New (Used) Car! Any recommendations on an after-market warranty company?

short+sassy · February 2014

Hey All--

I just had to post an "I'm excited" post. I've been wanting a MINI Cooper convertible for a few years. But I was being a good MM girl and waiting until my current car was paid off, then saving for a nice down payment, and maybe buying my dream car later this year.

Then life happens and plans change. My car was totaled in an accident about two weeks ago. The good news is I'm fine, they were fine...totally their fault, no question. The other good news is the car I bought 4.5 years ago for below wholesale blue book at $7300...was valued by my insurance at $8900. I literally made a profit on the car, plus drove it for over 4 years for free. Awesome!

So I used some of that money to buy the cute little MINI convertible I've been wanting. And bought it used to get a better value. My insurance even went down $20 a month.

Unfortunately, I found the car through Auto Trader and in order to get the special Auto Trader price (which was very low), I HAD to let the dealership do the finance deal. So you know they went with whoever was giving THEM the biggest cut...not who had the best deal for me. I don't even want to tell you MM folks what my interest rate is. You'd all be clutching your pearls, lol. But that is what an auto refinance with my own bank a couple months down the road is for!

The car is a 2010 with 49K miles, so it is out of its original warranty. Does any one have an after-market warranty company they would recommend? It would give me peace of mind to buy one of those. Thanks!

Xstatic3333 · February 2014

Congrats on the car! And so glad you were okay. What a deal!

H has an after-market warranty, but honestly I can't recommend his company. He has made his money back-his car's model year is prone to issues-but there has also been a lot of sneaky things that were supposed to be covered and aren't. For example, he was told the AC unit was covered when he got the warranty since that was one of the anticipated trouble sources. When it needed replacing, it turned out the Freon was not covered, and was the most expensive part. (Yes, we're dumb about cars).

In retrospect, the next time we buy used I'll probably skip the warranty and just funnel extra $ to our car repair fund. But, at the time we bought it money was extremely tight and we were less able to handle the unexpected than we are now.

daisy662 · February 2014

I would recommend putting the money you would use to purchase the warranty into paying off your vehicle. Then the money you would have used monthly as your car payment should be saved for repairs. I'm not a believer in car payments. We don't buy anything we can't afford.

hoffse · February 2014

I would plan on paying for repairs out of pocket. I you can't afford to drop $1000 on a major repair at any give moment, put money aside for that each month and just hang on to it until you need it. After market warranties historically have a ton of loopholes, and you have to read the fine print to know exactly what you're getting. A lot of people spend a small fortune on them and then find that they can't get anything out of that warranty when they need it. At 49K miles you really ought to get a few more years out of your car before a major repair is needed.

I don't think financing a car is inherently a bad thing, and it certainly doesn't mean that you can't afford your vehicle. I know plenty of people who finance so that they don't have to sell their investments (which tend to be appreciating assets) to buy cars cash (which tend to be depreciating assets). H and I financed for this very reason. We had enough in investments to cover our car purchase, but they've been doing pretty well recently, and adding a car payment to our budget was just NBD. We got such a low interest rate that it was basically free money - so we financed virtually the entire thing. We can absolutely afford the car, and we could pay it off tomorrow if we had to. But keeping the bulk of our money in the market is a better choice for us.

The key to good financing is low interest rates. If you got taken for a ride on the interest rates, try to re-fi that thing as soon as possible. We bought in Jan and got a 0.99% interest rate on our car. That's below the rate of inflation and WAY below the average rate of return on our investments. If you are able to re-fi soon, you might find that what you are saving on interest is a good amount of money to put aside for repairs each month (say $50-$100) instead of buying the warranty. That would have you "spending" virtually the same thing each month on your car, but it's a much more efficient use of your cash.

short+sassy · February 2014

Thanks for the input everyone. I've always had after market warranties, but hadn't been happy with the companies I've used in the past (sigh).

It actually didn't occur to me to just forego the warranty and keep the money I would have spent for that in a special e-fund. That really might be the better option. I just always hate the thought of suddenly having to pony up a ton of money for a big car repair...but then those after market warranties aren't cheap either!

The one time I had an after market warranty come in handy was when my A/C quit one month before the extended warranty expired. They replaced it, no questions and no problems, BUT they would only allow my mechanic to use a refurbished A/C instead of a new one. Which then broke again 13 months later. And, in the end, what I paid for the warranty was only about $200 less than what the mechanic charged for that repair anyway.

Yeeessss...I'm starting to see the light, lol.

It doesn't bother me to finance a car...especially since I know I can refinance to a more palatable interest rate in the near future. Plus, I already plan to pay the loan off in 3-4 years and hopefully drive this car for many years past that. Heck, I drove a Honda Civic for NINE years because it was still running great...and only sold it when the transmission start slipping and the repairs would be more than the car was worth.

New (Used) Car! Any recommendations on an after-market warranty company?

Re: New (Used) Car! Any recommendations on an after-market warranty company?

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