Today, extended warranty may be worth the money
Minneapolis Star Tribune
October 12, 2012
Q: I want your opinion on whether to buy an extended warranty on our 2012 Acura TSX. We just bought the car and the salesman told me, "If you plan to keep this car more than five years, you should buy the extended warranty." The cost to extend the coverage to 100,000 miles or 2020 is $1,950. He claims this car has so many computers in it there are bound to be problems sooner or later and computer problems in these cars are expensive to repair -- easily exceeding $1,000 a shot. What do you think? Is he just trying to sell me something I don't need, or should I splurge and pay the extra two grand?
A: My perspective on extended warranties or service contracts, as they are often called, has evolved quite a bit in the nearly 30 years I've done this column. In fact, my position is exactly the opposite of what it was in the '80s. With the massive costs of purchasing, operating and repairing modern automobiles, I think extended warranty/service contracts are almost a no-brainer in many cases.
There are factors in the decision, however. First, are you going to keep the vehicle the approximate term and mileage of the contract? If yes, is it a bumper-to-bumper warranty/contract? And is there a deductible due at the time of service? Zero deductible is very attractive, while $100 deductible every time you take the car in under this warranty/contract can add considerably to the total cost.
Be aware of typical exclusions, such as brake friction material, hoses, drive belts, etc., which are normal wear-and-tear items. But most of these warranties/contracts also exclude shock absorbers, brake rotors/drums, glass, trim, lights and other potentially expensive parts. For example, worn struts/shocks or an $800 composite headlamp assembly that has become sand-blasted, clouded or cracked are likely not covered.
In addition, make sure any extended warranty/service contract dovetails with the original manufacturer's warranty -- effectively picking up coverage when and where the original warranty expires.
Also, unless the extended warranty is offered by the auto manufacturer, it is probably a service contract offered by a commercial company. Thus, make sure it is accepted by dealerships and service agencies who might service your vehicle. Many quality companies offer these contracts, but check their record with the dealer and with the Better Business Bureau, as well as online. And if it is a contract offered by a commercial company, you may be able to shop the price at other dealerships -- at least this could give you some negotiating power in the deal.
Are these warranties/contracts worth it? If they provide full coverage on your vehicle for the time and mileage you'll drive it, in my opinion, yes. Besides the peace of mind, $2,000 only covers a couple of significant repairs.
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