Extended Warranty GOOD OR WASTE OF MONEY

[pecosrunner]

Sorry, not sure if this is the proper place to post.I have an 09 JSW with 35K.I have heard of extended warranty plans but not sure which one to buy or where.Are they worth the money u pay for them???Also, any suggestions where to buy them.Thanks...

 

[JSWTDI09]

Sorry, not sure if this is the proper place to post.I have an 09 JSW with 35K.I have heard of extended warranty plans but not sure which one to buy or where.Are they worth the money u pay for them???Also, any suggestions where to buy them.Thanks...

Are they worth the money? That's a tough question to answer because for a few people they are worth the money, but for the majority of people they are not. You have to realize that these are not really "extended warranties" - they are insurance policies. They are only as good as the company who writes them, plus they are designed to make money for the sellers. If you have serious problems, and the company cannot find an excuse to not honor the policy - they can save you a lot of money. However, if most people did have these serious problems, the company would go bankrupt. Most people do not really need this policy, so the company makes money (their goal). These policies are priced so that most people do not get back as much as the paid (it's the nature of insurance). The choice is yours - do you want to bet against your car or not?

For more information, do an advanced search and search titles for "extended + warranty" and you will discover many posts asking basically the same questions as yours.

Have Fun!

Don

 

[pecosrunner]

thank u, DON.

 

[Poppy231]

Just got my 2010 Jetta TDI. Was offered the extra extended warr over the 3/36k bump to bump which would have gotten me 5/100k. Price was $1,900. Trying to sell me on 24hr roadside which most good auto policies alredy offer. Decided against it and let it run its course. Have 200k on my Golf TDI and never an issue. Got a lower offer of $1700 on the outside but ill keep my $$$.

 

[ymz]

Just keep in mind that the 2009-> TDI's employ a new technology that has the potential for very expensive repair costs (see all the message threads concerning the high-pressure fuel pump problems...). If I was getting a CR-TDI (not likely), I'd $pring for the extended warranty, even though it's against my usual tendency...

Yuri

 

[75r90rider]

Extended warranties or service contracts are pure math. Someone has analyzed failure rates and expenses and figured out the statistics on how often things fail and what they usually cost. They then price the service contract wholesale to the dealer or seller so that on average, they will pay out less in claims than they take in from premiums. Then, the dealer who buys the contracts "wholesale" sells them to you at another markup, often substantial.

Let me assure you, some very smart people with a very large base of data to draw from have priced the warranty where it is to make money off you. It is simple as that. They are not in the business of losing money. The bottom line is, they pay out less in claims than they take in via premiums. At least, the vast majority of the time. Yes, on occasion they are wrong, and occasionally one person out of a hundred has a really expensive failure that blows the curve. But, on average when all is said and done, they are again paying out less than they are taking in. Dealerships make HUGE money on service contracts. So do insurance companies, etc, basically anyone selling them.

You may indeed be one of the minority of people who benefit and come out ahead. You may have a $4000 repair and the contract cost you $1500. Everyone has an anecdotal story like this, kind of like everyone has a story where someone survived a crash because there were NOT wearing a seat belt. Odds are, though, that you are safer with a seatbelt, and odds are that you will keep more of your money when you don't buy extended service agreements.

It's like a casino, really. The vast majority of people lose. Yes, the odd person wins big once in a while. On average, though, if you gamble long enough, you will be a net loser and the house a net winner.

What you are getting with extended warranties, though is peace of mind. This has a value to many people. You may not care as much that you ultimately recovered your premium or not...it is the fact that you are driving worry free, you already wrote the repair check basically ahead of time, and you have a known period of covered time to breathe easy. This psychological reason would probably be the only valid reason to buy a service contract strictly speaking. Math wise, odds are against you, and there are a lot of highly paid actuaries out there studying the data and setting up the contract pricing scales who are paid to make sure the company wins overall.

 

[75r90rider]

Just keep in mind that the 2009-> TDI's employ a new technology that has the potential for very expensive repair costs (see all the message threads concerning the high-pressure fuel pump problems...). If I was getting a CR-TDI (not likely), I'd $pring for the extended warranty, even though it's against my usual tendency...

Yuri

Agreed. I thought just like you. I never buy extended warranties. However, I am thinking about it with my '10 TDI due to the HPFP issues. Problem is, VW sidesteps even the standard warranty by claiming "contaminated fuel", so having an extended warranty is useless if they won't even cover it under the warranty that comes with the car. If I was sure they'd cover HPFP issues under the VW extended plan, I'd be in there signing up today, and I'd happily drive my '10 worry free. When I heard VW was doing what they could to deny warranty claims on HPFPs, though, I thought the extended service might not be such a wise investment.

 

[75r90rider]

Just got my 2010 Jetta TDI. Was offered the extra extended warr over the 3/36k bump to bump which would have gotten me 5/100k. Price was $1,900. Trying to sell me on 24hr roadside which most good auto policies alredy offer. Decided against it and let it run its course. Have 200k on my Golf TDI and never an issue. Got a lower offer of $1700 on the outside but ill keep my $$$.

Historically, you would be ahead. With the common rail cars, though, they are a completely different animal than your old version TDI or my old 2000 or 2003 TDIs. I have a feeling the current model is a lot more complex, a lot more fragile, and a lot more trouble prone. It might be the exception where extended service contract make sense due to the incredibly expensive nature of fuel system failures. However, if VW is going to take the attitude in the real world where they do all they can to blame HPFP failures on the customer and not cover repairs under warranty, then warranties are fairly useless regardless of length at that point.

I used to sell VWs, and sold a ton of the 2000-2004 or 05 diesel cars. I don't ever remember having any issues with those cars even remotely approaching what this HPFP issue looks like. This may be a different beast.

You are correct, though. Usually you are ahead to forego extended warranties or service contracts.

 

[TwoTone]

Problem here is people are having a hard enough time getting the HPFP covered under the normal warranty, what do you think the likelihood of getting it covered by an extended warranty is going to be?

 

[MyAvocation]

Above posts are all great advice. Additional perspectives:
- extd warranty ideal for those with little/no cash reserves
- MUST get in writing what is not covered; airbag systems not covered, etc
- even the best extd warranty covers less than factory warranty
A 100k extd warranty saved me twice what I paid for it -- not on a single expensive repair, but a series of them. Typically not a fan of these warranties but will not hesitate to buy again -- especially considering I drive 45k/yr and burn through even the 100k one too soon.

 

[MostroDiesel]

HPFP is a red herring warrantywise

If VW balks at covering these failures under warranty (and interestingly, seemingly ALL the most recent failures HAVE been warranteed) you can bet your life the extended warranty will not cover it.

I would never buy an extended warranty. Soon as my factory warranty expires, I will become my own mechanic, as I have been for the last 15 years. The money saved on labor alone will pay for an extended warranty many times over.

 

[DieselJeff]

I've never bought an extended warranty and probably never will. As said above, they are in business to make money by selling these policies. They are not banking on helping the consumer, they are banking on making a profit. I'd be willing to bet that by declining every extended warranty on every product I've bought would equal AT LEAST the cost of my '10 Jetta. They are guaranteed to get your money when you purchase but you have to HOPE to get something covered under warranty? And don't get me started on the word "hope".

 

[Rod Bearing]

If VW balks at covering these failures under warranty (and interestingly, seemingly ALL the most recent failures HAVE been warranteed) you can bet your life the extended warranty will not cover it.

I would never buy an extended warranty. Soon as my factory warranty expires, I will become my own mechanic, as I have been for the last 15 years. The money saved on labor alone will pay for an extended warranty many times over.

+1

What he said.

 

[AlcoC420]

Your first step is to get a full copy of the plan and read all the small print. A quick review shows that Fidelity's warranty (the VW plan) provides no coverage for these:

Any breakdown caused by negligence .... including any negligence caused by ANY repair facility. Any breakdown caused by "contamination" .... No coverage in Canada ... No coverage on standard transmission clutch or components, air bags, upholstery, exhaust, shocks, CV joints, excessive oil consumption, etc, etc.. ...

This isn't to say that the plan is a bad idea, but any Buyer needs to be aware of what they're purchasing. I chose not to buy one because of the high expense and because there are too many escape clauses.

 

[thebigarniedog]

A vw extended warranty is a complete waste of money. Unless and until vw abandons their "blame the customer first campaign/attitude" their warranties are worthless. My opinion.

 

[75r90rider]

You have to ask yourself why there is pressure on the finance manager at a dealership to sell as many extended service contracts as possible. Why? Because they are a huge profit center. If there wasn't a huge amount of money being made on these products, believe me, they wouldn't be offering them to you.

I was never a fan of such contracts, and never promoted them particularly when I was in VW sales, although every dealership and/or manufacturer out there gives its sales force incentives to do so. Most salespeople are paid "spiffs" or small bonuses if their customers buy a service contract at the time of sale. Every finance manager I've ever seen was tracked to see what percentage of their "turns" or customers that came through their office to have paperwork done bought a contract. They were also paid bonuses, incentives, or had their pay in some way massaged in a positive manner if they performed well with extended warranty i.e. service contract sales.

Would this would be the case if these contracts did not make the wholesale seller or underwriter AND the dealership level seller a boatload of money? Would they be offering these if they were paying out more in claims than they were collecting in premiums? Nope.

It's all termed "back end" at a car store. Money made not on the front end of the deal, in other words markup on the sale of the car itself. Accessories, the hocus pocus paint treatments, window etching with VIN numbers, fabric protection, all this stuff is hugely profitable and a profit center for the finance office in the dealership. Most, if not all of it, is a waste of your hard earned money, and is marked up absurdly.

I would opine that if your financial reserves are that skimpy, then you are buying too much car in the first place. Having an extended service contract on a car that is honestly out of your budget is merely masking the true issue...you need to drive a cheaper car that you can afford to maintain.

 

[Lightflyer1]

When dealing with weasels, expect them to weasel out of anything they can weasel out of. All insurance policies (warranties) are written in such a way as the provider will make money off most and lose to a few. I prefer to self insure (keep my money in my pocket to use as I see fit).

 

[Jester]

I never believed in extended warranties either but I bought one on a 98 Ford Tauras once. I used it twice: once on an engine issue that would have cost me $4500 and another time road detrius punched a hole in my gas tank which was covered. These two expenses far exceeded the original cost of the warranty. So, it really is a hit and miss proposition. I would rather have and not need it, than need it and not have it.

 

[D-Cell_Mekanick]

There are several people that can give you examples them of saving thy ass. I am one of them. I have a platnium warranty that pays back the amount of the warranty if not used. I have used it twice now on a 2003 Ford Expidition. The good thing is if I didn't use the warranty I got the money BACK after the warranty expired without use. Again you are betting it will cost less to fix thatn the price of the issue. I had over $2300 in repairs since, saving me $600 to date!

Jason

 

[Biffster]

Actually, Murphy says if you buy one, you won't need it. If you choose not to, you will regret it.

So, I don't recommend that you not buy one.

 

[petger]

If I had purchased every extended warranty offered I hate to think how much money I would have spent to date. Probably well over $10,000. So I chose to stay my course and pocket the money for the inevitable large repair bill, and figure I'll be ahead even then.

 

[75r90rider]

Everyone has the story of the one guy in a million who would have died had he been wearing a helmet, but was not when he crashed his motorcycle, so he lived. Yeah, there probably is one case in a million where this is true. Still, the other 999,999 times, wearing the helmet is beneficial statistically.

Same goes for extended service contracts. The companies have analyzed the statistics and structured the plans and prices to where they win the vast majority of the time. Can you occasionally beat them? Sure. But not even close to the majority of the time. On average, you're paying more than you will reap in benefits, period.

 

[nhdoc]

As others have said, extended warranties are nothing but an insurance policy. Let's not forget what the theory of insurance is. It is a pooling of risk such that no single individual's exposure would exceed his ability to pay for a loss while the underwriter builds in a profit for themselves for their work and risk.

Now, you ask yourself, could you afford to pay for the loss of a major repair if your car should suffer a failure during the period of the extended warranty? Most of us could - while we would find it distasteful and unpleasant to pay several thousand dollars to get our cars back on the road it wouldn't financially ruin us. But that's the purpose of insurance, to eliminate the risk of financial ruin. If you could afford the repair but buy the extended warranty you are just gambling that you will come out ahead, but statistically you will not. Just like going to a casino, the house has the advantage built in - and that's if they play fair and don't cheat by denying a covered claim with some "exclusion" like contaminated fuel.

The problem is, insurance companies have redefined insurance to mean it should cover everything and nobody should pay for anything themselves. Think of health insurance that way. You are paying for every routine visit to the doctor by paying the insurance company MORE than it would cost if you just paid the doctor directly. A $100-$200 checkup won't put you in the poorhouse but you buy insurance to cover that? Now that's crazy and that's why the health insurance system in our country is so fundamentally flawed...but I digress.

 

[earlthepearl]

My decision to buy an extended warranty on my 09 Jetta, and 2010 Touareg, is directly related to the number of miles we put on our vehicles. The Jetta already has 71k mi., and the T-reg 31k. Both will have run out on the standard warranty long before many will have finished up their "free service" period of 36k. It's just insurance. 100,000 Platinum cost me a little more than a month of Blue Cross/Blue Sheild Health Care. Small price to pay, especially if your turbo fries, or the "life-time" timing chain breaks because a tensioner decided to take a vacation.

 

[Abacus]

I am also not a fan of extended warranties, but have typically bought them in the past...I know, an oxymoron. But, with today's vehicles, it will run you into the THOUSANDS in short order for the simplest of repairs, which is why I get them. I dislike having to spend the extra money, but in every case, I have come out ahead.

It is also the reason I like the older cars, they are simpler to fix and typically cost less since I work on them myself without needing an advanced degree in Auto Engineering/Computer Systems/Dumbass Design. Then again, I still have full coverage insurance on my B4, because it's short money compared to something simple like a damaged fender and bumper (adds about $20 a month).

The others that have posted have it correct: do you want to pay for the repairs yourself, or run the risk of having to fight for others to pay for them on your behalf. I see it as how long will VW or an independent agency guess your car will be trouble-free. With the 2009 or 2010, I don't know that I'd take that much of a risk and would opt for the warranty. It's also why i didn't go out a buy one, the HPFP issues worry me to the point I won't take the chance. But in any case, definitely read and understand ALL the fine print, and backup any questions IN WRITING.

 

[nhdoc]

Responses in support of extended warranties beg another question: Why keep a car which is so unreliable during its initial warranty period as to make the owner consider that an extended warranty will ultimately be a good bet?

I mean, my thinking on my Cup Car is if I have to return to the dealer more than once a year for an unscheduled significant failure then the car will simply not be mine after the warranty expires...let it be someone else's problem and I can take the money I might have spent on the warranty and put it towards another new car that will be under warranty. If, on the other hand, the car doesn't need special attention during the initial warranty that is usually a pretty good sign that the car will be relatively trouble free - no guarantee, but again odds are good that it isn't a lemon. Just my additional $0.02.

 

[jbbnet]

whats the cost of the extented warranty? i seen $2200 for 4yr/100k no deductible

 

[gimpy9195]

whats the cost of the extented warranty? i seen $2200 for 4yr/100k no deductible

I was just offered 1700$ for a 5yr/100k. They said VW retails this for 2200 but I can offer you this... Blah..

It sounds like a scam from the dealer. I'll offer 1000$ and start with that. Maybe they will come back at 1500$. I'll have a bidding war.

 

[Joe_Meehan]

Well any car can have major expensive repairs.

The profit to the salesman and company is usually over 50%. So for every $1,000 you spend the insurance company has less than $500 to pay for repairs or they will loose money, something insurance companies do not do. Some people will get nothing back and some will get a lot more than they pay. Most will get far less. In addition you need to keep in mind that the insurer has worded it to eliminate as many expensive things as they can.

Remember that the seller is out to make money and they get to write the rules and set the price. They are not going to sell them at a loss so one way or another they are going to have you pay more than they will pay out.

Would you gamble with a car dealer who gets to set all the rules and knows all the odds?

Your decision has to do with the value of the piece of mind it gives you. If that is worth the cost then buy it. Don't expect it to cover everything however, most are written to keep cost down and exempt what they know will cost them money.

Good Luck

 

[tdisedanman]

A vw extended warranty is a complete waste of money. Unless and until vw abandons their "blame the customer first campaign/attitude" their warranties are worthless. My opinion.

Good point. Before trading both my TDI's for gassers, I had a bad experience with vw warranty. To sum up, wife b5 passat had noise from the front end which I thought was the balance shaft chain. They agreed a problem existed. After a couple days, they said the oil pressure was low and their was considerable cam wear. The oil pressure light never showed any issue with presure, the car was running great, mpg milage as usual was consistently high, no smoke etc. Well, I had done at least half the oil changes myself. They told me To bring in proof that I used 505.01 and the service intervals I changed it at.

Ends up, the oil pressure issue was caused by a valve keeper in the oil pick up tube, most likely dropped in during the engine manufacturing. Had I not been able to prove what oil was used and when, they would have stuck me with the cost of the remanufactured engine. And, to this day, I think they screwed up her original engine during the balance shaft chain replacement. Maybe they ran it for a minute and forgot to refill the oil. I'll never know the truth. Got rid of both TDI's shortly after that experience.I love diesel but am afraid of vw and Audi. BMW is costly and not enough diesels in the u.s. To get long term reliability and maintanence costs so, I'll stick with the Lexusgassers for now. Maybe hybrid next.....?

Btw, I have an extended warranty on both my Lexus cars...so far mine has paid for itself in two repairs, wife's car just went out of original warranty so we will see if I lose money on her warranty.