Weird experience at Carmax today

[Creditaddict]

Let's not confuse finance mangers and carmax because the people that "try" to sell you extended warranty are sales people and it's never required!!

[Momof5]

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@sccredit wrote:

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@tony01 wrote:

I do agree with your points, Gap and warranties are clearly spelled out on the finance contact as optional products. 

In my experience the vast majority of buyers are not in a position to put out additional cash for these products. GAP is an insurance product and the pricing has state/federal controls. The largest price difference I've seen is less than $25.

Extended warranties while not an insurance product needs to be in line with lender rules (this protects the end user). Best way to determine if a warranty is any good? Read the section on what is not covered.

When shopping third party aftermarket warranties I've discovered that pricing is in line with dealerships. This is driven by competition. 

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GAP and "extended warranties" are both technically insurance products.  There is no regulation on pricing on them .  My credit union offers GAP for $295, the dealer $700.  I've seen some dealers offering GAP for close to $1k.  There is no regulation on the pricing. 

Edit to add that in CA a F&I person must carry an insurance license

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Not true.  Florida regulates the pricing on these.  I know because I had to code the software for SE Toyota to prevent charging more or less than the state allows.

[6speed8]

Ahh the never ending extended warranty vs fix it yourself debate lol. Over 25+ years, I managed a few Goodyear shops and I was a service advisor for VW,Audi,Land Rover, and Mercedes. Also a car guy myself. I've been on both the consumer and the service sides of the counter. There are pros and cons to the warranty or not to warranty debate. On the used end of the market, I'd most certainly get an extended warranty particularly if it was of certain makes and models. The ones I worked for? MOST DEFINITELY lol. A Toyota/Honda/Hyundai/Kia? Probably not. A Nissan or ANY car with a CVT transmission? MOST DEFINITELY. I've seen many a CVT failure well before 100,000 miles. Not with Nissan personally (they've had their issues) but with the number of failures I saw, I just don't trust CVT reliability period. With cars today, odds are it's the electronics that will nickle and dime you before an engine/transmission failure so long as you maintain your car.

Pro extended warranty - One of my last repair orders in the industry was in 2008. It was a 2005 front-wheel drive Audi A4 (CVT trans) purchased from CarMax. She had it 5 months. 67,000 miles. The trans failed. Extended warranty was with Zurich. While checking the transmission, we found leaking engine mounts (hydraulic) and leaking cam seals. Zurich had an adjuster out the next day to inspect the car. He agreed with our findings and faxed them to Zurich. Within an hour, I had authorization for the near $11,000 repairs. Yes, ELEVEN THOUSAND DOLLARS. The trans was $10,000 on it's own. So that $2000+ warranty paid for itself five times over with that one claim. She paid a $100 deductible.

Against extended warranty -  Stick that $2000 in a rainy day fund set up for the car only and don't touch it. You may get lucky, you may not. The joys of car ownership lol.

If you do go with an extended warranty, here's a few things you want to know before signing.

- Are you limited to the selling dealer's service department or can you take it to any shop.

- Repair payment. Do they pay the shop directly or do you have to pay and submit for reimbursement. Believe me I've seen a few fly by nights that worked that way.

- Who's repair manual do they use to base repair times. Most use Motor or Mitchell as they're almost always less than manufacturer book time.

- What labor rate do they pay. Some have a cut off. So if their max pay is $100hr and the repair facility has a $130hr labor rate, you will pay the difference along with your deductible.

- Do they allow for OE or equivalent parts or strictly aftermarket parts. Also, do they reserve the right to supply used parts if the car has high mileage at repair time.

- Do they cover diagnostic time, fluids & filters associated with the repair.

- Some offer a percentage refund upon expiration if you never put in a claim.

I've seen all of these. Example: C280 Benz. 97,000 miles. Benz service department. For my own protection, I will not name the fly by night warranty company publicly lol. Trans not shifting properly. Need a Conductor Place/Valve Body. Diag/parts/Labor approx $1200.00. I call "Joe's Warranty." They go by Motor not Benz repair times. They pay $90hr max (ours was $130hr). They do not cover diagnostic time or fluids & filters associated with repairs as that would be part or routine service anyway by their policy. Also wanted to send a used conductor plate. If the customer wanted us to repair it as per our estimate and not "Joe's" method, "Joe" would have covered $245 ONLY of the $1200.00.