Extended Warranty on New Gen III is BAD IDEA!

Yes my dealer tried to talk me into this aswell. I said that if a new Toyota couldn't last five years without needing that kind of money spent on repair, then I shouldn't be buying one. He shut up after that.

 

Extended warranties are not completely unlike insurance. Whether you need insurance or not depends on your tolerance for risk, your ability to pay for unexpected repairs, your peace of mind, etc.

Ultimately, a blanket statement that they are a bad deal is very unfair. It really depends on what you pay for it. For example, some would say that paying MSRP on a new vehicle is a bad deal, yet many people do just that on high demand models. Extended warranties are little different. If you pay sticker price, it takes a lot to go wrong to recoup your premium.

Some dealers discount OEM warranties by up to 50%. Depending on the original warranty and exclusions and such, that may not be an awful bet, depending on what you actually pay.

Also, there are a couple reasons some people may wish to buy one when they purchase a vehicle. I don't know about Toyota, but some companies like Honda include roadside assistance with their extended warranty. With a AAA membership going for $56 a year here, that's a nice perk. Plus, it can be financed at the time of sale, also not a bad deal if you get a 0% or low interest rate.

I reluctantly bought one for my 2006 Honda Odyssey. I got a nice deal on a 7/75 Honda plan for around $700. About $400 of equivalent AAA coverage for 7 years made the price more like $300 to me. Haven't used that yet, but I did have a power sliding door repair after the factory warranty. I'm about break even now with 3 years to go. I figured it was a good bet when I bought it. Had I paid full price that was like $1500 or something, it may never have paid off.

I'm not advocating an extended warranty. They usually are bad deals, especially 3rd party ones. But, like almost anything else, a smart buyer might be able to turn one into a legitimate gamble, probably a better one than the stock market in any case! I'm leaning against buying one for the Prius at this time. The 6/60 powertrain and 8/100 hybrid warranty cover a lot. On the other hand, first year models are prone to a few more issues. I'm in no rush to research it at this point. I'll probably pass unless I start hearing about a lot of problems...

 

1. She should go back to the dealer and cancel the extended warranty. If it's the genuine Toyota extended warranty, she can cancel it within 30 days and get a FULL refund. After 30 days, the refund is pro-rated.

2. The Toyota extended warranty can be a good insurance buy if you get it at the right price. PriusChat offers Toyota's best and longest extended warranty - the Extra Care Platinum Plan 7 years/100,000 miles/$0 deductible - for the discounted price of $1055.

3. I strongly suggest that she wait until 35 months or 35,000 miles (whichever comes first) to make the decision about the extended warranty. That way she will be better informed as to (1) the car's reliability and whether the need for the extended warranty will justify its cost, and (2) which extended warranty to get in terms of maximum years or miles -- note that she can save hundreds more off that PriusChat $1055 discounted price if she elects an extended warranty with fewer maximum years and/or miles, as may be appropriate for her anticipated future driving usage.

4. Here's the thread about the Toyota extended warranties and prepaid maintenance plans available at a discount on PriusChat:

Discounted Toyota Prius Extended Warranty /Service Contracts

 

I bought an extended warranty against stains on my furniture. Sure enough I got a stain, and it took me 3 MONTHS to resolve the claim with the warranter. They ignored my calls, and when on the phone would tell me they'd put the claim in and not...it was the biggest headache over FURNITURE! I could only imagine what a ripoff it would be for a car...

 

Hi all,

I've listened to the Clark Howard Show on afternoon radio for awhile now, and he is 'quite' the champion for the consumer in all kinds of financial/purchasing situations; His focus is on the consumer getting the best deal and not allowing unscrupulous businesses or sellers take advantage of you. He also recommends many consumer friendly venues. I recommend that everyone should check him out. Although I have not visited his web site (www.ClarkHoward.com), I have heard his commentary on purchasing extended warranties. He makes a lot of valid arguments for his ideas against an immediate purchase.

Having said that, however, purchasing the EW is purely a personal decision. It is based on one's comfort level and risk taking factors. My co-worker's Gen II needed a new computer at 60,000 miles and he felt good about having purchased an EW. My current car is a 2000 Subaru Outback Wagon LTD. I purchased the EW and I don't believe I ever used it, or certainly didn't have repairs that added up to the cost of the warranty. I don't regret purchasing it, but my problems started long after the warranty expired.

My new car will be a 2010 Prius IV, which I did pay MSRP for. (there were no deals there, and I wanted the car...getting a break on the price would have been great but I wanted the car more than the savings right now).

I will consider purchasing an EW, but luckily I don't have to make that decision yet. I'll probably start revisiting the idea in the 1-2 year range when we'll all have better idea of some of the problems occurring with the 2010. By then, I also will have better recovered from the cost of buying a new car.

This is all just more food for thought... we're fortunate that we have the time to think about what our needs are for an EW and we don't have to feel pressured by the dealers to buy one immediately. After all, they're in the business of making money, and we're the one's handing it over.

Jennifer ;0)
___________________________________________________
2010 Prius IV - Blizzard Pearl/Dk Gray - No Package - ETA 8-18-09
*:car:*

 

You guys are absolutely correct, I talked my mom out of an EW for her forester, its been a few months & I'm still convincing her it was the right decision.

I think dealerships love to take advantage of women buyers, women should always bring a guy with them who knows more about cars than the salesman.

 

This excellent advice pretty much sums it up. Have her walk back in and ask for a refund. She has every right to do so up until 30 days from the point of sale.

Bryan

 

heathylaugh,

I bought EW from Troy (warrantyShack.com). I know what I got. It is GENUINE TOYOTA WARRANTY (I hope this is loud enough for you). So many of senior members here have bought from Troy and some even used it. Are we all stupid?

Some of your advices are valid points.
However, for $700 I got for my '05 to cover 7yr/80K.
Any non-hybird component failure would have costed more than $500 easily. There have been many (not slim chance) MFD failures reported for '04-'05. Each costs more than $1000 to repair at dealer.

Again, EW has been beaten to death as a topic here.
It is personal financial decision one has to make. Calling it a "waste of money" is insulting to people who cannot afford risks. (you know that there are people who live from paycheck to paycheck, right?)
You also loose money statistically buying medical insurance. Why do you have it?
That's right. You probably can't afford the risk of having to pay $100K out of pocket.
Well, some people can't afford to pay $1-2k expectedly. Different amounts, same reasoning.

For Toyota warranty, $2000 is a ripoff.
Below $1000 is a great deal. (7yr/80K-100K)

Statistics is useful information BEFORE you buy a vehicle. Once you GOT one, statistics does not apply to yours anymore. Your luck kicks in. Keep your fingers crossed. There are lemons from Toyota (like all other brands).
Search the web for such horrible stories.

Seriously, think about canceling your medical insurance. They are statistically bad financial investment. So is life insurance, etc.

 

The only EW available on the Prius in Germany/EU that I am aware of is the one offered directly from Toyota. It is not offered by default from the sales person, as it is clear that it makes sense to buy it withing the 3rd year of standard warranty offered in the EU for the non-hybrid parts (5 years on the hybrid parts).
If you want, you can then buy the extension from Toyota, for the next 2 years, for about 200€ - if I understood correctly. I would never sign an extension for 2000€, considering also the quality (or supposed quality) of Toyota.
Nobody/3rd party in EU would ever offer an EW on a Prius (or any other car/manufacturer for that matter) - I don't even think it is legal. Warranty in EU is only guaranteed from the manufacturer who is responsible for all repairs that fall under such warranty.

 

This discussion elsewhere on the forum is relevant:
http://priuschat.com/forums/gen-iii...941-real-pricing-2010-prius-5.html#post919455

 

Your rant is something I would expect after seeing your icon. One sided opinion with a little truth mixed in and based on worst case scenario's. The warranty offered by Troy is the Toyota Warranty. I wouldn't recommend a third party warranty either. They do go bust. Toyota willnot go bust and you won't have to argue with them. As for stain warranties and the like, they are third party and I would never recommend them

These Toyota warranties are indeed insurance. Insurance is arguably only good when you use it. The rest of the time it simply assures you that you won't have to spend anymore than what you put into the warranty. Now that Toyota offers a 125K mile warranty I consider it a nice feature just for the resale of the vehicle to a second owner. I really didn't want one until the 125K option came out. I would never consider a uned car with 80K+ miles on it without some guarentee's. I think the 125K warranty will almost pay for itself when you go to sell your car. And BTW, not I wouldn't pay $2K for it.

Your response about pricing it just under $2000 makes me think you are young and inexperienced. This has been a marketing ploy for decades and may have worked for some. But any adult knows that $1999 is actually 2 grand.

Your rant on WarrantyShack, and then you disclaimer on not accusing them or knowing anything about them is typical of the rest of your commentaries. You don't know what you're talking about.

 

My "business manager" (the guy who did the paperwork at delivery) had a list of extended warranties (paint, interior, undercoating, etc.) The "road hazard" was one that I have had on all my new tires. However, theirs was $599!!! I thought it was a typo. Surely they meant like $5.99 for each tire or something? No, I questioned him and he said it was $599 for the tire package. I said "couldn't I buy 4 new tires for that amount?" (suddenly wondering just how expensive these tires are)

He nodded once and quietly turned to the next page.

 

I feel it is way over priced for the length and mileage. When I bought my last Volvo I was offered a 5 yr unlimited mileage bumper to bumper warranty for $555. It was such a bargain I couldn't pass it up. I was in sales at the time and piling up mileage at a good rate.

There were people with 200K-250K miles on their car collecting on those warranties.

If Toyota offered a factory extended warranty for 10yr, 100K miles for under $1K, I would consider buying it. Third party no way.

Any modern car that is properly maintained should run relatively problem free for at least 150K.

 

Statistics require data. Data on how much was paid. Data on the coverage. Data on the provider. Data on repair frequency. Data on cost of repairs. Etc. Statistics do indeed lie, as they are easily and often omitted or twisted. So far, I've seen no statistics regarding Prius warranties or repairs.

Even cars with above average reliability are likely to have a couple repair visits over the years after the factory warranty expires. The question is how costly those repairs will be vs. the up front cost of an extended warranty.

Dealers and manufacturers sell these things to make money. They make a ton at sticker price. When heavily discounted, it's possible for both parties to come out ahead. The reason is that the consumer pays higher prices on parts and labor than does the manufacturer through their arrangements with the dealer.

Would you turn down a Toyota 7/100 EW if it was $1000 instead of $2000? What about if it was $800? $500? $300? $10? There's a cost where it becomes a reasonable gamble. The question is where is that cost for a 2010 Prius. I'm sure you could dig up some theoretical numbers for a 2nd Gen Prius from Consumer Reports or True Delta or somewhere if you really wanted to prove your point. Add an amount because the 2010 is "all new" and you have a starting point for an interesting discussion.

 

Why yes, throwing away $1000 is certainly a better deal than throwing away $2000.

EWs are always priced to make a profit for the seller, not for the buyer. If they didn't make a profit for the seller the seller would go out of business. Period, end of discussion, no statistics required. On average you will not get your money back. You might as well play roulette. Use that $1000 to reduce the amount you finance or buy a 12 month bank CD, and you will get more value from it. Nothing gives "peace of mind" like "cash in hand".

If you cannot afford the low possibility of paying for a major repair out-of-pocket on your new car, that is strong evidence that you really cannot afford to buy a new car.

 

I agree with many that have posted in this tread. The extended warranty is a waste of money.

I have a 2000 4Runner with 305,000 miles. Over the last 10 years I have had less then $1,000 in total repairs. Most of the repairs happen in the last 3 years that never would be covered by the extended warranty. Do not waste your money.

The old and new

 

With this type of rigid thinking, as ceric said above, you would also cancel any other form of insurance you have. Life, medical, auto, etc. They're all priced to make a profit for the seller. Thus, no value to the buyer. End of discussion, no statistics required. On average, you will not get your money back. Keep your cash in hand and peace of mind.

Or maybe you think these types of insurance differ because you don't pay them up front? Or they aren't as expensive per payment? Or the potential risk is greater? Or the odds of catastrophe are different? Well, yeah, there are variables that might make them a good gamble, just as there are with extended auto warranties.