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Extended Warranty on New Gen III is BAD IDEA!

Discussion in 'Gen 3 Prius Main Forum' started by healthylaugh, Aug 12, 2009.

  1. HTMLSpinnr

    HTMLSpinnr Super Moderator
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    While I had only $400 in repairs on my 2004, there were items I "would have repaired" had they been covered (dash warpage, etc.) that I just let go due to cost.

    For the 2010, there are some new pieces of technology, that, while I have total faith in Toyota, their reliability will only demonstrate over time. For instance, mixing coolant and exhaust in the same system - not once, but twice (cooled EGR and exhaust heat recovery). Exhaust gases are corrosive and from what I've seen, a stainless steel exhaust system only buys time vs. preventing corrosion. Translation, I felt that there was a small likelihood of developing a leak in one of these systems that could eventually become expensive. Should it happen within the first 7y/100k miles, it'd at least be covered. This was my justification for getting the warranty - combined w/ my prior experience w/ first year releases.

    I simply consider it part of the cost of being an early adopter. To each his/her own though.
     
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  2. jay_man2

    jay_man2 jay_man_also

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    My '08 Highlander Hybrid had to have the electronic power steering link and some other stuff replaced under warranty (as did a lot of earlier Highlander Hybrids and the '07 Camry Hybrid, as I recall). List on the parts alone was over $1200. While I too have faith in Toyota, a little insurance never hurts either.
     
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  3. radioprius1

    radioprius1 Climate Conspirisist

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    I had the same thought when I bought my Prius yesterday: why am I buying this new car if "everything" is going to break in a few years. I could tell the guy trying to sell it to me felt slimy doing it.
     
  4. healthylaugh

    healthylaugh boughtalottatoyotas

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    :thumb:

    Bravo... well stated. These vendors run the nunmbers and they are in the EW biz to make money--period.

    :fencing:Some who don't agree with my thesis are making personal attacks such as:

    "I must be young (and immature)" or

    "I'm rigid and one-sided" or

    "there is no truth to my statements."

    1) I'm neither young nor inexperienced. I'm a consumer advocate and a professional writer/speaker. Immature? Always, life's more fun that way.:der:

    2) Read my posts again, I clearly welcome everyone to make a choice with wihich they are comfortable, but the choice to buy an EW does not change the facts that no company sells these at a loss, based upon their empirical evidence.

    :peep:This may inflame some, but it's Mr. Schumacher's hard truth: If a person cannot stand to bear a catastrophic repair out of pocket, they have bought a vehicle too expensive for them and their budget. If, as one poster stated, you "live paycheck to paycheck," you are the poster boy (or girl) for the economic meltdown we're in--too much credit, too little common sense/delayed gratification. Buying any new car when you're that tight for money means no EW is going to save you if you lose your job, get sick and cannot work, and so forth...:help:

    3) Bring your data about how EW companies are altruistic and have the consumer's best interest at heart. Of course if you get it cheap enough, it's a good deal at a certain point and everyone needs to decide that number for themselves (BUT if the company does not honor the repair or goes out of business, no "discounted price" is good).

    I have ex-dealer F&I friends and now that they're out of the biz, they openly admit taking advantage of buyers via the EW and own large houses and expensive toys from their proceeds of same.

    Furthermore, the medical insurance analogy is not germane, mainly because medical issues can be far more opressive financially, whereas one's exposure with this car is in the mid-20 thousands (and no non-accident failure ever costs the entire purchase price). You can chew that up on the personal medical side in a hurry with one labotomy, which is what you need if you ignore the facts. <j/k> kind of...:fish:

    Some who disagree have made valid points, but again IMHO, none override the statistics. I respect all opinions and embrace the freedoms that are quickly being eroded in this country. I also clearly express that these are my opinions and the opinions of many experts based upon facts. If you choose to ignore them or disagree, I respect that fully. So enough with the personal attacks. Sinmply bring your verified stats...

    LAST ITEM: I'm unclear on the statement that WarrantyShack.com is an official Toyota warranty? Do you have a signed contract from Toyota Motor Corporation stating that they will honor any and all warranties purchased through them if WarrantyShack.com goes kaput? If so, I stand corrected and apologize profusely for my error.
     
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  5. LoraJ

    LoraJ Active Member

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    At some point, I will be buying the warranty. I had a 5 year on my current car. There were some minor repairs that I had done during the 5 year that were covered. Of course once I hit the 5 year mark the repairs got expensive, even for minor things. The car is almost 7 years old and I have paid almost 2k in repairs since the warranty expired. I am debating between getting the 7 year and the 8 year on the Prius. We can afford the piece of mind.
     
  6. dhs

    dhs New Member

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    The Prius extended warranties offered by WarrentyShack are toyota warranties. That means they are backed by Toyota. Warrantyshack is a front for an F & I person at a toyota dealership.
     
  7. CPSDarren

    CPSDarren CPS Technician

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    You haven't presented any statistics.

    I don't see any referenced numbers of any kind relevant to the Prius in terms of expected repairs, repair costs or warranty costs.

    I can say that the earth is flat because no one has presented any statistics and with this line of reasoning I'd be right, until proven otherwise. Yes, extended warranties are often bad deals if you go into them blind. But rather than hand wave that they are good or bad, all that is needed is some real data so that people can make an informed choice based on relevant information. If you want to dig some up specific to our new 2010 Prius, that would be very helpful. It's not a personal attack. It's a request for information to support your hypothesis.
     
  8. jaywolf

    jaywolf Member

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    Plus it help supports PriusChat.
    I took it to my local dealer it is the exact same warranty they sell for $450 more.
     
  9. Jon S

    Jon S Member

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    The thing to remember is that the Gen III Prius is a new car and new cars always have issues when first released. These issued will be fixed along the production line once they are discovered, but buyers of the new cars will be more or less guinea pigs. Toyota does build good cars but they are not perfect...
     
  10. hampdenwireless

    hampdenwireless Active Member

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    The number one reason I will not buy an extended warranty is the lack of integrity even of the big companies original warranties. Alone without the aid of the internet these companies screwed the lone customer time and time again. Now with the internet we can see their behavior to other customers denying the exact kind of claims that should be honored.

    If your buying a reliable car, why by an unreliable warranty to go with it?
     
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  11. pdxrose

    pdxrose New Member

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    Here are the economics:

    1) You're buying a Toyota Prius because it's dependable in the first place. NEVER buy an EW on any vehicle check rated by Consumer Reports, which the Prius has been.

    2) Take the $2,000 and put it in YOUR pocket (ie. savings account, ok I know they aren't yielding much at the moment), not the dealer's coffers. There are HUGE markups (profit for the salesman/dealer) on EWs, so how can it be good for you as a consumer?? In fact, it might be the biggest or one of the biggest profit centers on a new car today.

    3) Buying the EW at time of purchase DOES YOU NOTHING for 3 years or 36,000 miles (you already have factory warranty for that).

    4) The chances of you needing a $2,000+ repair over the first 5-6 years or 72,000 miles of ownership are slim. If you don't, the warranty was a waste, wasn't it?

    5) What if the EW company goes bust (and for this reason you NEVER even consider 3rd party warranties EVER)

    6) These EWs are NOTORIOUS FOR DENYING REASONABLE CLAIMS. Do you want to fight these reprobates over mice type on the contract? Not me...

    PLAY THE ODDS--the chances of you needing it are slim. If you happen to be unlucky, blame it on my proslethizing but don't kick yourself because it really would simply be bad luck, especially in the case of this vehicle and its track record.

    I hope that helps. BE STRONG--do not give into sales tactics that have no basis in fact and do not make good economic sense. :cool:[/quote]

    Just because your friend was naive or non-consumer savvy does not justify your one sided approach to "chatting." There are other things to consider whether or not the cost is justified including: age (yes more men enjoy fixing their own car), gender (its fun to crawl under the underbody at 40 but perhaps not 70), and what one "pays" - I paid $1,055 and your friend paid about double.

    If you don't like extended warrantees, great, but

    1) When quoting Consumer Reports or another publication, don't cherry pick the parts that support your opinion without including that CR did not recommend the Camry a year or two ago for "reliability." It is again in 09 but three other models are not. All Hondas are still recommended except the Element (new insight not rated yet). I have been reading CR for over 20 years and while I still subscribe, am less enamored. For instance, the RAV4 slightly beats out the CRV, which I have. A friend has the RAV4 and being priced about the same, it is inferior except for getting a couple of gallons more gas mileage. Interior appointments much cheaper looking, less well thought out and space inside, and as for the wheel still on the outside of the cargo door...

    2) Play the odds? No thanks as I have had a car with 23,000 miles have the whole engine have to be taken out for an oil leak. It was under regular warranty, but if it had not been, the cost would have been over $3,000 (and no car for a week).

    3) Be strong? I am :cool:; single so take care of a 3200 sq foot house, yard, cat, two vehicles, and run my own consulting business. I am strong enough, thank you, without repairing my own autos.

    4) EW are notorious for denying claims? Maybe non-OEM firms, but NEVER a manufacturer backed EW in over 20 years (have had Honda, Toyota, and even way back FORD and they paid whenever I said there was a problem). One of the Honda’s never had a claim so the dealer gave back all but $50 (which dealers still did that). Not sure why you are saying “third party” warranties when a Toyota EW is not TP.

    5) Loose money if don’t have a repair? Disagree. While I have already participated in the other thread (where the style for the most part give and take/pros and cons vs. this one), suffice it to say that if I am fortunate enough to never use my 7 year warranty, purchased for $1,055 with zero ded., I still will get it all back when I sell the car privately (a few months before EW expires) vs. trading the car to a dealer (even taking in to account the sales tax issue).

    6) In response to another member’s comment, "what am I buying this car for if I need a warranty," I am buying it for the gas mileage, the fun I have driving it, and because it’s made by a "reliable" car company. Not because I think it’s not going to have any repairs needed in 7 years, having had friends and families Toyota door handles fall off, CD players eat the disks, etc. In closing, on my Avalon, the seat belt design was such that it chipped the heck out of the side panel on the door. I made Toyota replace it under my EW under my warranty because of the "defective" design and with all my cars, if I hear a strange sound, I can take it in, get it checked out with 0 ded, and be on my way even if its fine.

    Thus, in closing, I am buying piece of mind and resale value, and because this is America where we are all free to do our homework, utilize our experience, and then make the best choice based on our own circumstances. Cheers!
     
  12. 32kcolors

    32kcolors Senior Member

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    I've had the same thing happen to a Mustang right before the extended warranty expired, and the engine was of course replaced under warranty. But it was a Ford and that's far less likely to happen in a Toyota. The cost would've been only $1,000 to play the odds ($3,000 less the $2,000/cost of EW).
     
  13. CPSDarren

    CPSDarren CPS Technician

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    If you don't trust the company, that's a great reason not to buy a warranty from them.
     
  14. healthylaugh

    healthylaugh boughtalottatoyotas

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    I welcome you to buy the warranty and/or advise you family and friends to do so because you think it's a good idea. I repectfully disagree. Your earth is flat analogy is preposterous because we know better about the earth. Same with the EW--we know that these insurers are not here to make our lives better, they're in it to make money.

    Obviously, there is no data on the 2010 Prius and you also clearly know that, so quit trying to make me look uninformed because I don't have any--because no one does. These premises are all based upon historical data and trends, just as the EW's prices are.

    The catalyst for this thread was the dealer EW for ~$2,000 and the tactics used to sell it. Again and again, you continue to ignore that I welcome each person needs to decide for themselves. IMHO it's a bad idea. If you disagree, bring your stats or refute the "profit logic," please.

    My hypothesis hinges on Consumer Research conducted by Consumer Reports, Clark Howard, and common sense. Again, the companies selling these do so to make a PROFIT. Their empirical data and analysis tell them that if they charge $X for this Prius' EW, they'll likely have a profit of $Y.

    I'm asking you to refute that with facts. I have common sense on my side. It's been claimed on this forum that "I don't know what I'm talking about." I'm simply saying "please prove it." Show me statistics on your side that consumers purchasing EWs benefit on average. THEY CLEARLY DO NOT, because if they did, the EWs would not exist or the prices would escalate to the point where they would again be profitable.

    SIMPLIFIED: In the EW equation, someone has to lose financially. On average, that someone is the consumer.

    And those few consumers who do benefit tend to use the same argument as the insane "I don't wear a seatbelt because my friend's uncle was thrown clear of an accident because he wasn't wearing one" or that "I heard about a lady who was hanged by her seatbelt when her car flipped over."

    I wear a seat belt because, statistically, I'm safer. Similarly, I don't buy EWs because your friend Zeke's neice's Prius engine blew at 36,010 miles.

    The statistics could not possibly support the pro-EW argument. The companies would cease to exist (furthering my premise: if they lose money, they close their doors or continue to unreasonably deny claims and then your warranty's worthless in that event as well).

    Here are some data links:

    http://www.casact.org/pubs/forum/07wforum/07w165.pdf

    EXCERPT (look at where your $$'s going--wow, lots of slices before it hits the Warranty Reserve):
    These products are almost always financed with the vehicle. Once an extended warranty has been sold, the amount charged for the warranty will be divided into several components. These include:

    [FONT=Wingdings,Wingdings][FONT=Wingdings,Wingdings] [/FONT][/FONT]Retail markup (for the auto dealer)

    [FONT=Wingdings,Wingdings][FONT=Wingdings,Wingdings] [/FONT][/FONT]Agent’s commission

    [FONT=Wingdings,Wingdings][FONT=Wingdings,Wingdings] [/FONT][/FONT]Administrator Fee

    [FONT=Wingdings,Wingdings][FONT=Wingdings,Wingdings] [/FONT][/FONT]Warranty Reserve

    www.clarkhoward.com (search for "new car extended warranty")​


    EXCERPT:​

    salespeople are often given incentive pay for every extended warranty they sell. Stores magazine, a retail trade journal, estimates that more than $5 billion worth of extended warranties were sold in North America in 2002.
    Consumer Reports routinely warns its readers against extended warranties; at 10 to 30 percent of a product’s retail price, they’re statistically more expensive than the aggregate cost of simply replacing products when they fail. But these warranties are popular nonetheless, presumably because of the sense of security they provide to customers.
     
  15. CPSDarren

    CPSDarren CPS Technician

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    I never said or implied it was a good idea. So, you don't even have to disagree. I simply asked for your statistics that support your hypothesis and suggested that your general claims may not always apply to specific situations.

    Exactly. But as I suggested earlier, you could still make an effort to prove your point with 2nd gen Prius numbers. Start with Consumer Reports or True Delta charts on long term repairs per year. Adjust by the percentage the 2nd gen is above or below average. Then factor in typical problems and costs. Though it's only a rough estimate, it does give you a break even point. Then subtract the value added for roadside assistance if you'd purchase that separately. Now you have a ball park of a fair value of the warranty. If that's a lot lower than the best street price, then you've proven your point.

    I don't disagree. You may well be right. But you're the one who brought up statistics and made a thread titled, "Extended Warranty on New Gen III is BAD IDEA". The onus of proof is upon you, if you wish to convice smart consumers of your claim. If not, that's fine, too, but I won't be doing the math for you.

    That's swell. Don't know him. Don't care. Did he do an analysis of a 2010 Prius, based on any relevant numbers that can tell me the fair value of a given policy? If not, his general claims are fine in general, but that's all.

    Common sense has it that investing in the stock market long term is low risk based on historic patterns. Didn't work so well this decade. But I don't want your common sense, I want the statistics you claimed to have.

    Fine. No disagreement with that. What about on a new Gen III Prius Toyota EW sold at a steep discount to MSRP?

    That's true, in general. But again, there's a range of selling prices where both parties can benefit due to the different costs they pay for parts and labor. If you strike out dealer profit by buying near cost from a high volume seller, a smart shopper may well be able to put yourself in that range.

    Plus, if for every smart consumer who gets a good deal there are 10 others who pay MSRP, the seller still comes out way ahead. This principle works on most purchases. Every insurance company has actuaries that set prices to guarantee profitability. That doesn't necessarily mean that every buyer loses money. These are two issues you need to separate.

    Anyway, you're dealing in generalities. I'm looking for specifics to justify for or against a potential purchase for members considering such a warranty on their New Gen III Prius. When you have some data and analysis, I may well be inclined to agree with you
     
  16. healthylaugh

    healthylaugh boughtalottatoyotas

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    Folks, I'm not the enemy. I'm trying to help. I LOVE THIS CAR!

    This whole business model on EWs and this thread are based on generalities. That's how they determine the costs and anticipated payout.

    Please see the entire posting... perhaps they are too long, because some are misconstruing or mischaracterizing my statements...

    FOR THE LAST TIME:
    In general, the EW is a losing proposition for the consumer. If the 2010 proves unreliable, this may change my opinion for this specific vehicle, but I will take the 35 months to decide and shop it really hard if I do pull the trigger.

    Good luck no matter what you decide, even if you buy an EW. If you're happy, I'm happy.
     
  17. Jonah

    Jonah New Member

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    Thank heavens...whew! Thanks for putting the information out there, though.
     
  18. pdxrose

    pdxrose New Member

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    Its not about trust, its about perfection. No one or thing is. Plus, everyone keeps coming back to playing the odds with $2,000. I paid $1,055 with no sales tax (we normally have 8.5% but had a hybrid holiday). Plus if one is financing a car at 5% to 8% then they should wait until 35,000 miles, even if the price goes up. I am not paying interest (but guess the time value lost of the purchase is 1.5% at todays savings rate which will play off the odds the price will go up in 35 months : ). This horse has been beat dead so I surrender :eek:
     
  19. LRKingII

    LRKingII New Member

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    What i wonder is does healthylaugh has health insurance?
     
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  20. pdxrose

    pdxrose New Member

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    Good point. Being self-employed, I guess I am over insured: full health, disability, and LTC. No life insurance though since the cat will inherit enough. While I am a big believer in proactive care, since I am not perfect (either like my autos), I wanted to make sure that I get the best of care, and am not a burden to family, if I need repairs or restoration. :cool: