You have probably seen the commercials – for what are sold as extended warranties that will “cover” repair costs for next to nothing. And that’s just what you’ll get.
As in, nothing.
Less than nothing, actually. Because of course you’ll pay for nothing. That is the cost of paying for covered repairs – which of course means almost no repairs. You will discover this when you try to get them to pay for a repair, thinking they will. It is of a piece with thinking that voting for Trump would mean America First.
Fooled ya!
These TeeVee (and Internet/radio) extended warranties are worth even less than the paper they’re written on. The paper having some value – as toilet paper, for instance. But some people buy in, because they believe in that thing that’s often dangled in front of people who don’t understand that there’s no such thing.
The free lunch, that is.
Also, the offer that’s too good to be true. Which is always true (with the possible exception of the offer made by the fictitious Col. Landa in Inglorius Basterds). The easiest way to understand the truth of this is to ask whether any business makes money by paying for things? A related question that’s important to ask is whether you think businesses are your friends, who will help you when you need it?
Business is a transaction and – at best, one that exchanges value for value. That is, you get something that is worth at least as much (if not more) than the money you are willing to spend to get it. This of course assumes you actually get it.
The “coverage” for the repair costs, I mean. As opposed to getting it – as in the rear end.
Odds are, you won’t get them to pay for the repair – because they will say it isn’t “covered.” These extended warranty companies – especially the TV and Internet/radio ones that say they will issue “coverage” to owners of older cars with high miles for just a few dollars a month – will indeed issue said “coverage.” It just won’t actually cover much, if anything. There will be disqualifications galore in the fine print, which is there because of course almost no one reads it. They prefer to believe what they are told, which is often a very different thing.
Note the literal language: Never pay for a covered repair again!
Italic added. They are telling people the truth – but most people blank it out because they want to believe they will never pay for a repair (as in any repair) again. The sellers of this rely upon that belief.
Heres is the truth: You are vastly better off not spending a cent on these flim-flam “coverages” that are unlikely to pay for anything but absolutely will cost you money. This important difference – a hypothetical possibility vs. an absolute certainty – is one many people don’t understand, in part because the parties that benefit do not want people to understand.
You are much better advised to save and put aside money rather than to spend money. That way you will be able to pay for repairs if and when your vehicle needs them. The italics are to make a point about the difference between occasional expenses vs. recurring costs.
How often do you pay for repairs to your vehicle? Is it once a month? It will probably not even be once a year. But let’s say it is once a year – and let’s say the cost is $1,500. If you had set aside $120 per month for a year, you could cover the cost of such a repair. If such a repair doesn’t need to be paid for this year – and you set aside $120 each month for another year – you will have about $3,000 saved up to pay for a what-if repair that might need to be paid for at some point.
Meanwhile, you still have the $3,000.
One of these TV/Internet and radio warranty outfits will sell you Diamond or Gold “coverage” for about $150 month – which means you will be spending that much each month and have nothing to show for it at the end of the year. No, that’s not quite right. You will have $1,800 less to show for it after a year of making these payments.
But, you wouldn’t have to pay for any repairs if they are needed during that year – right? Absolutely.
Provided they are covered.
. . .
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Years ago I bought a new Oldsmobile minivan at a very good price. With some of the money I saved I decided to get one of these extended warranties. I did my research, the best I could back in the Oldsmobile era and bought a highly rated policy. Well before I made a claim the company went bankrupted. Not the company I bought the policy from, but the one they sold my policy to. I bought a worthless warranty on a lousy car. I then bought a Toyota minivan with the Toyota warranty due to all the high tech features. The Toyota was such a good vehicle that during the extended period I only needed a Shock absorber replace. Lost even on that warranty. Don’t fall for any extended warranty.
Amen, Ken –
While there are exceptions to this rule, it is generally true that you’re better off setting aside some money for just-in-case. Say you put $100 aside each month in a rainy day fund. In just a year, you will have $1,200. After two, $2,400. After three, $3,600. That sum will pay for most repairs shy of something catastrophic. If you’d put aside $150 each month for three years you’d have $5,400 – enough to pay for just about anything shy of a total engine failure. If nothing major happens, you still have your money – as opposed to a worthless piece of paper.
Just like gambling. If you could beat the house, there wouldn’t be a “house”.
These grifters have run the numbers and know you ain’t gettin’ jack diddly squat in the long run.
Like “life insurance”. You pay them saying, “I’m gonna die.” and they say, “No you won’t.” and take your money.
I think saving the money for the rainy day is always going to be better than paying a premium. The money is always yours, insurance it’s just spent and gone. Keep in mind too, if you can’t pay the premium for whatever reason the policy is void immediately. Not so with savings, it stay there as long as you don’t spend it.
I have a HSA saving account for medical expenses. My employer puts in $1500 yearly before taxes (shielding it from income tax). It’s my money (even after I retire)in my HSA bank account, and since I am pretty healthy there is an enough money in it now to cover expenses that that the high deductible doesn’t cover. Plus it earns interest too. I think the interest actually covered what I spent out of it last year.
Never Pay for a
Covered RepairEeeVee Fiasco Again!EeeVee Fever stings another pathetic corporate victim:
‘General Motors will record a $6 billion charge after scaling back several electric-vehicle projects, reflecting both weaker demand and the impact of new federal policies under President Donald Trump, according to Reuters.
‘Most of the charge — $4.2 billion in cash — stems from terminating contracts and compensating suppliers that had prepared for higher EV production. GM said the charge will appear as a special item in its fourth-quarter earnings. Additional costs are expected in 2026 but will be smaller than the current year’s EV-related charges.
‘Despite the pullback, the company said its U.S. lineup of about a dozen EVs remains intact: “We plan to continue to make these models available to consumers.”’
https://www.zerohedge.com/markets/gm-cuts-ev-exposure-after-policy-shift-takes-6b-charge
Translation: you silly customers are JUST WRONG. Buy your EeeVees … and swallow your castor oil. Because Mommy Mary says so!
If you don’t eat yer meat, you can’t have any pudding
How can ye have any pudding if you don’t eat yer meat?
You! (if you don’t eat yer meat)
Yes, you behind the EeeVee charger (you can’t have any pudding)
(How can you have any pudding if you don’t eat yer meat?) Stand still, laddy!
You! Yes, you behind the EeeVee charger …
— Pink Floyd, Another Brick in the Wall, Part 2
In the last I never bought extended coverage. Now, I’ve done it twice, the 2018 Harley and the 2018 Grand Cherokee, both got utilized for minor failures- rocker box oil leak on the bike and a radiator leak in the Jeep. My main concern was the electronics especially the Jeep, since the neighbors Toyota had the nav system in the head unit fail that was thousands to fix but was covered.
Another wrinkle, did you maintain per the factory schedule? I can see this being an out for the extended coverage. They say no, then what? Go to court for thousands of $$ out if your pocket? Next up for the Jeep is the rear driveline a known failure issue, I expect that to get bounced since I missed the transfer case maintenance many miles ago. Getting the vibe and now a whine in sub 20 weather they use a piss poor carrier bearing design first to go is the rubber surround on that bearing area.
I watch the Royalty Auto Service youtube videos, and more than once they’ve shown how worthless this supposed insurance is when they failed to cover repairs that they should have covered.
There’s a science / art / black magic in reliability engineering. The extended warranty scam exploits it to the tune of gazillions of dollars.
Homer Simpson on extended warranties: https://www.youtube.com/watch?v=Bnc6SnECpgQ
I tire of the fact that everything in American life seems to be a swindle of some kind. I generally do not fall for any of these because I am the type of person who doesn’t trust anyone.
But that creates and entirely different problem — you can’t fit in with all the bleating sheep who, under the principle of “ignorance is bliss,” and HAPPY to be swindled.
People think something is wrong with YOU if you are skeptical of the daily bullshit (the COVID vaxx being a prime example)…
“ I tire of the fact that everything in American life seems to be a swindle of some kind “
Yep! Back in the ‘80s as young couple – first up was “time share” scam. Friends did one, they actually used it was a really nice resort on Lake Chelan but over the years the annual “maintenance fee” was outlandish. We could stay at the same place for about two weeks hand the keys back for about what they spent for maintenance and the lost interest they could have made on the money sunk into the time share.
Hi Sparkey,
We had a similar experience back in the 90’s, inherited a timeshare when my parents died and enjoyed using it for several years. It was in the Berkshires in August, lots to do – Tanglewood music festival (Boston Symphony), nice restaurants, hiking trails, etc. After awhile the maintenance fees increased to the point that we could have spent a week at a five star hotel for the same price, so we ditched it. Everyone is trying to scam you in the USSA.
Timeshares are the worst. Just go to a hotel or rent something. Or if you really love a place and can afford it (ok, that is very few people), just buy it (it’s not like you couldn’t rent it out yourself too when you aren’t there).
I have a nine year old vehicle that has been paid off for six. Other than gas, oil changes/consumables and tires (3 sets) it has been extremely reliable. However there were some suspension issues that needed to be addressed, to the tune of $4500 (my mechanic was having problems getting the parts from Mopar so I let it all fester until it got to this point). But now we’re back to running like a champ again. As for wear and tear, the only real thing I notice is the leather on the steering wheel is getting a little rough. The only real maintenance I do is wash it. Often. Especially in winter to keep the mag chloride off the body and undercarriage. I don’t see any rust or signs of rust. Maybe that will change this year, who knows? But $4500 over 9 years is a pretty good deal, IMHO. No need for extended warranties or other expensive feel good financial instruments.
Most repairs shops in this are have signs up say they don’t take any other those insurance repair companies as they never pay the shop for repair
No shit?
Wow. I have not seen one here.
Insurance companies, All insurance companies are in the business of collecting premiums, NOT paying claims.
In the 1980’s movie “Weekend at Bernies” the dead insurance crooks boat is named “Premiums”. More true to life than you think, right?
Ah, Car Shield one of the many ads on the Glen Beck Show…
I’ve had two extended warranties on used cars I’ve purchased over the years. One was from an independent used car lot and wasn’t fit to wipe your ass with. The one from the Ford dealer and backed by the Ford Motor Company was good. I know a few people who had the Ford backed warranty and the cars were repaired under warranty. In those cases Ford definitely lost money as the cars had issues but they were happy as the cars were repaired.
I suspect that an extended warranty backed by the car’s manufacture is the way to go if you hold onto a vehicle long term and with the lower reliability of the high tech features might be a good idea if you can get it for a good price. Since my cars are all antiques now I try to do most of the repairs myself but I have a couple mechanics that do the work I can’t or won’t do.
‘Car Spiel’ — a sucker is born every day.