Extended warranty: yay or nay?

I'm on my second CX5. My first CX5 had a trans replacement at 32k miles, my second trans problem in the same vehicle showed up at 70k thousand miles. So I speak from personal experience, NOT emotion based. Don't be so quick to judge just because you have a difference of opinion.

I'm not judging, just citing statistics.
My point is that your unfortunate personal experience is not a reason to cite for everyone to run out and buy $2K extended warranties.

Out of the 445,000 CX-5's sold in the last few years, how many transmissions went out within the very specific 40K mile window (between 60K-99K)?

Would you agree that the number is extremely small? Would you agree that it is likely far less than 0.5%?
Do you recommend people proactively spend $2000 upfront based on the extremely unlikely event of a transmission going out in this window?
 
I'm not judging, just citing statistics.
My point is that your unfortunate personal experience is not a reason to cite for everyone to run out and buy $2K extended warranties.

Out of the 445,000 CX-5's sold in the last few years, how many transmissions went out within the very specific 40K mile window (between 60K-99K)?

Would you agree that the number is extremely small? Would you agree that it is likely far less than 0.5%?
Do you recommend people proactively spend $2000 upfront based on the extremely unlikely event of a transmission going out in this window?
I'm not saying everyone should go out and buy an extended warranty, it's a personal choice. What's good for you is not good for me and vice versa. This vehicle has a history of a few trans issues, no matter how minor, and I think it needs to be brought out. Think what you want. I didn't purchase a warranty at $2000, paid $1300 and it's bumper to bumper. Covers much more than the powertrain. I honestly could care less about the 0.5%, all I care about is what kind of expenses I'll have 3 years from now when my factory warranty is up based on my prior experience.
 
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Can't stop myself and when it comes to warranties the percentages for you are the same for me assuming we both buy the same vehicle.

If I toss a coin there is a 50/50 probability of heads or tails. If heads comes up 3 times in a row, it still means that the next toss is a 50/50 probability.

When a manufacturer, or 3rd party creates an extended warranty what they basically do is calculate what will happen during the years covered and produce an expected cost. For math purposes, lets say they expect the average car to cost $100 to fix. For example, 1 car costs them $2,000 and 19 cost 0, netting $100 per car. This is obviously more complex but the basic concept is correct.

Once they have this number other factors are added to the cost of the warranty.

* The warranty issuer needs to make a profit and cover their expenses. $20 to the cost.
* The issuer needs to have reinsurance in some states. $5 to the cost.
* The F&I guys gets a commission. $10 to the cost.

These are some of the basic costs, simply framed, made up and probably low, of a more complex process.

Then because people like a deal, we wind up with the following cost structure

$100 in repairs
$35 in administrative cost that has nothing to do with the repair cost.
$165 additional markup, just because.
$300 price to get $100 in work done.

When you go into negotiate, the $300 will be cut in half, you'll think "man, I'm a skilled negotiator getting this at $150". The thing is, even getting it at $135, a legitimate cost in this example, you are still paying $35 in something that doesn't benefit YOU in any way.

There is NO SCENARIO* where an extended warranty benefits you. You lose money, every, single, time.

Now, I can understand extended warranties for business purposes. The vehicle goes down, I need it fixed now, I don't have the cash, so I financed the warranty at purchase as insurance. That, kind of, makes sense. Yes, you lose but I can get to a place where I could understand the decision. I'm not sure that this would apply to anyone in this thread but it might, I suppose.

But, "Peace Of Mind" because you last car broke down, well, gosh, the coin did come up tails 4 times in a row. Or, well, my car has a history of transmission problems. Really, you think the guys issuing the warranty don't know that and didn't price the warranty with that in mind? Really?

* I added this for precision. It is possible that the warranty issuer underprices the warranty. It happens, but you have to be smart enough to know that.

Hint: you aren't.
 
Lots of people in this thread are looking at only one side of the coin.

Can you afford a $5000 cost to be able to drive to work? Well...

...can you afford a $17/mo charge to insure you don't have to have the $5000 cost?
 
No duplication? Are you sure about this?
Mazda's come with a 5 year powertrain warranty. So the extended warranty you purchased is valid through year 14?
Can you please provide a link to the warranty details that states this?

Also, you must be one unlucky son of a b**** with new cars.
Extended warranties are huge profit centers for the people that sell them. On average, you will never come close to recouping what you paid for the extended warranty.
Yet somehow, on your last two cars, you've gotten all your money back on one and 3x your money back on the other? With your luck, you might consider leasing.

Agree with this statement...my purchase of brand new toyota in '04 I bought extd warranty and never had to use it but I didn't learn my lesson so my next new vehicle was a Volvo in '10...got extd warranty again ($3K) but only had to use it once for a side mirror heating function replacement w/c cost $700 and I paid $100 deductible. It actually would have been covered under the factory warranty had I not procrastinated in getting it fixed immediately (thought was I had extd warranty anyways so why rush). My new vehicle this yr, a Mazda, I was offered $3K for 4yr extd warranty so I said not this time. My thinking now is save a few bucks every month as contingency for repairs down the road and if you are buying a reliable vehicle in 1st place then no need for the extd warranty
 
Lots of people in this thread are looking at only one side of the coin.

Can you afford a $5000 cost to be able to drive to work? Well...

...can you afford a $17/mo charge to insure you don't have to have the $5000 cost?

This is insurance in a nutshell. Wellsaid.
I have a 1000 deductible - I know it wont hurt me. But my car totalled and it was 12000 if someone did the math that you will lose on buying car insurance and it was not mandated by law - it would be a huge setback. Maybe over 20 years it would even out and i would have been ahead by few $$$$ not buying insurance but its a service that makes sense.
 
This is insurance in a nutshell. Wellsaid.
I have a 1000 deductible - I know it wont hurt me. But my car totalled and it was 12000 if someone did the math that you will lose on buying car insurance and it was not mandated by law - it would be a huge setback. Maybe over 20 years it would even out and i would have been ahead by few $$$$ not buying insurance but its a service that makes sense.

Maybe you can say that they're both a type of "insurance", but they're nowhere near alike. A car wreck can cause $Millions in damages to property and bodily injuries, but this extended warranty could cover nowhere near that. I bet the correlation of people who get their cars serviced at dealers and those who fall for extended warranties is very high.
 
Maybe you can say that they're both a type of "insurance", but they're nowhere near alike. A car wreck can cause $Millions in damages to property and bodily injuries, but this extended warranty could cover nowhere near that. I bet the correlation of people who get their cars serviced at dealers and those who fall for extended warranties is very high.

You know what? I used to be a "shade tree" kind of guy for work that needed doing that I didn't have tools for (clutch, etc.). Then I began pricing the dealer...dealer was CHEAPER in many cases than small independent shops, and their work has ALWAYS been superior in my experience.

Further, we are not talking about a wreck. We are talking about you driving to work one day and the car won't shift out of 1st and a stoplight, or it randomly shoots revs through the roof on the freeway and donezo is donezo, and you need a new transmission. Would you like to tap into that $5K worth of your savings, or...rather have the $17/mo being silently drafted to handle that? Think about when you get to 70-100K miles. Think anything MIGHT just go out? AC compressor? Diff? Transfer case? Transmission? One of these new DI motors that Mazda had to change the piston design on to keep from getting hot-spots for 2017? Mmmmmm?

I'll pay the $17 a mo, just like I pay for VERY high limits on my insurance policy, just like I pay for insurance because I carry a weapon, and just like I pay for health insurance. You're banking on being lucky. I'm banking on not having to worry about being nearly as lucky, and I can afford the papercut costs much more happily than I can the "big costs".
 
I'm also banking on being lucky. I've owned like 10 cars and never had a $5,000 expense. Never blew a motor or a tranny. I think the most expensive thing one time cost I've ever had was $1,200. Nothing that would have been covered under warranty. So, yea.... you spend a lot on various insrances every month, what's an extra $17? I'll save my $17 / month. I already pay enough for insurance in other areas.
 
Would you like to tap into that $5K worth of your savings, or...rather have the $17/mo being silently drafted to handle that? ...
I'll pay the $17 a mo.

Unfortunately, you are falling for one of the most common financial mistakes...having a monthly payment mentality.
Many people use this faulty mental accounting to justify purchases. Google "monthly payment buyer" and you will find plenty of information describing this mentality and why to avoid it.

Instead of looking at the extended warranty for what it is...a costly expense of $1K-$2K for a very limited amount of coverage...you justify the cost by telling yourself...oh, it's only $17/month. You are just tricking yourself.

This way of thinking is dangerous for many consumers, and is a reason they spend too much on their cars/houses/furniture/ect.
I hear about this all the time from my car salesman neighbor. Monthly payment buyers routinely buy more expensive cars and accept the junk dealer add-ons & warranties, because "it's only $20 more a month." Even though the total cost is thousands of dollars and extends their payments out for several more years.
 
Unfortunately, you are falling for one of the most common financial mistakes...having a monthly payment mentality.
Many people use this faulty mental accounting to justify purchases. Google "monthly payment buyer" and you will find plenty of information describing this mentality and why to avoid it.

Instead of looking at the extended warranty for what it is...a costly expense of $1K-$2K for a very limited amount of coverage...you justify the cost by telling yourself...oh, it's only $17/month. You are just tricking yourself.

This way of thinking is dangerous for many consumers, and is a reason they spend too much on their cars/houses/furniture/ect.
I hear about this all the time from my car salesman neighbor. Monthly payment buyers routinely buy more expensive cars and accept the junk dealer add-ons & warranties, because "it's only $20 more a month." Even though the total cost is thousands of dollars and extends their payments out for several more years.
Maybe if you;d been randomly hit by massively expensive work needing to be done on your CX5 while under warranty like I have, you'd like some peace of mind beyond 60k miles? Or maybe not.
 
Maybe if you;d been randomly hit by massively expensive work needing to be done on your CX5 while under warranty like I have, you'd like some peace of mind beyond 60k miles? Or maybe not.
First, if you're spending $25K+ on a brand new car, you should have an ample emergency fund to cover such expenses. If you can't afford a few thousand in repairs, you have no business buying a brand new car.

Second, what do you do if you have an expensive repair at 101K miles? Why not take that $1K-$2K and put it in a CD for the rare case you might have an expensive repair, regardless of mileage? You'll be way ahead if you do that with every vehicle you purchase.
 
First, if you're spending $25K+ on a brand new car, you should have an ample emergency fund to cover such expenses. If you can't afford a few thousand in repairs, you have no business buying a brand new car.

Second, what do you do if you have an expensive repair at 101K miles? Why not take that $1K-$2K and put it in a CD for the rare case you might have an expensive repair, regardless of mileage? You'll be way ahead if you do that with every vehicle you purchase.


Well, I'll let you know when I hit 100k if I won or lost, but I've never had a vehicle without a multithousand dollar failure before 100k.

I'll take a known 17 bucks a month over an unknown. Many thousands of dollars repair randomly visited.
 
Well, I'll let you know when I hit 100k if I won or lost, but I've never had a vehicle without a multithousand dollar failure before 100k.
I'll take a known 17 bucks a month over an unknown.

Wow. Never had a vehicle that made it to 100K without a major repair? How is this possible? What cars have you owned? I've only had 4 cars in my life, but they've all gone well over 100K without ANY multithousand dollar repairs.

This is all the more reason for you to have a large emergency fund!
 
Wow. Never had a vehicle that made it to 100K without a major repair? How is this possible? What cars have you owned? I've only had 4 cars in my life, but they've all gone well over 100K without ANY multithousand dollar repairs.

This is all the more reason for you to have a large emergency fund!

Infiniti G20...before 110K it had to have 2 new axles, all new motor and transmission mounts. I bought it at 110k, with all of the above wrong with it as a fixer upper, so who knows when it went out? IT likely wasn't just as it crested 100K...
2001 Trans Am...before 100k it needed a new TO bearing, new rear-end, new axles (two times), new water pump, and new slave hydraulics for the clutch, and a new AC compressor
2010 Grand Jeep Cherokee...oh...let me count the ways it broke....just take my word for it that Chrysler's 5/100 powertrain warranty got a helluva workout from 60-93k when I sold it!!!
2012 370Z...nagging brake issues that involved going through 3 sets of front rotors and pads (not necessarily cheap on Akebono's) for violent vibration under braking, finally dealership admitted fault for over-torquing lug nuts.
This CX5 has already had the rear diff replaced, to the tune of $2700. It got water in it when I crossed a flooded drive-way. User error? Whatever. Warranty covered it. It counts.

1995 Trans AM: Purchased at 147K miles, best damn car I ever owned. The heater core went out, and that's it to 170K! (sold)
1988 Mustang GT: It was a complete re-do, and purchased as such. Doesn't really count.
1993 Crown Vic P71 interceptor: First car, driveway project, only the transmission was OEM to the car, neat thing! Doesn't count as it had a 5.4L V8 Triton and other non-OEM stuff


So yeah, I have plenty of "emergency fund", but I also bought the damn warranty because saving money is what it's going to end up doing for me, based on past history.
 
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I knew there had to be something about you I liked. LOL I've owned 3 Firebirds. 👍

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I knew there had to be something about you I liked. LOL I've owned 3 Firebirds. ��

Sent from my XT1585 using Tapatalk

I had a 1995 Trans AM A4, and a 2001 WS.6 MN6
(Yes, they both got sticker mpg, even though I was in my teens/early 20's, when I drove them on 500+ mile road-trips doing...over the speed limit in Texas...)
 
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