Auto extended warranty

[Rand]

I used to work for a company that sold extended warranties for micrographics equipment. We called them maintenance contracts.
While they *can* work out in your favor the odds heavily favor the company selling the warranty. I wouldn't buy one for anything.

[jonmulzer]

Warranty companies such as this work on a 200% markup, excluding their overhead. They know what a specific vehicle is going to cost in repairs on average. They figure your car to cost roughly $400 (spread out over a large enough sample), so they charge you $1200.

The people these warranties appeal to most of all are broke people. You can roll it in with your financing at the beginning and while you are living paycheck to paycheck making a car payment that is 30% of your income you will not have to worry about coming up with the money for major repairs. If you have an emercency fund to cover such expenses, then you will be money ahead by always saying no when they ask you if you want an extended warranty. If you don't have an emergency fund, then don't buy a car you can't afford.

[MilDoc]

The RAV4 has so far been an extremely reliable car. I would bank the $1200 rather than waste it on a warranty.

[BobSch]

I figure anything they try to push that hard is nothing but a high-profit item for the dealer. I'm with CR, save your money.

[radhak]

hmmm...lots here not for the extended...
come to think of it, i had a toyota corolla for 10 years, and never had any repair done, other than regular maintenance...

After checking RAV4World, I asked for and got another quote from a Toyota rep for a 7 yr/100k/ zero-deductible : $870 net! That's a third less than the earlier 'cheap' quote; best is, he tells me i could take this up anytime before the OEM warranty (3 yr / 36k miles) expires. So maybe I could let some months/miles go by before making a decision; I might get to know how it behaves in that time!

[vaking]

I agree completely with Loring and others about extended warranty being form of insurance, spreading the risk, obscene mark-up, etc. I would never buy such warranty for a new vehicle. I did, however, bought such warranty for one car I got used.
To be specific - I bought Chevy Malibu for my 18-year-old son. I bought after it spent one year as rental car with with close to 30K miles on it. Manufacturer's warranty was up to 36K miles, so it was close to the end. I was buying a car for a teenager and I had full confidence in his ability to destroy any car fast. I bought an extended warranty for a total mileage of 65K miles. The decision paid off when the car blew the gasket at about 60K on the car. The insurance company tried at first to dispute the "fault" but it turned out blown gasket on Chevies of that year were quite often.
On a related note - the same teenager worked part-time at places like CompUsa or CircuitCity while studying in college. Extended warranties were the favorite sales item at all such places. A policy that CompUsa would normally sell for $300-$400 a store employee was able to get at an employee discount for about $70. Employee discount is close to actual cost (10% mark-up or so). Gives you an idea why computer stores are pushing those policies so hard. I am sure car dealership are just the same.