Originally Posted By: Islandvic
Clevy posted: "You must have made the salesman day buying an extended warranty on a Honda.
I guess you missed every single article and news report that says those extended warranty policies are pointless and only benefit the insurer since it's rare for a vehicle to require the repairs those warranty will actually cover.
I'm surprised automakes still offer those things considering all the press they got about being a scam."
Clevy is correct on extended warranties in general. Honda's already made the sale to you; they've already sold you the Pilot. There is no motive for them to sell you an extended warranty on which they will lose money. An extended warranty is an insurance policy; in this case, Honda is the insurer of a HondaCare policy. Honda, just like other insurance companies, make money on their insurance policies (extended warranties). If they didn't make money on them, they wouldn't offer them.
It's absolutely true that, on average, the buyer of an extended warranty will lose money. That's necessarily the case; regardless of how cheap you buy one, Honda isn't going to sell it to you below their average cost to offer it. And that average cost includes their figured actual average repair costs, the admin and overhead it costs them to offer it (printed materials, etc). I've read that you can figure the actual average repair cost to be something in the neighborhood of 50% of the "retail price" of the extended warranty...the other 50% going to the admin and overhead mentioned earlier.
I bought one on our '08 CR-V. They offered it to me for something like $1,200. I ended up paying something like $600 for it after negotiation. I still lost money on it, but it was a calculated risk. The car was an unknown to me, and I felt like I had very little chance of making $1,200 back on warranty repairs. I felt like I had a better chance of making $600 back on warranty repairs.
(So far, I've been wrong; I've made $0 back on warranty repairs.)
You can buy extended warranties from the dealer. You can buy them from online Honda dealers. You can buy them from third parties. In every case, the buyer, on average, loses money. There will be people like Bill_G who make out on them. There will necessarily be more people like me who lose on them. And we know that to be the case by the simple fact that they're selling them. It's like Las Vegas: the house will always win in the end. If the house didn't win, it wouldn't be there.
But even with all of that said, I don't necessarily think they're an unwise purchase. Not everything in life is black-and-white, or dollars-and-cents. People have nerves and uneasiness and need to sleep at night. A $600 insurance policy helped us feel better about a used vehicle purchase. I've ended up not needing it, and in another 6,000 miles (100k), I'll lose my $600. I'd still do it again, with the understanding that the odds are against me that I'll recoup my purchase price (even at half of the "retail price").
Clevy posted: "You must have made the salesman day buying an extended warranty on a Honda.
I guess you missed every single article and news report that says those extended warranty policies are pointless and only benefit the insurer since it's rare for a vehicle to require the repairs those warranty will actually cover.
I'm surprised automakes still offer those things considering all the press they got about being a scam."
Clevy is correct on extended warranties in general. Honda's already made the sale to you; they've already sold you the Pilot. There is no motive for them to sell you an extended warranty on which they will lose money. An extended warranty is an insurance policy; in this case, Honda is the insurer of a HondaCare policy. Honda, just like other insurance companies, make money on their insurance policies (extended warranties). If they didn't make money on them, they wouldn't offer them.
It's absolutely true that, on average, the buyer of an extended warranty will lose money. That's necessarily the case; regardless of how cheap you buy one, Honda isn't going to sell it to you below their average cost to offer it. And that average cost includes their figured actual average repair costs, the admin and overhead it costs them to offer it (printed materials, etc). I've read that you can figure the actual average repair cost to be something in the neighborhood of 50% of the "retail price" of the extended warranty...the other 50% going to the admin and overhead mentioned earlier.
I bought one on our '08 CR-V. They offered it to me for something like $1,200. I ended up paying something like $600 for it after negotiation. I still lost money on it, but it was a calculated risk. The car was an unknown to me, and I felt like I had very little chance of making $1,200 back on warranty repairs. I felt like I had a better chance of making $600 back on warranty repairs.
(So far, I've been wrong; I've made $0 back on warranty repairs.)
You can buy extended warranties from the dealer. You can buy them from online Honda dealers. You can buy them from third parties. In every case, the buyer, on average, loses money. There will be people like Bill_G who make out on them. There will necessarily be more people like me who lose on them. And we know that to be the case by the simple fact that they're selling them. It's like Las Vegas: the house will always win in the end. If the house didn't win, it wouldn't be there.
But even with all of that said, I don't necessarily think they're an unwise purchase. Not everything in life is black-and-white, or dollars-and-cents. People have nerves and uneasiness and need to sleep at night. A $600 insurance policy helped us feel better about a used vehicle purchase. I've ended up not needing it, and in another 6,000 miles (100k), I'll lose my $600. I'd still do it again, with the understanding that the odds are against me that I'll recoup my purchase price (even at half of the "retail price").