From: rjwade@rainbow.ecn.purdue.edu (Robert J. Wade)
Subject: Re: OK..why shouldnt I get an extended car warranty?
Organization: Purdue University Engineering Computer Network
Distribution: na
Date: Wed, 16 Dec 1992 14:32:15 GMT

In article <BzBxu0.M4@cup.hp.com> staggers@cup.hp.com (Ken Staggers) writes:
>I just bought my new car, a Mercury Tracer LTS.  Today's session with
>the sales people was to talk financing and "other options".  They made
>the extended car warranty sound OH SO GOOD.  After listening to him,
>I couldnt remember anything the net has said about these warranties.
>I need to be reminded...why are they such a bad deal?  On principle, it
>sounds great.  For $660 I can get an extra 2 years of coverage.  And the
>brochure they give indicates a lot of things that are covered.  I have
>a lot of power options like door locks and windows.  Couldnt they fail
>during years 4 and 5?  What didnt the sales guy tell me?  What was he
>leaving out?
>
>Yeah, I turned it down.  But they will be "giving me another chance" to
>take it when I pick up the car.  I wonder how many other chances will I
>get afterwards?
>
>--Ken
>  staggers@cup.hp.com

ken, you did good!  the *rule* is: never buy an extended warranty!
they are always a ripoff.  why do they sell them?  cause they make a fortune
off of them.  salesthing gets big cut and so does dealer.  why are they a
ripoff?  lots of reasons....let me ramble on some...
first they get your money free for 3 years while you are under normal warranty.
also many times therex are exclusions for what they pay and usually co-payments.
keep your money and stick it in the bank and if/when something breaks after
3 years use that money to pay for it. many magazines have written complete
articles explaining the scam.  i know 4 people who have bought them and they
never paid off...even one guy who had lots of problems and has had his car
for 6 years now...he still would have been money ahead by keeping his money
and using it to pay for repairs...here is his story:

bought 1986 ford exp brand new...paid $836 for extended warranty that has a
co-payment of $75 on each repair.  the car came with basic 1/12 and a 3/36
on the powertrain.  and of course epa makes emissions covered for 5 years.

year 2, egr goes bad...covered because it is emissions device
year 3, after normal warranty over...mass-airflow metere goes bad...covered
for free by emissions...2nd egr goes...free again.  then while at the 
grand canyon the starter goes...no ford dealer around ...so he has to pay 
$125 for local place to replace.  ford refused to reimburse him later.
rack goes bad...yea...extended warranty coverage...he pays $75 and gets the
new rack which the receipt said cost $375.  so at this point he has paid
836+75deduct+125starter=$1036 to save $375.  next...rear springs start sagging
bad...surprise...not covered.  next...gas struts that hold up hatchback go 
bad...surprise...not covered.  next..3 tailights and 2 headlight bulbs...
not covered.  interior diagnostic chart(the fake car with the lights to tell
you when bulbs are out or doors ajar..etc) goes insane and lights randomly
come on or off etc...not covered.  exhaust rusts out..not covered.  inner and
outer tie-rod ends go bad ...not covered. all this happened with less than
33k miles on the car..but it was over 3 years old.  then...frozen right front
disc caliper...not covered.  normal stuff...tires and brakes.
anyway...he figured it up and if he had kept *his* money he could have paid
for all these other 'not covered' repairs and still been money ahead!
and yes i know some extended warranties offer different coverages and less
co-payments or none etc etc.  some guy posted a really good article on 
warranties on all kinds of goods a while back...same bottom line...don't buy
extended warranty on anything...cars...electronics...appliances etc!!!!