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

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...

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.

quoted text -

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 :D