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  • avatar carcounselor 02/22/08 3:32 pm PST

    Both the previous answers are correct. When you buy a 5 year extended warranty the clock starts on it the day you buy the car, but the manufacturer's warranty covers the car the first 3 years. You are paying for 3 years of no coverage. If you sell or wreck the car in the time before the extended warranty kicks in you will get a rebate, but only for the "unused" years. In other words if you sold the car at 3 years you would only be rebated for the 2 remaining years of the warranty even though you could not have used it before the 3rd year was up.
    We have seen that there are very few major problems with new cars in the first 100K. There are exceptions, but not nearly as many as even 10 years ago.
    The best bet is to set aside the price of the warranty, in one lump, or on a monthly basis until you need it for repairs, or as a down payment on your next car.

    Source: 

Answers

  • qbrozen 02/22/08 2:48 pm PST

    When someone says "service contract" I think of things like oil changes. But you said "extended warranty" in your last sentence, so I'll assume that is what you are talking about.

    Whether or not it is worth it is usually a personal call. It, of course, depends greatly on what vehicle we are talking about, too.

    All in all, if you have the cash value of the warranty, you are better off putting that away in an interest bearing account and keep it there should anything go wrong with the vehicle. After all, warranty companies are not in the game to lose money, so the odds dictate that your out-of-warranty repairs will not exceed the cost of the warranty.

    HOWEVER, I have purchased several extended warranties when I felt the risk outweighed the cost.

  • 604doc 02/22/08 3:05 pm PST

    In addition to gbrozen's opinion, unless you want to finance the extended warranty, why not wait until the manufacturer's warranty is about to expire? Depending on the type of extended warranty, and the type of car you buy, the first few years of ownership are covered by the manufacturer. You would be paying for the extended warranty for basically no coverage.

  • carcounselor 02/22/08 3:32 pm PST

    Both the previous answers are correct. When you buy a 5 year extended warranty the clock starts on it the day you buy the car, but the manufacturer's warranty covers the car the first 3 years. You are paying for 3 years of no coverage. If you sell or wreck the car in the time before the extended warranty kicks in you will get a rebate, but only for the "unused" years. In other words if you sold the car at 3 years you would only be rebated for the 2 remaining years of the warranty even though you could not have used it before the 3rd year was up.
    We have seen that there are very few major problems with new cars in the first 100K. There are exceptions, but not nearly as many as even 10 years ago.
    The best bet is to set aside the price of the warranty, in one lump, or on a monthly basis until you need it for repairs, or as a down payment on your next car.

    Source: 

  • joel0622 03/17/08 6:39 pm PST

    If you plan on buying one any way buy it the day you buy the car. There are several reasons.

    1. You pay todays prices not the prices 3 years from now. The VSC's increase in price each year.

    2. You don't have to pay the surcharge for not buying it in the first 12/12 (varies by make)

    3. It is already done and you don't have to worry about it 3 years from now

    4. Most VSC's include a loaner car provision for when your car is in service.

  • silverback4 04/04/08 8:16 pm PST

    I would be very cautious about buying a "service contract". This is a warranty that covers repairs for your car after the manufacturers warranty expires.I bought a service contract from Jack Daniels Audi in NJ from Zurich Insurance. I was promised that "anyone" would accept it and do the repairs with only a $100 deductible due at the time of service.I was also told they "were the Gold Standard of warranty companies."I had heard the name before, and thought it was worth it. So far, two Audi dealers refused to accept the warranty and insisted that I pay up-front for any repairs, and then try to get re-imbursed.The dealer that sold me the service contract, Jack Daniels wasn't going to accept the warranty they sold me until I complained to the management. I cancelled the contract, lost $600 in 8 months, and filed a complaint with Audi, the Attorney General for NJ, and the Bergen County Office of Consumer Affairs.Check first before you get one of these things. I have also found out that this dealership sold two cars to people that were Audi Certified, but in fact had been in accidents, and it was reported on Carfax. The dealer never told the customers. Therefore, even the Certified cars may be suspect. Beware.

    Source: Audiforums.com, and Audizine.com

  • daisybuttons 10/18/08 1:43 am PST

    I listen to 'Dave Ramsey-don't know if you've ever heard of him before-but he says if you buy one of these extended warranties-then you are paying a stupid tax-in other words-you are paying for something you are not going to get without paying an extra price-it's not worth it! just passing this along! I got a good warranty with my car-and after it's done-well then I'll be liable for paying to get it fixed-but most of those extra warranties have such high deductibles and then what you pay each month for them-you might as well be putting money in the bank! and pay for whatever happens! most have so many clauses and this and that's -they don't pay anyways-but it's up to you as to what you'd like to do! just read the fine print!!

  • jawit4 11/17/08 2:53 pm PST

    I have bought several cars that I was offered the extended warranty option and I didn't take it, now I'm wishing that I did. 2 of those cars had major engine trouble within the first year and I was left footing the bill for a new motor. I have bought used vehicles since then and I always take the extended warranty just so I don't have to worry about the chance that I would need a $3000 motor replaced. Like everyones said so far I think it's a matter of personal choice.

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