Quote:
|
Originally Posted by Bwana
In a lot of cases, in order for the warranty to payoff, you would have to smoke the engine, the transmission and the rear in order to break even once you do the math after paying interest on the extended warranty for five of six years. The odds are higher for you to hit the Powerball. If you are that worried about the thing breaking down and losing all those parts, perhaps you shouldn’t be buying that brand or check in for some psychological assistance? The way cars are built these days, 99.9% of the time the extended warranty is a total sham. If you want to be safe, take that same money and stick it into your savings account every month and if something does happen, not only is it there, but you were making the juice on YOUR money and not getting charged interest on something that you will likely never use. Not only will you get to keep your money, but if in the off chance something does go wrong, it won't cost you nearly as much when you work the figures on doing it both ways.
A little bit of homework can say you $100 or more a month in most cases.
|
Some of this depends on variables. I have an extended warranty on my Trailblazer and it has paid for itself with one repair to the tranny. With that said, I knew that I had a good chance ant transmission problems after the factory warranty expired because I had them when I was under it, so we bought the GMPP Major Guard before the factory warranty expired. By purchasing it later I accomplished a couple of things. I identified a potential need and I didnt pay any interest on the warranty.
Bwana gives fantastic advice with regards to saving the money you would be paying for a warranty so that you have it handy if you need it. While it is excellent advice there are a couple drawbacks. A LOT of people simply are not disciplined enough to save for a costly repair and thus they end up trading/selling the broken vehicle or they put it on a credit card or finance it somehow. In those cases they will spend more than if they had purchased a warranty and financed it into the car loan. Also, if you save the money you are still at the mercy of current labor rates and frankly they are high as a kite and will not likely be coming down any time soon. So, it depends on the person as to what makes the most sense when purchasing a warranty. The bottom line point that Bwana, myself and others have mentioned is to do some homework before you sign the contract.
The Doc Fee is in fact extra money that in most cases goes strait to the owner and is often times not negotiable except if they are willing to discount the price by the stated fee amount. In our case if a person objects to the fee we can either say thanks for shopping or take it out of the price, I can not delete the fee from pre printed forms however.
As far as rate markup....it happens, but there are laws that govern the amount the rate can be marked up. Most lenders wont allow a rate markup of more than 2%. Some still go 3%, but most are doing away with 3. The direction that dealer finance is heading is actually a detriment to those with good credit. Under the current situation if you have lets say a 760 beacon you can get a better rate with a certain bank then if you have a 700 beacon. The dealer marks it up a point or two and you sign up. The way dealer finance is heading they are going to eventually go to a higher flat rate, not allowing the dealer to mark it up and paying them a flat fee. The problem with that is, that the guy with a 760 for example will be paying the same rate as a guy with a 680 score. So the only people who will end up winning is the banks. Currently dealers can offer better rates then if you walked into the bank because of vollume. The dealer can in a lot of cases beat your rate and still make money, so it's a win-win....but that will likely change in the next few years.
Also, life insurance laws vary from state to state, so I can not speak to Missouri or Kansas since I havent lived there since 84, but in North Carolina, it is cheaper for an 50+ year old person to add Credit Life or Credit Accident-Health insurance to a car loan then to get it from an agent. The reason is that the premium is tied only to the amount and length of the loan, instead of the age, weight and vocation of the applicant. An 18 year old and a 50 year old financing $20,000.00 for 5 years are both charged the same amount of premiums. With that said, it isnt for everyone and I never pushed it hard while I was in finance for the past 5 years. I focused more time and effort on...
A: Rate
B: Warranty
c: GAP coverage