I'm thinking of buying a 2002 IS 300 with 60K miles. It's "Pre Certified" - so I get the warranty up to 2 years or 100K miles. The dealer is offering me an extended premium warranty (transferable) of 5 years - 125K miles for $2,350. Is it worth it?
In general, I am not a fan of extended "warranties" which are actually insurance contracts, but if you opt to get one, I recommend only getting one backed by the automaker because third party contracts usually are so full of loopholes that they hardly cover anything, or they end up going out of business. The price of service contracts is negotiable.
Your other option is to put the $2,350 into a savings account and use it if any unforeseen repairs arise.
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I vote for option (B. Find a reputable independent shop. Change the timing belt/water pump within 120% of the period recommended. Religiously get the oil changed (3500-5000) and I think you will come out WAY AHEAD.
JFI; Over the last 9 yrs I've owned three cars that averaged 50-60k /year, oil was changed as per manu recommendation i.e. 16-25k depending on manu. None of these vehicles (Diesel & Petrol) had any engine problems. And yet I constantly see US posts recommending short intervals?
On Mon, 04 Dec 2006 18:49:37 GMT, "Jerohm" graced this newsgroup with:
..maybe..and that's a *big* maybe. My 02 LS430 had *both* power side mirrors fail on me (they think it may have been a defective run). Anyway, just out side of the standard warranty and into my extended warranty (which I paid $1,500 btw), the mirrors failed. They were replaced free of charge. Had I NOT had the extended warranty, it would of cost me $1,800.
Yeah, $1,800.
Also, both lift assists in my trunk lid wore out. They too were covered by my extended warranty. Cost without warranty would of been $400 plus installation charge (and no, nobody sells aftermarket lifts for the LS430 that I could find).
And, the *entire* cost of the warranty was refundable if I had not used it but I've already recovered the cost of the initial investment with the two items above.
So, it's up to you. Just keep in mind that when something goes bad, the price to replace it can be a very expensive out of pocket expense.
This assumes that the warranties backed by the automakers are really superior to the third party warranties. In Lexus's case, the Certified Pre Owned warranties are really third party warranties, a fact they hide from you until you try to use it. See my posts in the thread titled "toyota vs. nissan". You may get some extra assurance that the warranty is "backed" by Lexus or the car has passed a "rigorous" Lexus inspection (whatever that means) but don't be fooled into thinking you're getting a warranty that's the same quality as the Lexus factory warranty because you're not, and adjust your expectations and willingness to pay accordingly.
Lexus's are very reliable cars and in general probably don't need extended warranties but as others have noted if things do go wrong it can get expensive, especially with fancy power doo-dads. I bought Certified Pre-Owned but if I had it to do over I'd probably buy a non-CPO Lexus for thousands less and have it thoroughly inspected by a Toyota or Lexus mechanic before purchase, and go without a warranty. The suggestion made by another poster to put the cost of the warranty in a bank account against future problems could make it more comfortable to do that.
Even if I was worried about that and decided to purchase a high-end third-party warranty, assuming I could do the research and find one that is respectable and won't go out of business (and you can probably find that if you're willing to pay a premimum price for it), it would probably have been less expensive to do that than to buy Lexus CPO.
Changing the oil is incredibly CHEAP insurance. While I agree 3500 may be overdoing it, my 1990 LS400 can be down a 1/2 quart or so after 5000 miles. It is kind of like just 'telling' everyone never to put metal in the microwave... it is just easier than expecting them to monitor all conditions that can specifically lead to problems.
According to the Lexus web site, the Lexus Certified Pre-Owned Warranty is warranted by Toyota Financial Services, Inc. Yes, TFS is a third party, but that third party is a wholly owned subsidiary of TMS. Perhaps your car was not a Lexus CPO car?
During my time as a district service manager, I did not deal with any third party extended service contract companies that I would recommend to anyone, other than the one backed by the automakers.
I'm not sure if that's who they were using in 2001 when I bought mine. And while it's wholly owned it's still a different entity set up to isolate Toyota/Lexus from responsibility for those warranties. They could spin it off at any time. It may be better than any other extended warranty company out there, but it's still a non-Lexus warranty.
It definitely was (is? I still own it but the warranty is long expired as I'm closing in on 140K miles)
Lexus has been using TFS since the inception of the Certified Pre-Owned program. "Extended warranties" are actually insurance policies, and the companies issuing those policies have to comply with various laws regulating insurance companies. TFS is a separate entity not so much to isolate Toyota/Lexus from responsibility for those policies, but so that a car company does not have to comply with the insurance regulations, which probably prohibit a non-insurance company from issuing insurance policies any way.
From my 15 years experience working for the company, I do not forsee Toyota spinning off TFS. Toyota's mode of operation is to either acquire companies that they pay a lot of money to for support or product, or form their own so that they can control costs, quality of service, or retain profits.
As to whether it is worth paying extra for a CPO vehicle from a dealer, it is a catch-22. A CPO vehicle will be less than 5 years old, have less than
60,000 miles, have a verifiable CarFax report, undergo a 161 point inspection with repairs as necessary, get detailed, and have the extended "warranty" and the owner is eligible for the stuff that new vehicle buyers get like concierge service, car washes, trip interruption insurance, etc. For whatever premium that the customer has to pay for a CPO vehicle, you could probably pay someone to do the inspection, get the CarFax report, and purchase the extended service contract from the dealership and have money left over to pay for your own car washes, rental cars, trip interruption service, etc. Here are the catches - if a third party inspects the car for you and they miss someting major, they are not going to pay to fix it for you, and my guess is that most, if not all, of the choice vehicles on a dealer's lot will be CPO and the leftovers will be just a used car. If all you want is a used car, then CPO isn't worth it, but if you want a cherry car, then CPO may be your only choice unless you find a private party with one.
In general, I am not a fan of extended "warranties" which are actually insurance contracts, but if you opt to get one, I recommend only getting one backed by the automaker because third party contracts usually are so full of loopholes that they hardly cover anything, or they end up going out of business. The price of service contracts is negotiable.
Your other option is to put the $2,350 into a savings account and use it if any unforeseen repairs arise.
On 6 Dec 2006 07:53:05 -0800, snipped-for-privacy@gmail.com graced this newsgroup with:
Well, we have two Lexi with extended warranties and they both are from Lexus with zero deductable and I've never had any problem with having an item repaired.
Additionally, I called the extended warranty department concerning the rear lifts on my car to ensure it was covered under the warranty (it was)..and the greeting I received was a Lexus recording before a customer service rep answered the phone.
Very true!
Yup. That's one advantage of CPO with the extended warranty rolled into the price of the car -- you can finance it. I doubt very many car buyers have an extra 2350 cash laying around to stash for possible repairs, and if they did they probably wouldn't worry about the cost of downsream repairs (or the extra cost of getting a CPO car)
That's a very good point. It was 2001 when I bought mine so I forgot that I did look at non CPO LS400's, both at the Lexus dealers and elsewhere, and they were all pretty much skanks.
Good Grief.........................You're buying a Lexus , and yet you don't have an extra 2 or 3 thousand in the bank for whatever problems may arise . Perhaps you should drive a less expensive vehicle untill you have more of a surplus of funds put away. -Dana
Yes Dana, that is right! They are buying a Lexus so they have an unlimited supply of money to fix things that break, should any things like that ever happen. It only takes one or maybe two of those cute little electronic thingies breaking to pay for the warranty - but then you have an unlimited supply of money and don't care about that. Please give some realistic advice based on your experience - like you have owned Lexus cars for 12 years and had only $500 repair items. My experience with Lexus indicates the extended warranty has a better than even chance of paying for itself on the Es series based on the $5200 repairs I have had on two of them. So you bet I will get one for the bag of bumpy bones they call an LS if I am going to keep it for one mile beyond 50,000.
Taking or not taking insurance is a gamble. If you don’t have insurance you are gambling you will pay out less then the insurance coverage cost over the span of the policy.
Suggest checking exactly what the warranty covers and does not cover (if the contract is readable). Each Toyota model seems to have items that go bad but with routine maintanence what are the odds of them occurring within 120K miles. What does the warranty say about normal wear and tear issues?
Normal maintanence (at your expense) will most likely still be required. If you are planning on keeping the car after 120K miles, preventative maintenance is even more important. Thus, during the warranty period you will still be spending your money on maintenance on top of the extended warranty cost.
Dealers sell these warranties because they make a lot of profit. Contract prices are flexible and you can negotiate a lower price. What part of the total price the dealer gets, don’t know. In other service type contracts such as electronics, it is not uncommon for the contract seller to get 50% of the price up front.
How miles per year do you drive? If read correctly, when broken down the dealer is offering you a 3-year/25K warranty. You would have already gotten the 2-year/100K warranty for free. Is this correct?
If the car has 60K miles now, this means averaging 20K per year to max out the free warranty before it time expires. Do you drive this much? If so, after these two years, your next 3 years driving will be limited to about 8K per year to stay within the warranty.
If you get the extended warranty, you can drive 13K miles per year without maxing out the mileage clause before the time expires.
Does your state or the federal government already mandate longer warranties on certain emissions items?
At $2350, this is $470 per year for 5years. But if this warranty just extends the free 2-year 100K warranty by 3 years, this is $783 per year.
Regarding insurance, statistically insurance carriers pay out about 50% of the premiums they take in, otherwise they lose money..... so already if you are collecting 50% of what the policy is costing you, you are technically speaking breaking even. Then when time comes to collect, you are at the mercy of the carrier's decisions and whims.
I much prefer buying the mandatory insurance, and paying for the repair work out of pocket. In this case you are the boss, you determine if you are satisfied, etc. Let insurance take care of catastrophic incidents. As so many suggest, assume you will pay an extra $100 or so a month in premiums, and put that money in a savings account instead. I think you'll come out ahead, statistically speaking.
Also, has anyone ever replaced Lexus run-flat tires with regular radial tires. Run-flats are nice though noisy, but if I ever get a flat, I need to replace the tire. Replacing a tire that is almost 75% worn means I have to replace four tires, should I ever have a flat, that's a very expensive proposition. So I would like to opt out of run-flat tires, any ideas out there????
/Nick
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