Extended Warranty - Yes or No

[longbow51]

Consumer Reports did surveys on this and for all vehicles, 55% never used them and only 25% would buy them again.

For Toyotas that number is likely skewed even more; we've had a T-100, 2 Tundras, a Sequoia, a Camry, a Land Cruiser, and none ever required much of anything. The Camry is not a new model, so should do well.

Put the money you were going to spend in the bank for any needed repairs.

 

[MTGreenhorn]

Would I personally ever buy one? Not likely, as I routinely buy non-running cars on the cheap for fixing/flipping or cheap commuters.
My wife however recently got a '18 Wrangler Unlt'd, she got the extended warranty on top of the remaining factory warranty. I'm fine w that, its her car. I have the peace knowing I don't have to always fix it, and if something major goes out, its covered, part of it was also lifetime oil changes. That right there saves me time, she can go change it at her whim and I don't have to carve time out of my already packed weekends.

 

[eddytheeagle]

Service advisor here who works at a GM store currently and have worked for several other brands. There is no choice in my opinion. KEEP THE WARRANTY. Generally most warranties have a 10% loss ratio, meaning if the warranty is sold to the dealer for $1000 dollars, the warranty company spends $900 in repairs on all the warranties sold. The loss ratio on the warranties we sell are on average 20% over the cost or $1200 per owner at our stores. The best warranty you can buy is from the car manufacturer and it’s their top of the line choice. Typically these are exclusionary, i.e. they tell you whats not covered. There are several 3rd party warranty companies that offer the same coverage, but you can also get stuck with a company like Car shield. I just finished a 25 day claim that they only covered $2,100 of a $4,750 engine repair.

The reason why legitimate warranty companies make money is honestly just owner ignorance. They forget they have them and pay for a repair, or forget to cancel it if it gets traded in or totaled, or buy a very short term warranty when your odds of something breaking quickly or a lot lower.

Yes, you can get an 8 year extension and never have the chance to use it.... You can also get liability only coverage and not comprehensive auto insurance and bet on yourself. It’s a personal choice. I’ve been doing this for 20 years and I buy extended warranties on the vehicles I purchase.

 

[shrapnel]

This is not a real hard decision. You said you can afford a $2000.00-$3000.00 repair. You already paid the $2000.00 for the extended warranty, keep it, you don’t need the money you paid for the warranty.

If you have a huge mechanical problem, you will be covered for 8 years. If you don’t, you get your money back for the unused warranty. Sounds like a good solution, and the interest you won’t get on the $2000.00 you paid for the warranty wouldn’t amount to a double whopper at Burger King...

 

[longbow51]

Service advisor here who works at a GM store currently and have worked for several other brands. There is no choice in my opinion. KEEP THE WARRANTY. Generally most warranties have a 10% loss ratio, meaning if the warranty is sold to the dealer for $1000 dollars, the warranty company spends $900 in repairs on all the warranties sold. The loss ratio on the warranties we sell are on average 20% over the cost or $1200 per owner at our stores. The best warranty you can buy is from the car manufacturer and it’s their top of the line choice. Typically these are exclusionary, i.e. they tell you whats not covered. There are several 3rd party warranty companies that offer the same coverage, but you can also get stuck with a company like Car shield. I just finished a 25 day claim that they only covered $2,100 of a $4,750 engine repair.

The reason why legitimate warranty companies make money is honestly just owner ignorance. They forget they have them and pay for a repair, or forget to cancel it if it gets traded in or totaled, or buy a very short term warranty when your odds of something breaking quickly or a lot lower.

Yes, you can get an 8 year extension and never have the chance to use it.... You can also get liability only coverage and not comprehensive auto insurance and bet on yourself. It’s a personal choice. I’ve been doing this for 20 years and I buy extended warranties on the vehicles I purchase.

FWIW, a close friend of mine was service manager of a GM/Toyota dealership for 30 years. GM/Toyota repair ratio was 8:1. Toyota repairs were more expensive when needed, though.

 

[NEWHunter]

Thanks for all the info and opinions guys. I ended up canceling the warranty. It was interesting that the finance guy told me the dealer cost for the warranty was $1,506 but on the paperwork I signed today it sure looked like the dealer cost was $1,306 - it reaffirmed my decision to cancel. I’ll be getting my $2,006 purchase price + $100 in sales tax refunded.

I perused some of the Toyota forums and it did appear that I overpaid for the warranty. If the research I did is accurate I have until 3 years/36,000 miles to purchase an extended warranty through Toyota. I’ll revisit the situation in the fall of 2023. Thanks again for the feedback.

 

[nwihunter]

Definitely get the refund. I was just in the same boat and got mine refunded on my 2019 CRV. The way cars are made nowadays I can’t really see having any issues under 125,000 miles. And even if something does come up it need to be more than $2000 repair to make the warranty worth it.