If I heard right on one of Clark’s broadcasts, he mentioned that 65% of extended warranties are never used? Also, only eight cents on every dollar spent on extended warranties are ever used on car repairs. Is there documentation for this?
I don’t know of any documentation. But I did use mine last year. Kept me from paying $600. I need it for a different issue right now, but unfortunately, I took a cross-country road trip over the summer and went over the mileage limit. I’ll be out of pocket.
How much did your extended warranty cost?
I have never seen a report on this, but Clark reads a lot and I’m sure he saw this quoted in a reliable news source somewhere. Based on my own experience with the 5 new cars I have purchased in the last 35 years I know I would have used the extended warranty on any of them exactly zero times. I suspect I saved enough money not buying an extended warranty that it paid for the used car I bought 6 years ago that we have driven 125 k miles since with few issues.
I bought a new car this past May and they were pushing the extended warranty then and since then. It’ costs close to $3k. But, it extends the power train warranty just 25k miles from 100k, and the so called bumper to bumper warranty 65k miles from 60k to 125k. So, the extended warranty covers a relatively short period of time. With the current amount of electronics in new cars these days, they push hard on how expensive it is to fix those things. I’ll take my chances.
I’ve seen surveys that said 55% of people never use their extended warranty. So, if the other 45% did use it and received a benefit equal to the cost of the warranty (unlikely), then the benefit per dollar on average is less than $0.50. Factor in that it’s rare for someone with an extended warranty to get even half benefit for the cost of the warranty, then you’re down to less than $0.25 per dollar. So, it’s seems pretty reasonable that the benefit would be $0.08 per dollar. And this is the reason they are pushed so hard by extended warranty companies. It’s not for your benefit, it’s for theirs.
Between wife and I, over the years we bought five or six new cars. Ext warranties were pushed, but we never bought, and none of them would have paid off.
Of course we bought nothing but Hondas and Toyotas which helped.
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Four Hondas and a Dodge for us. The Dodge had a major problem eventually, but still outside the time any extended warranty would have covered.