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New Member - Extended Waranty?


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#1 SleepyK

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Posted 02 July 2004 - 10:56 PM

Hello!
I just brought home my new 2004 XT forester and am so happy with my purchase.
I did however get the Gold Extended Waranty (7 years, 100k miles, $100 deductible) for $1,700. Normally I would have bought it, but there was a miscommunication between my husband and me (another story altogether:) Should I have?

I can cancel it for a full refund within 90 days according to the contract.

I was wondering if y'all can tell me about your experiences and if you feel the waranty is worth it. Any advice would be appreciated

Thank you!

#2 cookie

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Posted 03 July 2004 - 12:23 AM

and they have lost a few bucks on me. I used it to get the latest upgrades for problems that could become an irritation later. No unplanned costs on that car at all due to the warranty.
My Subaru Forester is also a 99. No extended warranty and unplanned costs have been at least four thousand bucks.
I suspect that warranty might be cheap insurance, although I hope they have developed fixes for the problem like head gaskets, clutch, clutch linkage, etc, that befell my 99.

#3 SevenSisters

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Posted 03 July 2004 - 10:53 AM

My wife told me I had too much beer in the refrigerator and she didn’t have enough room. I told her I could fix that. With that, please excuse any rambling here.



Extended warranty costs are generally very negotiable with the dealer. They're like $500 undercoating. Perhaps others can share their experiences and prices paid. I didn’t buy one based on the high reliability rating of Subaru at the time (1991). Avoid third party warranties. At least if you buy from Subaru, they will be around to back it.



Subaru and the dealer aren’t offering extended warranties to be nice. They know the frequency and costs of repairs and make money selling the warranties. That said, on the average you don’t need the extended warranty. If you are unfortunate enough to have a major problem, buying the extended warranty gives some piece of mind.



By the way, you can’t drive the Forester like Subaru shows you in their commercials, it will void the warranty.



I couldn’t get into the Subaru website because of my firewall settings and their use of pop-up windows to convey information. I admit I don’t know the details of the Gold Warranty, but here’s my take on warranties in general.



You’re not buying a 70,000 mile warranty. You already paid for a 36K bumper to bumper warranty and a 60,000 mile limited power train warranty. You’re just buying the difference and $1,700 seems like a lot for 10,000 miles worth of power train protection that you could probably justify. Otherwise, they’ll eat you alive with the $100 deductibles on any small repairs. Also consider the real cost of the warranty if you’re financing it along with the car.

I believe someone on the board talked about getting the cost of their extended warranty back if they didn’t use the warranty. That may change my opinion if factual.



My 91 Legacy only has 130K miles, the only significant problems I have incurred have been two rear wheel bearings. I had the dealer do one for about $300, I bought the tools and did the second myself (90,000 miles) because they seem to be a reoccurring problem. If the dealer had done both, the cost savings, less deductible, would have been just $400. I consider myself lucky. An extended warranty wouldn’t have helped me. Remember, the last one would have been out of the warranty period.



It’s disconcerting to hear that cookie has had to shell out over $4K to keep his ‘ru running and so many other board posters are experiencing major and costly problems with their Subarus. A car should be able to go 70K without a major repair. Chrysler had to provide a 7/70 warranty just to get people to buy one.



In general I’m opposed to buying extended warranties. Here’s my dilemma though. With JD Powers and Consumer’s Reports rating recent Subarus below the industry average for quality and reliability, an extension may be justifiable to get the advantages of Subaru AWD if the price of the car and extended warranty are right.



It wasn’t clear to me if you bought the warranty already or wanted it and forgot. If you didn’t get it yet, tell the dealer how much you want it but your spouse thinks it’s too expensive for not much additional coverage. See if they’ll lower the price and good luck.

#4 SleepyK

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Posted 04 July 2004 - 06:15 PM

Thank you for the informative post - We did already buy it, but as I said, we have time to cancel. We are asking for a partial or refund, or for them to change the deductible to a lower amount.

There are pros and cons of keepingit or not. My big fear (justifed or not) is that come mile 36,001 something major happens - if I don't keep the warranty will I kick myself? I thought if i posted my question, it'd be an easier decision....

I will give it more thought - and would appreciate any other thoughts, experiences, or stories regarding the topic.

Much thanks and Happy Birthday America!
k

#5 gbhrps

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Posted 04 July 2004 - 08:07 PM

Take the money they want to charge you for the extended warranty and put in into a bank account for future repairs, and forget the warranty. You might even add to the account from time to time to build up the nest egg. If you need to use it for large repairs, do so. If you don't, its sitting there for use with your next car. Consider this. You pay $1700 for an extended warranty on the car today...and next week some idiot runs a red light, broadsides your car, and totals it. It really doesn't take much of an accident any more to have the insurance company write off a new car. Where is your extended warranty money now? Good luck which ever way you decide.

#6 sduford

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Posted 05 July 2004 - 07:45 PM

There is a very good reason why salespeople push hard for extended warranty, and it is not for your benefit. They make a lot of money off these warranties. And think about it, if they can make lots of money off the warranty, that is because the majority of people never use it!

I bought a 6 year 160,000Km warranty for my 93 Volvo 850 and I never recovered a cent of it. After 8 years and 180,000Kms I never had one repair above $250 except for brakes, which were not covered...

I'm with the previous poster, stay away from extended warranties they are a sham, and that goes for electronics and appliances too, not just for cars.

BTW: if something very serious goes wrong at 36,001 miles, they darn better fix it for free. If not, then you need to find another car company and/or dealer. VW is notorious for that, and they will never get my business again!

#7 sduford

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Posted 06 July 2004 - 09:35 AM

Here is a short article from SmartMoney on the subject of Extended Warranties:

http://www.smartmone...?story=20030319

#8 cookie

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Posted 06 July 2004 - 10:31 AM

but the way Subaru has been the last few years you are a lot better off with an extended warranty.
Just look at the long list of weird failures new Subarus have had.
If you said you were buying a Toyota I would feel differently about the extended warranty.

#9 sduford

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Posted 06 July 2004 - 01:01 PM

but the way Subaru has been the last few years you are a lot better off with an extended warranty.
Just look at the long list of weird failures new Subarus have had.
If you said you were buying a Toyota I would feel differently about the extended warranty.


But if you add the Extended Warranty cost to your financing, figure out how much more you are paying (especially over 5 years), and you'll be surprised. Factor in the deductible on most such warranties, and you are much better off keeping that money and investing it or even better, put it down on price of the car itself. Then chances are you will not need it, but if you ever do, you should be prepared. Over the life of several cars, you are almost certain to come out on top.

Even better yet, do like me: lease it for 4 years and then get rid of it. This way you are never out of warranty, and you never have to pay for an extended warranty or major repairs. Subarus get very expensive to maintain after 5 years anyway. Dependability is very important to me, I need to be able to trust my car, so I do not like to keep a car beyond 4-5 years in the first place.As a bonus, I'm always driving a current model.

The only drawback is that Subaru Canada's lease rates suck!

#10 cookie

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Posted 06 July 2004 - 01:13 PM

unlike you I keep my cars for a long time. Seventeen years on my last Mercedes and my last Jeep was twenty four years old when I sold it.
I have no idea what my Forester cost in 1999, so we need that, as well as how much financeing would cost. I bought my Subaru used so I don't have the original numbers.
I can pull the file when I get home and give you the exact list of repairs and maintence and we could see which would have been the least costly way to buy.
I never lease since I can't write it off and I think the cheapest way for me to go is to buy a used car in good basic shape.
Who knows, we all might learn something.

#11 jcniest5

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Posted 06 July 2004 - 02:12 PM

Are you financing it? If you are, I would say the $$ added to your monthly payment isn't that much, so keep the warranty. I garrantee the $1,700 won't earn enough interest during the full 5-6 six years to cover any major repair cost. A tranny service alone would cost you over 2 grands. You will be glad you keep the ext warranty.

#12 sduford

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Posted 06 July 2004 - 04:57 PM

Well, once again, simple common sense dictates that if dealers make lots of money from these warranties, then most customers never recoup their investment. Period. There is no way around that.

Now, with interest over 5 years, that $1700 will end up costing closer to $2000, and you only gain 2 years of warranty on the powertrain. There is probably (I'm guessing here, but it makes statistical sense) a 80-90% chance that you will not recover your investment. In other words, there is an 80-90% chance that you wil LOSE $2000, and a 10-20% chance that you will actually recoup some of your money and even less of a chance that you will save money...

When I was a student, I worked as a TV & Stereo saleman, and I absolutely loved those extended warranties. I made 40-50% comission on the warranty, which was often more than I made on the equipment, and 99% of people never benefitted from it. Recently, I went with a friend to a major electronics chain that would match any advertised price plus 10% of the difference. They happily discounted on the heavily discounted price he got somewhere else, but then they worked on him for 30 minutes trying to sell him the warranty (they were desperate to salvage their profit margin). They tried to make him feel stupid and guilty by not taking it. Good thing I was there to keep him from caving in.

Salesmen are pushy with extended warranties, and I know why, so I never ever buy them. So far I have never regretted it. They are a scam! Sure, you might get unlucky some of the times, but you'll still be ahead of the game.

Some of the comments here are making me think though. If I can really expect a high probability of needing a new tranny on a 5-7 year old Subaru, then perhaps it is not the car for me. I find that totally unacceptable. I have never changed a tranny in my life.

#13 jcniest5

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Posted 06 July 2004 - 09:11 PM

Let me just tell you a story. It wasn't too long ago, I financed a used Jeep Cherokee Limited. I opted to go with the extended warranty and it ended up costing me just $100 for the tranny work, which costed that company roughly about $2500. I don't remember how much the ext warranty was, but I was so glad I had that to cover the cost.

Granted, it was my fault. I moved across the state and had to tow my Jeep with only front end on the trailer. I knew that the 4x4 lever had to be in the N so no damage can come to the tranny, and I setted it there, but as the long drive continued, the lever got dislodged so my tranny was a toasted once I got to my place. Anyway, to make the story short, I got it fixed and I paid only $100.00 for the $2500 tranny.

#14 cookie

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Posted 07 July 2004 - 08:31 AM

extended warranties. They are definately working the percentages, plus the fact that most folks are going to lose the original paperwork or sell the car or appliance.
The way Subarus used to be I would not have considered the extended warranty. The way Subarus have been lately, especially the 2.5, I would get it and be happy to get it.
With my budget I prefer a few bucks more a month that I can plan for, rather than a $3000 plus expense as an interesting surprise, like I got from my car in one shot.
I think it is cheap insurance and ask any of the other folks who have had head gaskets, clutch, or transmission failures on a late Subaru and I supect they might agree.

#15 sduford

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Posted 07 July 2004 - 11:56 AM

Sounding more and more like I should stay away from Subarus then.

#16 Commuter

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Posted 07 July 2004 - 12:24 PM

I've chimed in on extended warranties in the past. I use to weight in more on the "don't bother" side. Today, I'm more of a fence sitter. Cars are getting more and more complex, and more and more expensive to repair. It's not just Subarus. But I will agree that Subaru has slipped in reliability since the mid 90's. No first hand experience on that. Simply a trend observed by being on this board for 3.5 years now.

In many respects, the answer can only come from the individual. Everyone's situation is different. It's a financing issue. Can one absorb an unexpected big repair bill? Can one be disciplined with maintaining their own 'car repair' fund? Can one do some of their own repairs? Or have access to people that can? It's a comfort issue. Are you willing to pay (for the warranty and financing) peace of mind? You have to decide for yourself in the end. Yes, it all is a bit of gambling.

I tend to keep my cars for a long time (10+ years). I would like a new car every 4 years, but I don't like to "always" have a car payment. In the 90's, my wife and I went 5.5 years with no car payments on 2 vehicles. I paid like $205 Cdn for a warranty on my 85 Civic way back when (never used it), but I have not bought an extended warranty since. If you keep a car much past 5 years, I think one has to "expect" a major repair bill. It may not happen at all. It might not happen until 10 years. But I think you are fooling yourself (and I don't care what the brand) if you expect a car to not need some major work as you approach 10 years. It may be expected work that one can at least plan for and schedule (eg, a clutch, struts, radiator, A/C, CV's, etc.), or it might be a 'sudden' breakdown (eg transmission failure). It's a trade off for owning your car and not having monthly payments. To each their own. This simply has been my approach so far.

I've heard over and over that there is about 50% markup on these warranties, so one must bear that in mind when purchasing. I've also heard that one can wait and buy the warranty just before your basic warranty runs out. Another option. Yes, on the whole, the "warranty" companies expect to make money from their sales.

I don't know if I have helped at all. Just food for thought.

Commuter

#17 cookie

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Posted 07 July 2004 - 12:25 PM

out weighed the mechanical shortcomings. I like the size, its fun to drive, fairly easy to work on, and can make it through the woods where I want to go.
If I was going to do it again I would buy a slightly later car with lower mileage from a place offering an extended warranty.
I bought a car with nearly 90,000 miles on it from a private party figureing most bits would be pretty solid. Wrong.




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