This is debatable. Most folks say that the seller
of the warranty is betting that the buyer won't have
any problems while the buyer is betting that he/she will.
It's not that simple. The seller is betting that
for $x (where x is large and is based on the expected
number of buyers), the payout plus administrative costs
for the plan will be < $x. It doesn't say anything
about one particular buyer because probability becomes
meaningless when we deal with just one car.
I think it works like an insurance plan. If one doesn't
have any liabilities and one has a source of income other
than having to go to work, one can do without disability
insurance. In the same way, if one is willing
and able to take the risk of covering costs that
might be larger than the cost of the plan should such
a problem arise, then one can certainly do without it.
I don't have the stats, but for every 50 cars,
there was probably at least 1 for which the extended
warranty paid for itself. The question is whether or
not one is willing (and able) to take a risk of being
that 1 in 50.
FWIW, I did buy the extended warranty for my previous car
(a Civic), and never used it. I haven't yet bought it
for my current car (a 2003 325i) and I'm still debating.
I don't think the decision is a no-brainer.
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