bc6152

This is what I proposed previously. Stash a small amount of money aside at regular intervals in case of an expensive repair. If no repair, which is likely, take a trip, buy your significant other (or yourself) something nice, put it in the bank instead of the dealer's pocket.

DavidZ

One question to consider is how much of each dollar spent on the extended warranty is used to pay claims. For example, in the insurance business, 80% is considered a fair target. The other 20% going to administration, overhead and profit. If you Google "how much profit do dealers make on extended warranty," you'll get a very wide range because the dealers are just resellers and they add whatever profit margin they want. Therefore, it pays to shop around to limit price gouging.

TechNut

I think it’s important to think of an extended warranty for what it really is, mechanical breakdown insurance. Like any insurance, it is designed to profit the company that sells the product, and like any insurance it provides peace of mind. I have life insurance and health insurance for peace of mind. While I like the idea of just setting money aside each month, I too have purchased extended warranties. If I were asked, I would have a hard time arguing one option over the other as each path has pros and cons.

LexFinally

It's not mechanical breakdown insurance, though. That's AAA. An extended warranty does nothing to protect you against breakdown itself. It just covers the repair cost afterward, which you're less able to pay because you just made yourself a couple thousand poorer because you bought an extended warranty. It's like the guy who murders his parents and then throws himself on the mercy of the court because he's an orphan.

bostonsnow

Personally I look at it slightly differently but yet with similar conclusions

I consider extended warranty to be insurance also. I like to take insurance out on things that would be financially catastrophic to me, should the event happen.

I have insurance on my house, why? well aside from the reason that my mortgage company requires it, but also, if it were to burn down, I would not be able to cope with that lost money/ cost to rebuild on my own, and I owe money on the mortgage!

For my reliable lexus, which is now worth $21,000 trade in value at 68,000 miles, it is still in great shape, and still within factory hybrid warranty. By the time it gets so old that its at higher risk of high repair costs, then the car will probably be worth $10,000 trade in value. At that time, if something bad happened to it, I would just walk away from it. so the amount of money lost cannot exceed $10,000. I could deal with that. I personally did not see a need to pay some thousands of dollars at purchase time to insure against this....

If I had a BMW or Tesla....hmm...perhaps things could be different. But that's the reason I DONT have a BMW or Tesla!!

ionian

Another factor to consider is not all insurance is the same. Most have so many holes that you can drive a truck through it. Some companies are just shady and they will find excuses to deny the claim and you have very little recourse.

LexFinally

Important point. Usually, although not always, extended warranties from the maker will have fewer such loopholes than those from a third party.

bostonsnow

I'm also considering an Mercedes GLC versus Lexus RX. So, I was just reading the Mercedes Benz forums, in particular what owners say about warranty and extended warranty. Totally different discussion over there with the less reliable Mercs! Many owners seem to buy Extended Warranty, some from private parties, some from Mercedes. Seems common practice!
I'm leaning towards the RX. If I did get the Merc GLC, I think I would lease and turn it back in after 3 years....

ionian

The old adage still applies: Lease German and buy Japanese.

Freds430

Very well said.

Freds430

If leasing another discussion. Lexus is #1 in lowest depreciation. They are also the lowest in maintenance cost of all luxury vehicles and third lowest of all. The RX is the #1 selling luxury SUV. The GLC is # 2 with 30% less in sales. J D Power has Lexus #1 in reliability and Mercedes at #15 right below the industry average. Now strictly IMO I think the RX is world's better looking inside and out from the GLC. The GLC exterior is very bland again IMO. In the end everyone has different taste, wants and needs.

bostonsnow

Agree, good points.
Also with regards to " lease German, buy Japanese", for whatever its worth, many of the German cars for the US are not made in Germany/ the EU any more, for better or worse. All these companies are now Global companies. The GLC for the US is now all made in Pune, India. I'm not sure if that's better or worse, but keeps costs lower then building them all in the EU for sure, I guess. Not sure about reliability of assembly...

One more thing on the extended warranty aspect: there can be more to think about than just covering the cost of repairs. One thing is to be protected financially against repeated or costly repairs. Then also, having been in the unfortunate position in the past with other cars, there is the factor of time having to go back and forth to the service center! Eg taking a car in for a problem, leaving it there for 4 days, then happily picking it back up, only to discover a couple of days later that the problem is not fixed!! Even if costs are covered, one needs to factor that in....
Seems maybe now I'm talking myself into getting the RX not the GLC?! My current ES have never been in except for same day routine service visits...knock on wood....

bostonsnow

although, strangely enough - I looked at a online "residual calculator". it said the GLC residual after 3 years was 60% of purchase price. THe RX was 62% of purchase price.
I was suprised - I would think the difference would be much higher than this and the RX hold much higher % residual? NOt sure where this online calculator gets its numbers