure against fire is essentially money down the drain. However, in the unlikely event my home did burn down there's no way I could come up with the money to replace it. I would be financially ruined. (Which is why my mortgage company insists that I maintain insurance.)

Insuring small consumer items like DVD players, on the other hand, is completely foolish. Why place a bad bet when the potential loss is far from catastrophic, maybe $100 or $200? If you can't cover this loss you shouldn't be buying the DVD player in the first place.

I see the extended warranty as being somewhere between these two extremes. Nobody wants to shell out $3-4K for an unexpected repair. The question is, if this happened, given your own personal financial situation, how devastating would it be? If it wouldn't be catastrophic, why place a bad bet? (If it would be, it might be worth examining whether purchasing a new car for more than $20K is really a good decision.)

Having said all that, though, I'm not sure buying the extended warranty is as completely foolish as Judgeless makes it out to be. The policy that you purchase for the discounted price of $1000 probably has an expected value (EV, the payout per car over a large number of cars) somewhere in the $400 -$600 range (complete guess, btw), so you are getting about $500 in value right off the bat for your $1000.

There are other intangibles you get, as well (most mentioned elsewhere on the thread). These include 1) knowing that any work done will be done by factory trained mechanics at the dealer, using only factory parts, vs. Judgeless's trusted local shop, which may or may not actually know all the details, (this assumes, though, that you can trust the dealer's shop to do right by you), 2) avoiding some degree of hassle in the event there is a repair needed, 3) avoiding the risk of paying for unneeded repairs suggested by an unscrupulous shop, 4) some increase in resale value should you decide to sell the car, 5) the ability to plan for and finance on your own terms the $1000 outlay vs. potentially having to come up with an unknown sum at an unknown time, and 6) Peace of Mind. There are no doubt other things I haven't thought of.

Is all this worth the extra $500 you pay for the policy beyond the actual $500 EV? Probably not, but I believe it's a lot closer than Judgeless is allowing for in his arguements.

Good luck to all of you whichever way you decide to go on the warranty.

 

And a good "progressive" Democrat. Why did you bring politics into this?

 

Andreuccio, I agree with most of what you posted.

My goal is to save money. I find purchasing an extended warranty on a Toyota a waste because it probably will never fail over the time frame of the extended warranty. I also find it cheaper to do repairs yourself or taking them to a small shop. Over the life of the car you will save a lot of money.

This is from a thread I posted a while go with the history of my last Toyota I owned for 10 years.

http://priuschat.com/forums/gen-iii...nded-warranty-tec-platinum-2.html#post1095935

Over the first 170,000 miles the extended warranty would have gone to waste. I would have paid 5X in repairs if I took it to the dealer for every issue.

People that make the least amount of money waste then most because they do not think things out, and they never have a plan.

 

Take a breath buddy.

I agree with Andreuccio. I am just claiming after the car is out of warranty you can save money by going to a small shop or doing the work yourself. We all know this.

Please give an example of a personal attack?

 

Ah. There's another benefit I forgot to put on my list. Factory parts.

 

Some people will pay a lot of money for that. Me!

I was watching a show about whether you should or shouldn't pay off your mortgage. One of the reasons you should? Your "peace of mind."

I probably do things that are really stupid just for my peace of mind. I've got a girlfriend who is a real money drain (I could buy another Prius with the money I've spent in Chanel purses). But she gives me peace of mind. So, financially speaking, I should dump her. Probably not a good idea.

Mike

 

Yeah, that's why I included it in my list. There's certainly some value for "Peace of mind". It may not be easy to quantify, and it might (or might not) be overrated, but the psychological aspect of knowing you don't have to worry about any car repairs is worth something.

 

I think the word "probably" is a little imprecise and (unintentionally) misleading here. Let me give you an example. Let's say out of 10 Priuses, 7 have no problems whatsoever during the warranty period, 2 have a $3000 repair, and one has a $5000 repair. If each owner paid $1000 for their extended warranty, Toyota would have collected $10,000 but paid out $11,000 (ignoring sales commissions and other administrative costs). A bad deal for Toyota. But a good deal for Prius owners, since for their $1000 investment in an extended warranty they had an expected value of $1100. Still, since only 3 out of 10 of them needed the warranty, any one of them "probably" didn't get their money back out.

I don't think that scenario is likely, and neither does Toyota, or you wouldn't be able to find the warranty for $1000. More likely it will be something like two out of ten will have $1000 repairs and one will have a $3000 repair, $5000 in repairs total and an expected value of the warranty of $500.

 

Dumbmike I can sell you some all natural pills that will make your girlfriend spend less money. Will this give you piece of mind?

Some naysayers claim they do not work.

Some naysayers claim the odds of an extended warranty never work out.

Life is full of choices. Make smart ones.

 

Judgeless,

I'll take a life time supply of those pills, please (and maybe few extra, just in case I find some friends who need them). If they make her less expensive to maintain, it will definitely give me peace of mind.

But are you saying I should dump my girlfriend? If so, I'm showing her this thread so that I have proof of some support for such a decision.

I won't tell you the cost of the ring she wants.

Can I get an extended warranty on her? Is it worth it?

Actually, if I need to make the smart choices, which choice is that regarding extended warranties. People on this message board differ. Is either group wrong? Are both right? Hmmmm.

Mike

 

There are many things in life that are predictable and with a little research you can predict the outcome. (example: Extended warranty. Toyota spends a lot of money on research to create a target cost and profit.)

There other things like relationships, weather, health, and others like those that no one will ever be able to predict an outcome. (example: A relationship, no matter how much time and work you put in finding the right person there is no guarantee of the outcome.)

All you can do is make smart choices on things that are predictable and hope for the best with the items that are not.

 

Why do you need permission from anyone to decide to break up with her. You don't even need her permission. Make your own decisions, on her and on extended warranties.

 

If your only concern is money in vs. expected payout, then follow Judgeless's advice and don't get the warranty. It has to be a bad bet for you or Toyota wouldn't offer it. If the other items I put on my list are worth more than about $500 (guesstimate) to you, though, then it's worth thinking about getting the warranty.

 

The decision-maker compares the disutility of a small, sure loss with the disutility of a large, albeit improbable, loss.

So it all depends on your personal utility function--e.g., some of us don't go to the gym to mould the fine body, but to avoid the guilt.

All insurance is a "bad bet." You only win if you lose... or is it the other way around?

 

Well put, and interesting angle on it.

Not sure I get the analogy

LOL. True.

Just to clarify, when I use the term "bad bet" I mean your expected value over a large number of trials is negative. That is, you'll lose money. I don't necessarily mean you'll be happy if you "win" the bet.