Extended Warranty on Tahoe

[titelines]

Hi All,

I'm looking for some advice/info from those who know. I have an '09 Tahoe LTZ with 94,000 miles on it. About 3/4 of those miles are highway, and the truck is in excellent shape. That being said, this thing has all the bells & whistles and all the factory warranties have expired.

My questions is: Should I be looking at purchasing an extended warranty, or should I dump some money in the bank and use that for any repairs that come up? I put a lot of miles on this thing so I'm looking at something like a 5 year/100,000 mile package.

I've looked at some warranty packages and actually got a quote from AAA. I was disappointed to find out that, for this particular vehicle, they only offer their lowest coverage package, which doesn't offer very comprehensive coverage. They'll go the 5 year/100,000, but it doesn't cover much.

What are some other reputable companies that I could look at for quotes? Are there options out there that I'm not thinking about? Any thoughts/ideas are welcome.

Thanks all!

[Ufatz]

Okay-up front I know you won't pay too much attention to what I say but, here goes anyway.

Generally most analysts are not high on these things....mostly they are not worth the money. Shopping for one is like walking a minefield....you really gotta KNOW what is covered and how well the outfit will stand behind you. There are thousands of anecdotes which have as their essence the fact that when it came time to HONOR the warranty it was a foot dragging nightmare.

At the very least go see your local Tahoe guy....the GM guy and tell him what you are thinking.

Or simply try to set aside some money for repairs you know you'll have to make. Tahoe's are pretty sturdy stuff (I have 2013 and have had others) so the odds are you'll be looking at some more years of trouble free driving.

Be careful and go slowly when you get into the aftermarket warranty jungle.

[DrJuice1980]

Go buy an extended service plan from you local dealer. Youre a walk in guy thats not wasting any of their time and they get to pick up a quick sale and then you know you have a place that will repair your vehicle. Dont be fooled by some of those plans on the net, go buy one in person from somebody that can explain in detail what you're getting and what you're not getting. I can tell you its worth it to have a reference in person rather than a rep on phone. Maybe a little more $ but well worth the piece of mind, isnt that what youre really buying anyways? Extended service plans are not bad ideas, it can sure help of something happens, you pay for car insurance for the "if something happens" its is another form for mechanical issues.

[aanderud]

Extended service plans are not bad ideas, it can sure help of something happens, you pay for car insurance for the "if something happens" its is another form for mechanical issues.

You are comparing apples to oranges and then saying since oranges are good, apples are too.

Oranges: With car insurance, you usually pay for full coverage insurance when your new/expensive vehicle is worth 50k as you drive it off the lot. In fact, you're REQUIRED to do this if it has a loan on it. The expense to cost ratio makes sense in this case. You also pay for auto insurance to cover the potentially hundreds-of-thousands in injury protection it offers, and for covering damage to other folks' potentially very-expensive vehicles. Again, you're dealing with large cost/benefit ratios. Even if the odds of an injury are low, they're large enough to need insurance against, because they can possibly bankrupt you.

Apples: Extended warranties generally cover things that are NOT very expensive (relatively speaking). Engines, transmissions, etc are all in the single-thousands-of-dollars category, and thus usually won't bankrupt anyone if they need to covered out of pocket. Painful, sure, but not going to bankrupt you for the most part. So, the cost of the warranty compared to the potential benefit is quite high.

IMHO (and many other opinions), if you can afford (without much pain) to replace whatever you're insuring, you should not pay someone else to insure it. This is especially true if you have a statistically-high number of events where you expect some losses and some gains -- for instance, a 2 vehicle family that averages maybe 10 years per vehicle is buying maybe 10-15 cars over a lifetime and would fit this category.

By paying out of pocket, you're essentially "self-insuring" those items. Self-insurance works well if you have a statistically high number of events and if no single event can bankrupt the entire company. In this case, an engine failure probably won't bankrupt you. If instead, you let someone else offer the warranty (mechanical insurance), you're paying a profit to that company on top of the real insurance/warranty cost.

Again, this analysis assumes you could afford the repairs that the extended warranty would otherwise cover, without taking extraordinary measures to do so.

[DrJuice1980]

I suppose all the dealerships that have service departments and all the all places you can bring a car to get fixed survive on oil changes and tire rotations. Get real aanderud. Now if an extended service plan pays out for an engine you have exceeded the cost of what you paid, now if other things happen your ahead of the game and youre making money. Yes there are "ifs" there, but arent there "ifs" in a lot of things you pay for? Really the only thing that is not apples to apples is that one is required by law. The comment about paying a profit to a company I do not understand, were businesses not suppose to profit? If you were hired for a service wouldnt you want to be compensated for more than the costs?

Any form of insurance is going to benefit the company in the end and with the extended service plans it is a gamble but if you can protect yourself now from what the future may hold and you have that piece of mind and dont have to worry and may even exceed the cost in repairs than go ahead and pick one up. If youre Mr Moneybags and an engine replacement wont set you back than you shouldnt buy one.

[Ufatz]

AA quick final thought. The CONCEPT of an aftermarket insurance policy is valid....I do not argue that.

My aversion is based on the way so many of them are written and the fact there historically has been so much "flim flam" in the marketing of them. If you do some research you will find that in most cases they are not held in high regard and people have had a miserable time ever getting service/response from their "insurers".

A dealer backed plan, clearly written is the best way to approach your problem.

Dealerships are sometimes outrageously pushy and aggressive in trying to sell you one on a NEW car. Bought a new Tahoe less than a year ago and almost had to get up and walk out the door to get the smart-mouthed little fop to back off on his shoving an extended warranty down my throat on a NEW Tahoe! I told the salesman as we left that I never wanted to see that little pryck again!

[aanderud]

Get real aanderud. Now if an extended service plan pays out for an engine you have exceeded the cost of what you paid, now if other things happen your ahead of the game and youre making money.

[titelines]

Thanks Guys, great input so far. Lots of good points for me to consider. I'll continue doing my homework and talk to a couple local dealers I trust and see what they have to offer.

In the meantime, please keep your thoughts coming.

[Scott K]

I agree with aanderud on this. The companies are in it to make money, and when they need to pay out, they dont like it very much. The average person will lose money on the deal. On a rare occasion, it will pay out more then you pay in. Most of them will require some sort of maintenance records, a lot of them now also have a deductible on top of the cost of the warranty. So factor that in there as well.

My recommendation is if the warranty costs $1500, put it in the bank now, in a separate account, and dont touch it. If something big breaks on your car, you have $1500 for it. If nothing big breaks, you have $1500.

If you do decide to buy one, go to your regular service department, and ask them which ones they like to deal with. Some of them are impossible to deal with, and may make you go to a different repair shop.

[Whoaru99]

Facts are, most people pay more for extended warranty than they collect.

Sure, some people get pay out more than they pay in, just like some people hit the big jackpot at the casino or win the lotto, but most don't. Most simply hand over their money and walk away with little or nothing in return.

[delcecchi]

Facts are, most people pay more for extended warranty than they collect.

Sure, some people get pay out more than they pay in, just like some people hit the big jackpot at the casino or win the lotto, but most don't. Most simply hand over their money and walk away with little or nothing in return.

Also look at the deductible on the policy you are considering, and read all the fine print.

[DrJuice1980]

There's 2 types to look at, named component and exclusionary. Named component covers everything that is listed, if it ain't listed it ain't covered. Exclusionary will listed items that are not covered and as long as it's not listed it's covered. Now in the last 8-10 years sooo many aftermarket VSC (vehicle service contract) have come out and stated they have an exclusionary but it's tied to a ton of find print regarding labor rates, repair locations, etc. these companies rely on internet purchases. Not a good idea.

Pick your plan with awareness. Go to a dealership and buy their contract because you will have way more swing if there's an issue. Also the business manager won't try to gouge a walk in VSC buyer. It's free money to them, sure they'll mark it up $300-$400 but not the $1000plus they do when you're buying the car. If you're upset somebody made a profit off you I'd suggest never leaving your home.

[DrJuice1980]

Of course I'd like to make a profit if I ran a business. If I was a business owner, I'd certainly try selling extended warranties that were paying me "more than the costs" of doing business, because profit is important. You highlighted exactly why I wouldn't buy one. Thanks for that.

So it's ok for you to profit off others but not others to profit off you. Killer understanding of business. What fantasy world do you live in and can I get an invite?

[RebelSS]

I'll just pop my worth in. When I bought my 2010 F-150 new, the dealer tried to sell me the Ford extended warranty...$1400 for the "Platinum Warranty" a component list that covers about every friggin thing from stem to stern for 4 years. I don't do exteneded warranties on anything, as I take great care of my stuff and do all my own preventive maintenance. But, two weeks before the regular warranty was up, I considered it, as I'm now retired and on a set income. Know what a new sound sysytem/GPS costs?! An F-150 owner's club turned me on to a Ford dealer that sells the ford factory warranty cheaper than the other dealers. They are no different than a vehicle; they all have mark-ups, just depends on how low the dealer wants to go. Got the quote in writing for the Ford Factory warranty, $600 clams cheaper than my dealer, who I have dealt with for years, and have more than a few friends working there. Took it in to them and asked if they would meet it...took one look, and said "Yup". Printed it out and signed right there. Already paid more than half of itself, my factory warranty is done, blew one front strut out, then the other...Ford had some issues with those due to whoever was manufacturing the struts for them.

Anyway, took it in, replaced the struts, checked everything else, cleaned upp the mess from the strut leak, and washed the truck...no charge! Out the door.....so, my advice is SHOP around, you may be surprised. Oh, they just replaced my battery, too..no charge!!! I'm not gripin'.

[aanderud]

So it's ok for you to profit off others but not others to profit off you. Killer understanding of business. What fantasy world do you live in and can I get an invite?

No, I'm simply saying that I can (and I believe that most folks could) afford the costs of vehicle maintenance and repair. If you can afford it, there's very little reason to buy the warranty, which will (on average) pay the same maintenance costs PLUS profit for the company offering it. As you and I agreed, there's no reason the company would be offering it if they weren't profiting on it, on average. Of course there are cases where the buyer comes out ahead, but this obviously isn't the norm or the price of the warranty would be increased until profits are being made.

I'm not saying insurance is altogether a bad thing. I can't afford to replace my home after a fire or tornado, so I buy insurance for that. I can't afford to foot medical bills for folks if I'm ever at fault in an accident, so I buy insurance for that. I can't afford medical costs if me or a family member gets sick, so I insure against that (albeit with a low-cost high-deductible plan that has a deductible about as high as an engine replacement would cost, oddly enough).

Again, I just choose to self-insure when it's affordable to do so, and in the case of vehicular mechanical costs, that is most definitely the case. Most financial advisers recommend that folks have liquid assets available to cover at least 6-12 months of living expenses. This type of emergency funding can then be used to handle low-probability expenses due to thing such as unexpected job loss, sudden uncovered medical expenses, major vehicle repairs, etc.

[DrJuice1980]

So would you pay $2500 less for a new vehicle with no warranty? Seems foolish to me. Maintenance is not going to eliminate defects. Take a drive through any new car dealership and you will find one thing in common. They all have service departments and I seriously doubt the master technicians are being used for oil changes and coolant flushes. Now on top of that add in all the other service locations. They aren't just wrenching on 150k plus vehicles.

[Whoaru99]

So would you pay $2500 less for a new vehicle with no warranty? Seems foolish to me. Maintenance is not going to eliminate defects. Take a drive through any new car dealership and you will find one thing in common. They all have service departments and I seriously doubt the master technicians are being used for oil changes and coolant flushes. Now on top of that add in all the other service locations. They aren't just wrenching on 150k plus vehicles.

Sounds like extended warranties are right up your alley.

$2500 off on a new vehicle to forego warranty (recalls not included)? I'd take that....except it'd never happen, as in never be a choice you'd actually get.

[aanderud]

So would you pay $2500 less for a new vehicle with no warranty? Seems foolish to me.

I absolutely would. I've bought 3 new vehicles and 6 used vehicles. If I had saved $2500 on each of the new vehicles, that would be $7500 so far. The total in-warranty repair on those 3 vehicles is less than $1500 -- So, I'd be up $6000 already. Quite a bit of padding there sitting in my bank account, ready for 'the big one' to hit on some future vehicle. I only wish they'd offer such an option.

[delcecchi]

I think the $2500 is way high. I looked at Ford Motors annual report.

The revenue from the automotive group was $139 Billion. From that they paid 2.0 Billion into their warranty and recall fund. They paid out, for all the vehicles under warranty, 2.3 Billion.

I interpret that as showing that the expected expense under warranty is just under 2% of the price of the vehicle. The base it on various experience and historical values.

They do not break it out by category of vehicle.

So for at 30k vehicle you are looking at more like $600.

[aanderud]

I think the $2500 is way high. I looked at Ford Motors annual report .... So for at 30k vehicle you are looking at more like $600.

Yeah, I know that the $2500 is too high, that's why I'd take it in a heartbeat New vehicles don't break down very often. If they did, people would quickly stop buying from that company. The $600 you calculated sounds much closer to reality. My sample set of 3 is not large by any means, but I've had $1500 in warranty-covered repairs on my 3 new vehicles ($0 on one, $300 on one, ,and $1200 on one), average of $500. I don't know the cost of any of the various safety-critical recalls, but I'm sure if those are added in the cost would be around that $600 range.

[DrJuice1980]

Apples to apples right? Well we are talking about a Tahoe which is going to carry more of a financial burden versus a Fiesta. More parts, higher risk, higher cost of parts. That is why when calculating costs there are certain classes of vehicles. Plus add in 4wd. $600 is way too light for a 36/36 and a 5/100 power train. WAY too light.

Del, "your" figuring or interpretation is way off.

Do you guys seriously think that only a very small percentage of newer vehicles under warranty go in for repairs and the rest of the vehicles showing up at these repair facilities are high mileage older cars? Come on, let's be honest with ourselfs here.

[DrJuice1980]

Buying a new LTZ Tahoe for $2500 less with no 36/36 and no 5/100 power train would be the dumbest thing ever. This ain't 1982 where you can fix a lot yourself.

[aanderud]

Do you guys seriously think that only a very small percentage of newer vehicles under warranty go in for repairs and the rest of the vehicles showing up at these repair facilities are high mileage older cars? Come on, let's be honest with ourselfs here.

[DrJuice1980]

No vested interest and no I do not work in the automotive or any related business, the "you must work for them" defense is the oldest/poorest comeback out there.

The value of a warranty differs in relation to cost of vehicle. Higher priced vehicles tend to come with higher costing parts and labor. By your logic a warranty on a BMW brings the same value as a warranty on a Chevy Aveo. Yeah, that makes sense.

[delcecchi]

Juice Dude, the figure for Ford's warranty expense is roughly 2% of revenue. There was no information about how it breaks down by vehicle price, or even type of vehicle. Presumably it includes all the the various trucks as well as cars.

If you think a BMW has a higher cost of warranty, by all means go to their financial statements where it is disclosed (supposedly). I couldn't find it but maybe you will have more luck. It appears they don't break it out, so far as I could see.