Did your extended warranty pay off?

[MileHighRam11]

Yes. Paid for itself 3 times over.

 

[chrisbh17]

Who said dealers shouldn't make money on a warranty? That said, do you really think they add over $1k of value to the transaction by handing you a brochure and sorta-explaining it?

Do you buy a home warranty, too? What if you need a new furnace or some other major system? Unless you rent, then I suppose those are irrelevant concerns.

At what point do you decide to stop paying people to assume risk for you and self-insure? Smart money is only for catastrophic losses, and if you can't afford to repair your vehicle you couldn't really afford your vehicle. Instead of buying a new truck with a $3k warranty, buy a $3k truck and start saving...

Many Americans live paycheck to paycheck and find the idea of covering their own risks to be "cute" like you do. And they overpay for that "peace of mind" while being stressed about their finances, having no emergency fund, having no investments, and being dependent on SSI for any hope of a livable retirement. I used to be one and probably still would be except I learned two important lessons in 2003:

1) Poor people don't stay poor because of their income, they stay poor because they don't understand how money works.
2) No matter what you make, somebody is living on 10% less. Figure out how they do it, and save that 10%.


Since then, I went from a negative net value of roughly -$24k to over $400k in the past 17 years, and that's on a very middle class income in the best years, only part time employment in the worst. I made $86k this year in salary pre-tax and put $16k of it away in retirement funds. My wife doesn't work. As long as the market doesn't crash long term, I'll retire in my early to mid-50s (with the help of a defined pension plan, which I'm lucky to have). I take the family on vacations twice a year, every other year to Europe (except this year, thanks COVID). I am not a miser. I'll be "cute" and keep 6 months of living expenses in CDs and another 6 months in gov't bonds so I don't have to pay someone else for "peace of mind".

I say this not to say look how awesome I'm doing. I've been lucky as well. No major illnesses while I was uninsured. No divorce and child support that's financially crippled many men my age. It's just sad the notion of saving money to cover your own risks is deemed "cute".

I think this would be the perfect answer, except nowadays one or two fixes can cost more than the warranty (even the "expensive" Lifetime term warranty).

I could save and save and save and still not have enough. And how much is enough? Transmission - 5K. Engine - 7K (which is probably low). Various electronics - TIPM could be a 1300 fix. Radio is expensive but maybe I can get a junkyard part?

Saying that I didnt save 12K means I cant afford my truck is kinda crazy. Does that mean anyone that buys a 60K Laramie should plan on actually spending 72K?

Extended warranties are an insurance policy and a gamble that you'll need it. I bought Lifetime MaxCare and at no point did I view myself as "relying on someone else to assume risk for me". I know that if I never use it, it was $2600 "wasted". But over the 10+ years I plan on having the truck? Im pretty sure Ill make at least a little bit of that $$ back. Saving that $2600 would get me half of a "bad" issue (like the trans) that would be 100% covered under the warranty.

But! Extended warranties are like oil around here everyone has strong opinions either way, which is OK. The end of the day its my/your/someone else's money and as long as they feel comfortable spending it how they want, then its all good.

 

[corneileous]

I think this would be the perfect answer, except nowadays one or two fixes can cost more than the warranty (even the "expensive" Lifetime term warranty).

I could save and save and save and still not have enough. And how much is enough? Transmission - 5K. Engine - 7K (which is probably low). Various electronics - TIPM could be a 1300 fix. Radio is expensive but maybe I can get a junkyard part?

Saying that I didnt save 12K means I cant afford my truck is kinda crazy. Does that mean anyone that buys a 60K Laramie should plan on actually spending 72K?

Extended warranties are an insurance policy and a gamble that you'll need it. I bought Lifetime MaxCare and at no point did I view myself as "relying on someone else to assume risk for me". I know that if I never use it, it was $2600 "wasted". But over the 10+ years I plan on having the truck? Im pretty sure Ill make at least a little bit of that $$ back. Saving that $2600 would get me half of a "bad" issue (like the trans) that would be 100% covered under the warranty.

But! Extended warranties are like oil around here everyone has strong opinions either way, which is OK. The end of the day its my/your/someone else's money and as long as they feel comfortable spending it how they want, then its all good.

Exactly. You shouldn’t feel like you wasted money on an extended warranty if the vehicle you bought it for never needed it. That’s not the point. Even our regular car insurance and health insurance is a gamble. Hope to never use it but it’s sure nice to have it case ya do.

But hey, like I pretty much said before- if it wasn’t for this extensive air ride system that plenty of people have had plenty of issues with, and this extensive transmission that says I’m not supposed to ever service, I probably wouldn’t have ever spent the nearly 4 grand they charged me to have the lifetime MVP. And if I never use it in seven more years, great. But I won’t regret having the warranty.


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[Docwagon1776]

I think this would be the perfect answer, except nowadays one or two fixes can cost more than the warranty (even the "expensive" Lifetime term warranty).

Same question. Do you also buy a home warranty? What will you do if your furnace fails tomorrow? Do you buy an extended warranty on every automobile in your home?

I could save and save and save and still not have enough.

You can. I did. I'm not special. It just takes discipline and the ability to delay gratification.

Saying that I didnt save 12K means I cant afford my truck is kinda crazy. Does that mean anyone that buys a 60K Laramie should plan on actually spending 72K?

I would suggest anyone who doesn't have $12k in savings buying a $60k truck is crazy. Even more so if they are financing it. But folks like that keep the economy moving, so my investments thank you.

 

[chrisbh17]

Same question. Do you also buy a home warranty? What will you do if your furnace fails tomorrow? Do you buy an extended warranty on every automobile in your home?



You can. I did. I'm not special. It just takes discipline and the ability to delay gratification.



I would suggest anyone who doesn't have $12k in savings buying a $60k truck is crazy. Even more so if they are financing it. But folks like that keep the economy moving, so my investments thank you.

I dont think I was quite clear - my warranty cost 2600. If I keep the truck 10 years, that 260/yr, or ~25 per month.

I absolutely positively can save 25/month (willpower and financially, I have no problem doing so). But if a 5K transmission failure or a 5K cam/lifter fix shows up, I would have had to save for 200 months. Hell, if I saved 4 times that (100/month) I still would have had to save for over 4 years. If I get really unlucky and need BOTH of them....well, now Ive paid for almost half the initial cost of the truck, in repairs. Of course all of this is doable (regardless of how I paid for the vehicle), but in my case I erred towards the side of actually needing an expensive repair sometime during the extended warranty period.

In my case, its Lifetime, so I feel like the odds of it needing something in the lifetime of my owning it are VERY GOOD. Not because of the quality of the truck, not because of how I use the truck, but because its a LOOOOONG time to assume nothing expensive will go wrong.

 

[ryan hart]

Google "Dave Ramsey Extended Warranty". Will tell you all you need to know.


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[chrisbh17]

Google "Dave Ramsey Extended Warranty". Will tell you all you need to know.


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Google "Scotty Kilmer RAM 1500" and you'll never buy a RAM, much less an extended warranty for one

 

[ryan hart]

Google "Scotty Kilmer RAM 1500" and you'll never buy a RAM, much less an extended warranty for one

[emoji106]Found him, and then Google pulled up "This Emmy-Award Winning youtube Mechanic is Full Of ****"[emoji23]. I don't have enough views of him to have an opinion.

I've owned every model of Dodge, from Neon, to Caravan, to Journey, to Dakota, to Ram. Beat em like they owed me money. Never needed an extended warranty. Towed stuff I had no business towing. But I work on my own stuff, changing oil, everything else, etc. Being in this group makes me realize, I'm probably in the minority. The hashtag for this thread would be, Prius owners get fed up and buy a Ram.








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[chrisbh17]

[emoji106]Found him, and then Google pulled up "This Emmy-Award Winning youtube Mechanic is Full Of ****"[emoji23]. I don't have enough views of him to have an opinion.

I've owned every model of Dodge, from Neon, to Caravan, to Journey, to Dakota, to Ram. Beat em like they owed me money. Never needed an extended warranty. Towed stuff I had no business towing. But I work on my own stuff, changing oil, everything else, etc. Being in this group makes me realize, I'm probably in the minority. The hashtag for this thread would be, Prius owners get fed up and buy a Ram.

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I do my own maintenance too. But again what Im thinking about in the future is not routine maintenance but stuff that will cost a lot to replace, even just for parts if I did it myself.

Can I fix a wipe cam/lifters? Yes. Can I replace a transmission? Yes. Do I want to? Absolutely not.

 

[Docwagon1776]

In my case, its Lifetime, so I feel like the odds of it needing something in the lifetime of my owning it are VERY GOOD. Not because of the quality of the truck, not because of how I use the truck, but because its a LOOOOONG time to assume nothing expensive will go wrong.

Yes, and as I've mentioned at least twice...

That's no longer offered, so it's no longer a decision point. Like I said, I did buy the lifetime on my 2012 when I bought it new, but I shopped it and paid $2200 after tax. I already discussed the differences between the lifetime and the term policies. Lifetime is much more compelling than term.

Side note, I'm sort of glad they stopped offering the lifetime. It's yet another incentive for me to keep what I have even longer. 5th gen styling is another incentive...

 

[FriedDumpling]

At the suggestion of one of the forum members I watched the Dave Ramsey video. He makes a compelling case, however it addresses the business model of the warranty companies; saying that mathematically they forecast a 13% coverage rate for every policy, in comparison to a fat margin of 87% margin for the issuing company. In other words, they bank on a $130 payout on every $1,000 “earned”.

You also need to consider the irresponsibility of consumer behaviors like trading their cars before warranty expiration, failing to maintain their ownership requirements and other mishaps like totaling a vehicle such that the warranty cannot be used (and many owners may fail to cancel and recover a prorated portion).

So for the issuing company, they bank on the fact that they’ll payout less than they charge. Makes complete sense; but they are looking at this across all policies in total.

We’ve discussed in earlier posts how dealers can further inflate the costs to the end consumer (which is why I suggested never purchasing at time of delivery).

Now, if you own your vehicles for a prolonged period of time, or the balance of of your factory warranty leaves you with little headroom for coverage, a warranty remains a viable option but a hedge nonetheless that you can exercise it sufficiently before expiration. Admittedly, I’d probably be annoyed if I plunked down $2,800 and didn’t realize the benefit of coverage.

Some warranties, by the way, even offer a partial refund if they go “unused”.

So I do believe that it comes down to the consumer’s individual situation. I keep my vehicles for a long time, and as vehicles age, they are certainly more vulnerable to mechanical breakdowns. In my case, unlimited miles and age, on a MOPAR backed warranty was worth every dime of the $2,800 I spent on my CPO RAM. So much so, that I might have considered another MOPAR product with comparable warranty.

I would not have any expectation of owning the vehicle long after warranty expiration as the total cost of ownership will increase as age and miles pile on. At least not one with this much technology and costly repairs. With every vehicle, an owner has the unenviable decision when to stop investing.

Two final points:

1. At the point my warranty claim exceeds the value of the vehicle, MOPAR will either perform a final fix, or cut me a check in the amount of said repair.

2. Three years into my Lifetime coverage, MOPAR just offered to buy me out of this warranty for $300 less than I paid.

Dave Ramsey, is wrong given my individual scenario. My interests aren’t in breaking the warranty business model, or taking issue with their highly profitable industry, just making sure that my vehicle remains road-ready, with limited downside financial risk.

And to that end, every vehicle I will own will be a CPO, because of the warranty coverage being exceedingly better than on a new vehicle - and not taking the brunt of the deprecation by buying new.


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[indept]

At the suggestion of one of the forum members I watched the Dave Ramsey video. He makes a compelling case, however it addresses the business model of the warranty companies; saying that mathematically they forecast a 13% coverage rate for every policy, in comparison to a fat margin of 87% margin for the issuing company. In other words, they bank on a $130 payout on every $1,000 “earned”.

You also need to consider the irresponsibility of consumer behaviors like trading their cars before warranty expiration, failing to maintain their ownership requirements and other mishaps like totaling a vehicle such that the warranty cannot be used (and many owners may fail to cancel and recover a prorated portion).

So for the issuing company, they bank on the fact that they’ll payout less than they charge. Makes complete sense; but they are looking at this across all policies in total.

We’ve discussed in earlier posts how dealers can further inflate the costs to the end consumer (which is why I suggested never purchasing at time of delivery).

Now, if you own your vehicles for a prolonged period of time, or the balance of of your factory warranty leaves you with little headroom for coverage, a warranty remains a viable option but a hedge nonetheless that you can exercise it sufficiently before expiration. Admittedly, I’d probably be annoyed if I plunked down $2,800 and didn’t realize the benefit of coverage.

Some warranties, by the way, even offer a partial refund if they go “unused”.

So I do believe that it comes down to the consumer’s individual situation. I keep my vehicles for a long time, and as vehicles age, they are certainly more vulnerable to mechanical breakdowns. In my case, unlimited miles and age, on a MOPAR backed warranty was worth every dime of the $2,800 I spent on my CPO RAM. So much so, that I might have considered another MOPAR product with comparable warranty.

I would not have any expectation of owning the vehicle long after warranty expiration as the total cost of ownership will increase as age and miles pile on. At least not one with this much technology and costly repairs. With every vehicle, an owner has the unenviable decision when to stop investing.

Two final points:

1. At the point my warranty claim exceeds the value of the vehicle, MOPAR will either perform a final fix, or cut me a check in the amount of said repair.

2. Three years into my Lifetime coverage, MOPAR just offered to buy me out of this warranty for $300 less than I paid.

Dave Ramsey, is wrong given my individual scenario. My interests aren’t in breaking the warranty business model, or taking issue with their highly profitable industry, just making sure that my vehicle remains road-ready, with limited downside financial risk.

And to that end, every vehicle I will own will be a CPO, because of the warranty coverage being exceedingly better than on a new vehicle - and not taking the brunt of the deprecation by buying new.


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As per your point #1 here's what my lifetime maxcare states:

IMPORTANT! The maximum benefit amount should a covered component of the Vehicle fail will be THE TOTAL COST OF THE
REPAIRS PER VISIT LESS THE DEDUCTIBLE, OR THE CASH VALUE OF THE VEHICLE, WHICHEVER IS LESS! The cash value
of the Vehicle will be determined at the time of the covered repair and will be the average retail value as listed in the current NADA
Used Car Pricing Guide. If at any time the repair costs for covered component(s) exceed the Vehicle’s cash value, your final Plan
benefit will be our payment of the Vehicle’s cash value rather than the repair costs. Plan coverage and benefits will terminate
automatically and immediately pursuant to this provision and we will have no further obligations of any kind in respect to the
terminated Plan.

 

[chrisbh17]

As per your point #1 here's what my lifetime maxcare states:

IMPORTANT! The maximum benefit amount should a covered component of the Vehicle fail will be THE TOTAL COST OF THE
REPAIRS PER VISIT LESS THE DEDUCTIBLE, OR THE CASH VALUE OF THE VEHICLE, WHICHEVER IS LESS! The cash value
of the Vehicle will be determined at the time of the covered repair and will be the average retail value as listed in the current NADA
Used Car Pricing Guide. If at any time the repair costs for covered component(s) exceed the Vehicle’s cash value, your final Plan
benefit will be our payment of the Vehicle’s cash value rather than the repair costs. Plan coverage and benefits will terminate
automatically and immediately pursuant to this provision and we will have no further obligations of any kind in respect to the
terminated Plan.

Yep.

So there is even a bit of strategy when the vehicle gets close to that number:

If there is more than one thing that needs fixing, do it under multiple deductible "sessions". i.e. if the total fixes come out to 6K but the vehicle is only worth 5K, do some of the fixes at one time. Then go back and do some more, etc. BECAUSE it is only comparing the total of each deductible use to the worth of the vehicle.

It is interesting that @FriedDumpling mentioned a buyout quote from Mopar....Ive never gotten asked, but it would be an interesting conundrum. 3+ years into owning the truck and no major issues. Do I bite $300 and get most of the money back? Or do I keep the Lifetime? Im guessing they are offering buyouts because Lifetime is a long time

 

[Docwagon1776]

Im guessing they are offering buyouts because Lifetime is a long time

They are looking at an upcoming merger, so it might be cleaning up liabilities on the books to make them look better on paper.

Or, more likely in my opinion, they know the chilling effect the lifetime warranty has on people buying a new truck. See how nervous a lot of people in this thread are about not being in warranty? Given there's no lifetime option any longer, how many of them will be nervous enough to buy a new truck at the expiration of their term warranty?

Is it tied to the purchase of a new vehicle?

 

[chrisbh17]

They are looking at an upcoming merger, so it might be cleaning up liabilities on the books to make them look better on paper.

Or, more likely in my opinion, they know the chilling effect the lifetime warranty has on people buying a new truck. See how nervous a lot of people in this thread are about not being in warranty? Given there's no lifetime option any longer, how many of them will be nervous enough to buy a new truck at the expiration of their term warranty?

Is it tied to the purchase of a new vehicle?

Could be, but then again a lot of people probably have no idea Lifetime even existed. They had it once before, then stopped it. Then brought it back, and stopped selling it again last year I believe (well, 2019). In my case, it was the only one that made sense - I keep my vehicles a long time BUT I dont drive them a ton because of short commute, another vehicle to use, etc. So I would not even hit the mileage limit in the factory bumper to bumper or powertrain warranties. If I were to get an extended, the longest non-Lifetime (8 year, 120K or so miles) was not worth it either, because even at 8 years I might be around 60K miles. Plenty of miles left for something major to go wrong. So to me it was none at all, or Lifetime. I chose Lifetime.

My guess is the bean counters stopped selling Lifetime because they see their "$$$ took in" is getting within some range of "$$$ paying out". Now that they stopped selling the warranty, they want people that have it to take a "deal" to sell it back. Kinda like Verizon did with people that had unlimited data (before they started selling "unlimited" data [with quotes because now there are caveats]).

The Lifetime contract says its pro-rated for the first 7 years after purchase. So technically you should get something back if you cancel it. I have never inquired, but my guess is that its not linear (i.e. it does not go down by purchase price divided by 7 each year), so as to make it a very small refund in year 5, 6 or 7. But only losing $300 over 3 years is probably them trying to get people out of it so FCA no longer has to pay. Could be the merger or could just be the cycle of things with them and Lifetime. I bet if they offered it during Covid along with their other deals, the take rate would have been pretty high.

 

[FriedDumpling]

Could be, but then again a lot of people probably have no idea Lifetime even existed. They had it once before, then stopped it. Then brought it back, and stopped selling it again last year I believe (well, 2019). In my case, it was the only one that made sense - I keep my vehicles a long time BUT I dont drive them a ton because of short commute, another vehicle to use, etc. So I would not even hit the mileage limit in the factory bumper to bumper or powertrain warranties. If I were to get an extended, the longest non-Lifetime (8 year, 120K or so miles) was not worth it either, because even at 8 years I might be around 60K miles. Plenty of miles left for something major to go wrong. So to me it was none at all, or Lifetime. I chose Lifetime.

My guess is the bean counters stopped selling Lifetime because they see their "$$$ took in" is getting within some range of "$$$ paying out". Now that they stopped selling the warranty, they want people that have it to take a "deal" to sell it back. Kinda like Verizon did with people that had unlimited data (before they started selling "unlimited" data [with quotes because now there are caveats]).

The Lifetime contract says its pro-rated for the first 7 years after purchase. So technically you should get something back if you cancel it. I have never inquired, but my guess is that its not linear (i.e. it does not go down by purchase price divided by 7 each year), so as to make it a very small refund in year 5, 6 or 7. But only losing $300 over 3 years is probably them trying to get people out of it so FCA no longer has to pay. Could be the merger or could just be the cycle of things with them and Lifetime. I bet if they offered it during Covid along with their other deals, the take rate would have been pretty high.

Very well said.

I suspect you’re correct that they can cut their losses and get out for those who want to get out of the warranty and figure they can recoup their investments.

Another member referenced an earlier time when the manufacturer offered lifetime as an incentive (2008 or so) to spur on sales in a tough economy.

Was always told that these vehicles never came back in for trade. I bought Lifetime shortly before it was changed to have a mileage cap and term.

Glad I have, the dealer always comments whenever its in for service so they clearly see it on my vehicle profile.


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[sandawilliams]

My 2009 1500 came with lifetime drivetrain warranty. It was hard to let that go but I needed a 2500 in 2014.

 

[indept]

Very well said.

I suspect you’re correct that they can cut their losses and get out for those who want to get out of the warranty and figure they can recoup their investments.

Another member referenced an earlier time when the manufacturer offered lifetime as an incentive (2008 or so) to spur on sales in a tough economy.

Was always told that these vehicles never came back in for trade. I bought Lifetime shortly before it was changed to have a mileage cap and term.

Glad I have, the dealer always comments whenever its in for service so they clearly see it on my vehicle profile.


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They started the free lifetime powertrain warranty in July of '07. We had just bought my wifes '07 Pacifica in May '07 so we missed that warranty by less than 2 months. When I looked into it, Daimler Chrysler said too bad for us but I found out about the option of buying the lifetime warranties so I bought the added care Lifetime online at a good discount. My dealer never mentioned it as an option when we bought it. They only offered the limit term warranties which I didn't bother with.

 

[FriedDumpling]

They started the free lifetime powertrain warranty in July of '07. We had just bought my wifes '07 Pacifica in May '07 so we missed that warranty by less than 2 months. When I looked into it, Daimler Chrysler said too bad for us but I found out about the option of buying the lifetime warranties so I bought the added care Lifetime online at a good discount. My dealer never mentioned it as an option when we bought it. They only offered the limit term warranties which I didn't bother with.

Same for me. Cancelled the dealer purchased warranty, rolled it into MOPAR lifetime purchases online through seller recommended in the forum.


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[pacofortacos]

How did home warranties get into the question?? Apples and oranges.

Last time I checked, my house doesn't tow my boat 1300 miles one way at highway speeds - almost every year.
My furnace never sits outside and especially not for the 15-20 years I plan on owning the truck.
Part of my AC sits outside but tends to hide under cover in the winter months and has never driven in salt covered areas.
My roof did get damaged and lo and behold my homeowners ins. paid it - but I guess we shouldn't have homeowner ins. either????

I have bought 2 extended warranties in my lifetime - first for my wifes 2004 Gran Prix that included a clause that if no claims were paid out on the plan at the expiration, I would get a complete refund - not a bad deal as I received a complete refund.
Second on my 16 Ram - which has had really no problems since new (only 2 3/36 claims - a weatherstrip and reattach 2 flares).

I wish I would have had one on my 2001 Dakota as I had to do 3 transmission rebuilds, cylinder heads, calipers every 2 years, a wheel bearing, brake lines, trans lines - more than I would have liked but not too bad for sitting out in a brine/salt using state and used hard for 15 years and 200k miles. Towing long distances is a bit tough on a truck - esp. going over large hills (Appalachian Mountains) and rolling hills.

I paid $2450 for lifetime/unlimited miles w/$100 ded. per visit and like my health insurance and car insurance that I pay for every year, I will not complain if I never use it.