Extended Waranty for our 2005 Car?

chisueJune 27, 2010

We keep our cars a long time and don't drive much. We've put 17,000 miles on our 2005 Jaguar X-Type VDP. It came with a 4-year manufacturer's waranty plus a 2-year 'Jaguar

Certified' limited waranty that expires mid-December. We bought from a Jaguar dealer it in June 2006 w/2700 miles on it.

We're considering buying a 2-year Jaguar limited waranty (same coverage it currently has) -- and possibly another 2-year after that. A 2-year taking it to Dec. 2012 is $2697.

We like the car, especially the all-wheel drive and interior finish quality. We don't see anything new we like as well. It's currently worth up to $16,000. Buying anything similar new would cost us at least $20,000 + the trade-in.

I'm concerned that something expensive like a computer management system could fail. I know we'll still be paying for oil changes and maintenance, and all those 'not covered' things like new tires, batteries, brakes, etc.

What's the advice you'd give me?

PS -- I can also buy coverage through EasyCare that's similar price for a 2-year, and that also offers a 4-year for $3779 (ave. $945/year). The Jag policy requires Jag parts and would go to 100,000 miles (not at all likely for us). The alternate policy doesn't specify Jag parts and you can add 12,000 miles per year.

Many thanks!

Sue in Chicagoland

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john_g

First they would not sell those Insurance Policies, if they didn't make money on them. Yes they try and call them warranties, but they really are not warranties.

Prior to buying into any of these plans, google the company to see if there are any reports against them. Also check with the BBB.

Lastly, typical repairs do not total the kinds of prices you are planing to spend on that policy. Your gambling either way, but if you want to do the best bet for yourself, take the money you would spend on the policy and put it into a CD down at the bank.

While you are at the bank, open up a new savings account strictly for your car expenses. The payment on your Jaguar was probably in the mid $400's depending on what you traded in. So make this monthly car payment be in the $500 range. You must make that payment every month like you bought the new car. The only time you touch that money is if your car breaks and it will be more than $1000 to fix it, or when the day finally comes where you truly need to replace the car, which BTW should still be about ten years from now. When that day finally comes, do you realize what you would have in the bank? Cash for the new car with a good bit left over.

    Bookmark   June 27, 2010 at 8:41PM
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chisue

john_g -- Thanks for taking time to reply. I think you've gotten to the heart of the matter: That the car is unlikely to require the kind of expensive repairs that would be covered by a waranty! (Do you know how I could find out what IS likely to go bad on this model?)

We buy our cars outright; don't lease and don't finance. When you can't earn much on invested money, and because we keep cars so long, that seems the least expensive way to go. (Maybe you know otherwise?)

I was interested to know if there was a 'forumla' of some kind to judge the economics.

For instance, our car is now worth $16K tops. If we paid $2700 for a waranty, it's as though we'd have 'invested' in something that will only be worth about $10K in two years.

OTOH we'd be *saving* by not having to invest $20K (plus trade in worth $16K) for a new car now.

It looks like we'll be ahead to spend $0 for a waranty and take our lumps if there are big problems in two years.

BTW, I budget depreciation as part of our auto expenses. I have the current car zeroed out as it turns six.

    Bookmark   June 28, 2010 at 9:34AM
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john_g

I hope everyone reads what you wrote here, because it is the answer for millions of vehicle owners everywhere. As far as knowing otherwise, you are in fact doing exactly what we recommend. Buy new, and keep it for as long as you can. The only value the car has is to the person that wants to make a profit off of it when you finally sell it. As you noted the value drops and drops even though the car can be completely capable of doing everything that a brand new one could, comfortably transport you from point "A" to point "B".

So maintain it, and enjoy it for the next ten (or more years) and enjoy how much money you are NOT losing on the depreciation of two other cars, and that's some 50 to 60K or more!

BTW in today's repair world we recognize that it's rare for two cars to have similar failures. Attempting to predict what is likely to fail would be like you tring to guess where I will hit a golf ball to at the range. It's far easier to predict where it won't end up. VBG.

    Bookmark   June 28, 2010 at 9:50AM
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chisue

john_g -- Hey! You need to *think positively* to get that ball onto the green! LOL

Thanks for the encouragement and advice. My DH and I have read carefully both here and in the "Home Finances" forum, and we will not be buying a waranty on this car.

I must have become *sensible* or something in my old age. This little car does everything we need it to do, and it meets my wish for a comfortable, nicely finished interior w/o 'plastic'.
We've owned some fun cars, but I'm too old now to get in and out of an Austin Healey 3000 or a Jaguar XJS. I sure don't want to try to keep either one tuned. "For every thing there is a season," eh? Glad we had 'em -- back THEN!

    Bookmark   June 28, 2010 at 10:12AM
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