Ever wonder how much an extended warranty costs?

[Heat]

I got a letter from my local dealer for an extended warranty since my factory warranty will end in February (36 months). So I called, here are the details:

Duration: 4 years / 48,000 miles (after the Mazda warranty ends)
Covers parts, labor, diagnostics after a $100 deductible per visit
Does not cover wear and tear or routine maintenance

This policy would be through the dealer and would be honored at any Mazda dealer with a company called "Protectives" as the underwriter.

Original cost = $4,165, but $500 off if I signed up at that time. I declined and the price came down to "just under $3,000". Still too expensive for the policy in my opinion so I declined.

 

[5zoom]

Take the 3k, put it in a CD or something paying a little interest, and call it a rainy day fund. If you never use it, you've never spend the money, unlike an extended warranty.

The only way an extended warranty is a good deal for the customer is if they beat the odds(have a catastrophic failure with the van). Its a gamble and big money maker for the vast majority and the deductible is just another way they kick you down the road. It wouldn't be offered if they weren't making money on it. The only reason I got the one on my van is that the dealership was going out of business and was just trying to make a final buck. $800 dollars for a 4 year/100k no deductible warranty bumper to bumper from Mazda. Since I drive a lot, I was more concerned with the mileage than the years. Based on my calculations, I've only made up half the cost($400 in warranty work) in 86k miles. Yes, there is the chance that I'll have an expensive failure, buy the odds are with Mazda, not me.

 

[Heat]

I know that extended warranties on cars (and most items) are for suckers, I was just curious to see the details though $800 for a 4 year / 100K deal was a decent gamble.

Speaking of profit margins - your dealer sold you this policy for $800 and made some money off of it. Can you imagine somebody spending $3,500 on the same policy?

 

[5zoom]

I can't imagine spending more than 1k for an extended warranty, especially one with a deductible. I do think mine is the exception only because I got it so cheap. I think the money made off extended warranties is as close to pure profit as it gets for dealers, as they don't really have to provide a service/product that goes on the vehicle and it requires no prep time as well(accessories/paint and interior junk). Mazda doesn't bill the original dealer who sold the warranty when a claim is submitted.

 

[Heat]

Besides, there is no way I would take it back to the dealer. The one time I had an issue was when my blower stopped working (the motor would run but no air). I thought it was a warranty fix. They said it was a mouse, which it might have been, and they charged me $350 to fix it. Crazy prices and there is no way to know whether the fix is covered until after they look at it... and have time invested which means that if it isn't covered, you still owe them for 30 minutes or an hour of labor.

My Mazda5 will never see the Mazda dealer mechanic again, unless there is a recall.

 

[CanuckMazda5]

Avoid, it is a scam.

they cover almost nothing.

 

[Robotazky]

It's never crossed my mind once actually.