Here’s the latest reader question, along with my reply!
Alan asks: I have a 2012 Audi A6 with only 45,000 miles on it. Audi is offering a 4-year service plan for $5,314. I only drive it around 3,000 mile per year, hence the 45k miles after almost 10 years. Last year I had to replace the engine mounts & water pump. I went to an independent shop & got those done for about $1,500. Just wondering what you think about these plans for high-end vehicles with all their computer systems that can break, etc. At least it’s a 2012 so it does not have many of the new horrible features. I’m thinking it’s not worth it. The gamble is will I incur more than $5k of repairs in the next four years? And I can afford it if I have to make repairs and have an independent shop that charges about half what the dealer charges. Any thoughts?
My reply: Due diligence is the first order of business with regard to these extended warranties; as in – read the fine print. Closely. Some – not all, but some – are hardly worth the paper they are written on, with all kinds of exclusions and limitations designed to make sure the issuer never pays, but that you do.
A factory-backed extended warranty is usually more legitimate but – even so – I agree with you that it’s probably not worth it, especially in view of the car’s low miles and light use. I think it is unlikely your car will develop a $5,300 problem over say the next ten years, by which time you will have accrued not even 80,000 miles at the current rate and that is hardly broken in for a modern car. You ought to be able to go at least 120,000 before the car develops an expensive problem and even that becomes less likely if you are scrupulous about maintenance and treat the car well.
I would consider setting aside the $5,300 for just-in-case rather than spending it on “coverage” for a $5,300 repair that will probably never need to be made. If it does need to be made, you will have the $5,300 to pay for the repair. If not, you will have the $5,300.
These warranties are fundamentally a gamble – and the odds always favor the house, which would not gamble with its money if the odds weren’t in its favor.
Now, some people value the psychological security of being “covered” – and that may be worth something to you. It all comes down to how comfortable you are running a risk, as well as your evaluation of the degree of that risk!
. . .
Got a question about cars, Libertarian politics – or anything else? Click on the “ask Eric” link and send ’em in! Or email me at EPeters952@yahoo.com if the @!** “ask Eric” button doesn’t work!
If you like what you’ve found here please consider supporting EPautos.
PS: Get an EPautos magnet or sticker or coaster in return for a $20 or more one-time donation or a $10 or more monthly recurring donation. (Please be sure to tell us you want a magnet or sticker or coaster – and also, provide an address, so we know where to mail the thing!)
My eBook about car buying (new and used) is also available for your favorite price – free! Click here. If that fails, email me at EPeters952@yahoo.com and I will send you a copy directly!