Re: Service contract

[Eliot Lim <eliot@u.washington.edu>]

On Wed, 8 Nov 1995, EREC - DUNCAN, CAMERON wrote:

> This is obviously a generic plan and pretty comprehensive. The $1603 splits 
> to about $535 annually--for failure of non-maint.related parts.

this is really way too high.  the way insurance works is for everyone to
pool their money.  i can't imagine that every owner that buys a policy
is going to make $535 in claims every year.

extended warranties are one of the biggest consumer ripoffs...

> Great idea. The dealer carries Warrantech's plan, but I don't know how they 
> get their cut from it. 

simple, they purchase it from warrantech for $160.30 (just a figure i
pulled out of a hat but not too far from the truth) and sell it to you
for $1603.  you should also make sure that the insurance company is
backed up.. i.e. a lot of these operations go belly up (because the
policy doesn't really cost that much) leaving you in the cold.

the insurance companies were grumbling at one time about how little
they were getting from this big scam.  geico decided to sell it
themselves and keep the huge profits, rather than let the car
dealers have it.

>They may claim they only offer it and stand to gain 
> nothing by it. When they presented it to me, I was told, by rights, I had to 
> accept it or reject it right then.

total BS

> However, they said I could review it 
> until "Monday or Tuesday" at the latest. Somehow this does not seem right to 
> me.

they can sell this stuff to you anytime.

the biggest challenge in buying extended warranties is in figuring out
how much it really costs the dealer.

i ended up paying $800 for mine, but when i was twisting their arm for
the contract i was offering something like $100 to see how low they
could go.. also, the best thing anybody can do is to tie in the
contract into the entire car purchase.  don't buy the car first
followed by the contract.  squeeze them at the same time that you are
buying the car.  that way they will have the incentive to offer the
contract at a much more reasonable price, otherwise they lose the
entire sale, which they are most reluctant to do.


eliot