Are Extended Car Warranties Worth It?

Extended car warranties image for landing page (1)I buy used cars. Cars today are so reliable that buying a car with 50,000 miles is not a big deal. But there is one thing that I have done the last couple times that has saved me over $30,000 in the last 12 months - extended warranty.

In the last two years I bought myself a E63 AMG Mercedes Benz and my daughter bought a BMW X3. I know you are thinking, ‘That's a lot of money for cars!’ We didn't buy them new. We bought them used for about 75% of the original price. Each had about 50,000 miles. The one thing I did spend some extra money on was the extended warranty.  About $4500 for each warranty. That seems like a lot but on foreign cars it is cheap in comparison to paying out-of-pocket for repairs. 

On my Mercedes, I have replaced the front air shocks, fixed the air conditioning, and had a few other repairs made. Total cost? $1500 out-of-pocket. Think that sounds like a lot? Considering it cost $3200 to fix just the air conditioning, I figure I am doing pretty good. I paid $1500 for my deductible. So I’m ahead.

The BMW is another story.  This warranty was a life saver! I got a call from my daughter telling me the check engine light was on. So she takes it in to the BMW dealer. I then get a call saying it needs a new engine. WHAT?!? Apparently, the oil filter container broke causing the engine to loose pressure and oil. Top half of the engine…DEAD. Thank goodness I bought the extended warranty. They covered the cost of the new engine ($15,000 plus labor for a total cost of $20,000!). Out-of-pocket cost for me? $200 deductible. 

Now not all extend warranties are the same. Some are rip offs. I have had one of those. I got rid of that car pretty quickly when the warranty company refused to pay what they should have paid. I learned my lesson - READ THE FINE PRINT. It’s not what they will cover; it's what they won’t cover that gets you. Do your homework. Read the reviews. Make sure you know when the warranty will end. This way you can plan ahead.

Buying extended warranties has helped me save money and prevented me from having to dip into my emergency fund. If you want to talk more about some simple ways to save money, reach out to me. We can discuss your situation and figure out what may work best for you. Email me at trent@grinkmeyerleonard.com to get in touch. 

family finances, finances, saving, saving money, money, car warranty, extended warranties, extended car warranties

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