Warranty bs?

Betelgeuse · 07-12-2007, 09:55 AM

Extended warranties are insurance. You're paying some small (or medium) amount of money now to guard against having to pay some large amount of money in the future. As other people have pointed out, the price that Toyota (or whoever) sells the warranties at must make them money; the total income for warranties must be less than their costs in warranty repairs. However, as you can find out by reading stories on this board, it is also true that warranties turn out to be a "smart buy" for some people.

Basically, it comes down to what kind of a person you are. If you're the type of person that wants to play the statistics but take the chance that you might have an expensive repair to make down the road, you'll probably come out ahead in the long term (unless you're very unlucky). However, a lot of people would rather "play it safe" and pay a medium amount of money now to avoid having to pay a large amount of money later.

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07-12-2007, 09:55 AM	#21
Betelgeuse Senior Member Join Date: Oct 2005 Location: Northampton, MA, USA Posts: 1,327 My Car: 2005 Prius Package: #3 Nominated 0 Times in 0 Posts TOTM Awards: 0 Friends: 0	Extended warranties are insurance. You're paying some small (or medium) amount of money now to guard against having to pay some large amount of money in the future. As other people have pointed out, the price that Toyota (or whoever) sells the warranties at must make them money; the total income for warranties must be less than their costs in warranty repairs. However, as you can find out by reading stories on this board, it is also true that warranties turn out to be a "smart buy" for some people. Basically, it comes down to what kind of a person you are. If you're the type of person that wants to play the statistics but take the chance that you might have an expensive repair to make down the road, you'll probably come out ahead in the long term (unless you're very unlucky). However, a lot of people would rather "play it safe" and pay a medium amount of money now to avoid having to pay a large amount of money later.