Originally Posted by Blueskies123
I bought one with my Avalon. What a waste of money. 8 years later and not a single thing has broken on the car. Just oil changes, three sets of tires, and 3 batteries. It even has the original brakes.
+1
Selling extended warranties is a HUGE profit center for Toyota, it's independent distributors, and it's dealers. Even with independent 3rd party extended warranty companies, Toyota products generate big profits.
Extended warranties are insurance policies. What are insurance companies in business to do? Make money. How do they make money? By taking in more money than they put out paying claims.
One has to consider the reliability track record of the brand as well as the upfront cost of the extended warranty verses how much money will need to be spent on covered repairs during the warranty period. The odds are in your favor (HEAVILY in your favor on a Toyota product) that the cost of the warranty will exceed the amount spent on covered repairs during the warranty period. I'm not saying that Toyota products don't break, they do, but the vast majority of people will be money ahead by not paying upfront for an extended warranty. This is not just on Toyota products since, like ALL insurance products, the premium is based on the loss ratio. When you are shopping for a vehicle you can use this fact as a reliable indicator of the reliability and repair costs by getting extended warranty premium quotes from an independent 3rd party extended warranty company on the vehicles that you are interested in purchasing. Toyota products are always at the bottom of the premium cost scale, while other makes/models can have premiums that are as much as 5-6 times higher. Even some otherwise reliable makes/models can have very high extended warranty premiums because of their exorbitant repair costs.
Having said that, IMO there are some valid circumstances that can warrant the purchase of an extended warranty on a reliable make like Toyota, for example, a single woman who travels (or anyone else who thinks that they could be taken advantage-of by an unscrupulous repair facility).