I'm sure some people buy cars from a main dealer because of the extra benefit of the warranty. However its got me thinking.
Is it worth having these warranties in respect of the actual amount you spend to get it and maintain it, rather than the actual costs people have experienced with an out-of-warranty problem?
For example. Lets say you pay £1500 extra for a second hand main dealer car than the same car private. And the warranty also requires that you maintain the service history at a main dealer - perhaps £200 for an average service v £100 for an independent. Over 3 years this extra benefit of a warranty has cost £1800 more, plus maybe more on extra parts costs outside of the service that maybe required.
So, are the average cost of repairs that could be done under a warranty worth more than £1800?
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It\'s not clear to me what you\'re comparing here, Phoenicks. Your £1500 premium for buying off the forecourt doesn\'t give you a warranty, does it? Maybe I\'m not answering your question but:
You can buy a second hand car from anywhere, and then buy a warranty separately. Depending on the car, from £360 p.a. and a 50k 1995 Vectra doing 12k p.a. (first thing I clicked on) is about £500. www.motoreasy.com . Available provided the car is under 10 years old. They\'ll cover mechanical breakdown up to 5k; MOT failures up to £500 & give you breakdown cover.
No main dealer servicing requirement - they service the car as a part of the plan. So the question becomes \'I pay £500; would I expect to win?\' And the answer has to be \'no\' because the warranty providers are not a charity (for Phoenickses in distress).
Such offers are for poor people - for whom an unexpected cost of mechanical breakdown would leave them without transport. Peole for whom finding £1,000 for a new car in the event of MOT failure would be a disaster - rather than beer money. Over the 50-60 years of your life you will run a car, you can virtually guarantee that you will be better off not buying a warranty. The amount they pay you back is not going to justify the amount you pay them.
And if you run a car, but cannot afford the servicing costs (and so \'dread\' your car going in for a service) then IMHO I think you should be running a cheaper car.
I may have told this story before, but when I was at university I had a friend who was a secretary. She was 19, and ran a swanky well-loaded, brand-new 3-series. We stopped at a petrol station & I dutifully did the dirty work & filled the petrol tank. Full. At which she panicked, as so much of her salary went on servicing the car loan that she couldn\'t afford to fill her petrol tank. Nor to replace the stone-chipped windscreen. Having known a couple of people like that has made me very dubious of the benefits to most of us of running a newer & bigger & better car than we *really* need.
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I also know people who have bought new cars, only to realise that they couldn't afford them.
One changed job and the other sold her car.
It a case of working out a budget, properly, including costs of servicing, tyres (including contingencies for blow outs and punctures) and including another contingency amount for repair costs.
A bought warranty is just an insurance policy - they wouldn't sell it if it didn't make money for them. There will be occasions where people do get more than they paid out, but this will be the exception rather than the rule.
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Of course, to a large number of people the value of a warranty is high because it gives peace of mind. I know lots of people who will not consider owning a car that is more than 3 years old simply because of the "peace of mind" factor of having a manufacturer's warranty. In cold statistical terms, it is probably not worth the additional outlay however this does not take into account the human factors.
Ed.
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