Unless you believe there may be an issue with a particular car most will be simply paying to feel good.

The company that sells a warranty has to make money on them so on average the buyer has to be a loser.

 

First of all no reason to believe there will not be an issue.

I paid $1400 to extend a warranty on fine running Acura MDX with under 50K miles. Only to have the power seat go out at a cost of $800, exactly one week after the original warranty expired.
If you are talking a Honda CRV, or other more basic and reliable transportation I agree a warranty is more money out than you will ever regain. Although, still not true in every case.

With upscale vehicles, the same can not be said. 'system' problems are more prevalent. Infiniti and Nissan overall, make some fine vehicles, but they are far from the most reliable. If you are somebody who puts low miles and changed cars every 3 or 4 years, it might well be a waste of money, although it can help sell a used car much faster (and for a little more money) to a private party.

It's a personal choice, and like most things, depends on prior experiences.
Of course there are folks making money on them. What else is new?

 

If the insurance company selling you the extended warranty is worth their salt then it is true that on average you will not come out ahead with an extended warranty. It is the same as any insurance. If the insurance company always paid out more then they took in then they would be out of business very quickly. If they sell you an extended warranty on a particular car it is because they know on average that they will come out ahead on the deal.

Note in your example if you had paid $1400 for the extended warranty and then they had to pay out $800 for a seat (which they probably do not due to agreements with the repair shops) then they just made $600. As anothe pointed out the $1400 they got from you in the first place didn't just sit there either, they invested it to make money. Now you could have done the same thing as well and in most cases been far ahead on the deal.

I would venture that they have tables similar to the same tables used for life insurance. They know that if you are currently age 57, don't smoke, married, etc. that you will live x number of years on average. The same goes for cars. They know that if the car is a 2007 with 50 k miles that it on average will last x number of miles without a claim on the policy that would be greater than the amount tendered.

 

Yup, I was left with $600 I still had paid for the warranty. When I sold the car 6 months later I more than made up that difference, although I have little doubt another $600 worth of warranty work would easily have been performed if I kept the car another 3 years.

For those of us who have had repairs done under warranties it becomes a wash, or even a gain over the long run.

Yes, it is a gamble, I try and stack it in my favor. I don't always take out warranties, as I stated. One has to assess their particular situation as to it's value.
I never said it is for everyone. But because you don't think it would ever work in your favor, does not apply to everyone either.

If one is really concerned about the interest being lost on the price of the warranty, I would suggest it would wise for them to purchase a more basic automobile, one less expensive than an Infiniti. The interest on that savings would surely be significant.

 

I stated that unless you had a reason that a warranty basically was not a good purchase on average. You would be better off to put that money elsewhere where it could do some good for you.

Say you have a house you are purchasing like I am. Lets assume unlike most you pay cash for your extended warranty instead of just adding it on to the purchase price of your auto and have it financed.

You owe 40 k on your house at 6.25% interest. You make payments of 630 bucks a month. You will have 77.29 month of payments. That comes to 48692.70 . Now if you purchased a policy that cost $2000 . Instead we put this on the house. Now you will have 72.59 months of payments at $630 for a total of 45731.70 . Your $2000 policy over less then 150 k of miles just cost nearly $3000 and this is at 6.25% interest rate. Of course I would not put this on the house if I had other bills to pay.

Now if you put this into your own account and picked up 8% interest which should be fairly easy to do over 5 years you would have 2979.69 in your account.

In my case I have a 1999 300 m with 150k miles on it. I haven't had any work done on it that would be classified as warranty work. Many policies costing in this neighborhood are for 100k. I personally have never had an engine blow, a transmission issue, nothing over the last 40 plus years that occurred in this mileage area.

A better use of this money would be (on average) to apply it to a more aggressive maintenance schedule if you decide that investing it doesn't make sense. If you have kids purchase a program similar to GET and send them through college for a much better return on your investment.

 

This subject of this topic is 'extended warranties'. For me the 1400 served a need. For others it might be weekend in Las Vegas.

One has to make any choice based on their own situation. Fortunately, I am able to enjoy full retirement and have managed my money well enough over the years to have security for my family and myself, as well as peace of mind, even in today's economic climate.

I don't participate in automotive forums for financial advise, for obvious reasons, but your attempts are appreciated and may help others.

 

And for me the reason would be for 'feel good' puposes. I actually have one on my wife's car to make it easier for her to get service as needed but not on mine since I don't need that comfort blanket. I maintain it really is for the most part like any other insurance and it has to be for a reputable company selling it - simply something that is not a good investment on the side of the buyer.

I am also in retirement although the climate has changed my direction substantially. I own the new 'G' and almost the home. But my other half has not succeeded in getting the dream job necessary to make it an easy go. So for me it has become a 4 year extended plan until I have full access to all of my money (72 T account) or something changes to put us back on our original track. But I am doing well making about 20% return when everyone else I know is going about the same amount in reverse.

So basically extended warranty on cars, televisions, etc. are rarely a good thing from an economic standpoint which is nearly always why they are purchased and how they are presented to the purchaser.

 

Wish you luck which ever way you go. You seem to be a creative fellow I am sure you will find a path. In this climate we have to be pretty crafty sometimes to just get by, other times to just get a leg up.

 

WarrantyReports.com- Unbiased Aftermarket Research and Reviews

Start here first.....

 

The FAQ makes a good read.