Is Volvo's extended warranty on used cars worth it?

I'm buying a used car from volvo that has 42k miles on it and the
bumper to bumper warranty runs to 2010 or 100k. Is it worth it to
purchase two extra years to get me to 2012? The extended two years
come with a $100 deductable - or per repair? Anyone have any
experience with this warranty? It's $1175, can it be discounted?

 

the car is a 2004 with 40k miles. The original warranty was 6 years or
100,000 miles

 

It depends on the model. When a new model is introduced, they sometimes
have a weakness such as the '93 850 had an AT that would fail around
80-120k miles. That was worth guying extended coverage for. In most
cases they actually get more reliable in the big picture but have small
things like belts go bad. The warranty would require dealer service
which you should be getting anyway.

In general when your car is 8 years old it will be worth so much. If
the repairs are less than the value when it is fixed, you can fix it and
sell it and get your money back. If they are more than it is worth, you
are out of luck unless you have extended coverage. To me, $1200 for 2
years is a big gamble and not worth it unless this model has a history
of a major part going bad. If $600 per year is worth it for the peace
of mind and knowing that in 2012 you would have a car that is in good
condition and be able to sell the car and get another one, then go for
it.

 

This warranty also covers things like auto locks, power seat motors,
and sun roof motor. Don't those tend to be expensive to fix?

 

The downside to these insurance policies is you'll have to pay dealer
prices fix the things that are not covered.
Things like belts, gaskets, hoses, rotors, A/C, exhaust, etc.
Read the fine print. Google the things that aren't covered to see if you
can find examples of failures.

In the end, it's just insurance. So the question is, do you feel lucky?

 

I would never buy a car with a sun roof for this reason. They are great
when they are new but tend to leak or have other problems as the car
ages. Basically they are a bad idea.

I have never seen any problems with auto locks or power seat motors.
Actually most people only use a power seat motor once and leave it
there. Sort of a waste to even have it. Seat heaters are another
story, but most people don't fix them when they fail on a used car.

 

Hmmm, they said it's a bumper to bumper warranty. Are you telling me
that if they have to replace the engine I'm going to have to pay
dealer price for the belts and gaskets involved in such a repair? That
sounds pretty shady.

 

So Stephen can I mark you down as a "no" on the extended warranty? The
only reason I'm thinking about it is because I've read so much about
Volvo repairs averaging over $1000.

 

You never said what model you are buying; you just mentioned the make
and year.

 

Most bumper to bumper warranties do not replace normal wear items. Most
engines do not come with normal wear items such as belts, oil and
filters.

 

Volvo V70 XC 2004

 

No, I'm telling you to read and understand the fine print. And ask
questions, and get the answers in writing.
I only have two real life experiences with 'bumper to bumper' extended
warranties. Both on a Chevy I bought new in '85.
Dealer where I bought it wouldn't fix an exhaust leak because gaskets
weren't covered.
When the alternator failed, I took it to a different dealer. (finally
happy I could use the "insurance" I bought.)
They fixed the alternator and, while they were in there they noticed a
busted exhaust stud so they fixed it (along with the blown exhaust
gasket.) No phone calls, no authorization, and no charge.
Needless to say, I was pleased with the outcome but the lesson learned
was you're at the mercy of the dealer when it comes to warranty repairs.
They can just as easily screw you as help you.
Same deal on a 'lifetime' alignment I bought once. First time I took it
back, they informed me I had $600.00 of worn out rod ends, etc. I would
have to pay them to fix before they would do the 'free' alignment...

 

This is one of their better than average years with no major areas of
concern. I would not buy the extended warranty. However, if you can't
come up with the cash to make a major repair, then get the insurance.
That is what it is for, for people who need transportation on a fixed
budget.

This model typically sells for $20,825 - $33,150 today. By 2012 it
should be worth in the range of $7,875 - $15,250. So you would be
paying about $600 per year for two years to guard against large repair
bills. It will almost certainly be worth fixing no matter what the
problem is whether or not you have the insurance.

 

You are already paying a premium price for a warranted car. In a
sense the warrranty that comes with the car is a bet on your part that
you will have repairs that exceed the amount of the premium built into
the used car price. Assuming the car was well maintained and you will
continue to maintained it I could not see prepaying several years in
advance even more repair expenses.

 

Exactly.

Insurance, ON THE AVERAGE, is a losing game. That's why its offered.
Obviously if the auto mfg. (or secondary insurer) expected to spend
more on repairs than they make in premiums it would be an unprofitable
business. However, it is a very profitable business. The insurers know
that for every person that has repairs over $1200 (and is therefore
glad that he bought the coverage) there are a dozen other people that
never make a claim. Financially, MOST PEOPLE, would be better off
putting the $1200 in an interest bearing account, but few actually do.

So the question remains, do you think you'll be one of the minority
that come out ahead, or one of the majority that don't?

 

However, the insurance is still popular because most people don't want
to take the risk of a major repair bill when they can settle for an
insurance payment that is slightly more than the average repair cost.
So the attractiveness of insurance has nothing to do with average repair
bill, but the ratio of maximum repair bill to insurance cost. People on
a tight budget can't afford to not get the insurance.

Personally, I am normally self insured and win the lottery every week by
not playing. However, I have bought extended insurance on two cars and
it payed off both times. They were new models and did not have an
established level of reliability before I bought them and had new model
problems after the basic warranty expired. So, even in my case, the
extended warranty was of value in two cases.

 

Sure its still popular. The lottery is popular too. That doesn't make
it a good deal (I say again) on average. But ask the guy that wins and
he'll tell you it's a great deal.

I understand perfectly well WHY people buy the insurance. Hell, I
actually sell insurance:-}. Like you said, the risk of a large repair
bill (no matter how small the chance) is daunting to some people. But
the fact remains that if you look at a large number of people (or one
person that buys a large number of cars) on average they/he would have
been better off not taking the insurance and saving the money. I can't
predict whether this guy will hit "the volvo warranty jackpot" or not.
But simple economics suggest that most people will not.

Congrats on your good fortune (both the lottery and the warranty). I,
on the other hand, have never purchased an extended warranty, nor have
I needed it. The few repairs I have even had to make were well under
the premium amounts that I would have paid for the warranty. I'm not
recommending that he should or shouldn't buy the warranty, I'm just
presenting the math of the situation.

 

I bought a "lifetime" alignment from Firestone (big mistake, Firestone)
for a vehicle I sold earlier this week. At 25k miles Firestone told me
I needed new rocker arms and ball joints and that an alignment wouldn't
hold. The alignment was worse coming out of the shop than it was when I
put it in - four tries later they had the alignment done to my
satisfaction and I moved my "lifetime" alignment to a different
Firestone store. Over seven years I had the alignment done 17 times
under that lifetime warranty. By the time the vehicle hit 100k miles it
did in fact need new rocker arms and ball joints (plus some other
unexpected high-dollar work).

There's a reason I sold it and bought a used Volvo