Cancel Pre-Paid Maintenance Plan

Thanks for the heads up, as I have been thinking about that decision I made since I've purchased it.

 

Yes, I bought a Pre-Paid Maintenance plan when I bought my car in 2010 since this was my first Toyota and I wanted to establish a relationship with the local dealer. After the first service it became very obvious that it did not make good financial sense except to the dealership.

 

I canceled mine and opted for my insurance (geico) mechanical brakedown coverage for $50 a year. Worth every penny, they covered over $2k in brake repairs.

 

I wonder what the repair would have cost if it was your money paying the bill, and you had acted like a smart consumer.

 

Not sure what you mean, I thought that was pretty smart, opting for $50 a year coverage over a $2k Toyota extended plan. The repair for the car would have cost me around $2700, but instead I paid a $250 deductible and the dealer worked out the rest with the insurance company. The dealer was probably not able to charge as much as they would have direct to consumer because the insurance company has set rates and often provides their own parts.

 

I meant that bills insurance companies receive are often inflated, although I do not know if the insurance company applies a discount not evident on the bill.

As one example, I think I remember paying $150 - $200 for windshield replacement, but the shop told me they bill over $400 to the insurance company. Another example: The dealership charges Toyota $72 for a basic oil change during my new car period, but would charge me $49 if I paid out of pocket. Other issues that can come into play that result in inflated bills to the Insurance company :

OEM rather than generic parts;
Poor customer diligence in avoiding repairs not needed;
No incentive to shop around for the best value. If anything, the insurance incentive pushes the customer to the most expensive place in town in hopes of gaining a higher quality repair, more convenience, or a more pleasant experience. Cost/benefit goes out the window.

As a matter of principle, insurance simply removes the customer incentive to be a smart and critical consumer. None of this is specific to you nParker; I am just skeptical of statements by insurance owners how much they 'saved' by buying the policy.

 

Gotcha, I agree with a lot of what you are saying, this was a little interesting because I didnt realize I had it, so they gave me the bill, and in my sticker shock I began researching alternatives when I came across my insurance. So before I even contacted them, I knew the 'retail' price of the repair. The shop said they took a big hit on the service (they probably wouldn't have done it if they were losing money), but who knows what goes on behind the scenes...the beauty of information asymmetry.

 

Just to make sure, you are talking about the maintenance plan, not the extended warranty plan, right? If you are willing to crawl under your car to do the oil change and the various checks, the maintenance plan is not worth it. Actually, I'd tell most people NOT to get the maintenance plan, and if you don't know how to change your oil and do all of the checks, learn how to do it. I got the maintenance plan because I'm getting too old to crawl under my car to do much of anything (I like to preserve all of energy to chasing my girlfriend around the living room). When I installed my fog lights, I had to crawl under my car, and the next day, my back did not appreciate it. Same problem with doing plumbing in my condo.

As to the extended warranty, I'll let each individual make their own decision on that. There are reasons to do it and reasons not to do it.

Mike