Extended warranty

[Ozzie Osmond]

With my car approaching 3 years old Mr Porsche has asked whether I want to extend the warranty. In round numbers the cost will be £1,500 for 2 years.

I tend to buy good cars and keep them for quite a while. So on this basis if I keep extending for the next 7 years (to 10 years old) my additional warranty cost would be more than £5,000 - which is 10% of the original cost of the car.

Sounds a bit steep! £5k in a jar in the kitchen looks a better bet to me.

[sidicks]

Ozzie Osmond said:

With my car approaching 3 years old Mr Porsche has asked whether I want to extend the warranty. In round numbers the cost will be £1,500 for 2 years.

I tend to buy good cars and keep them for quite a while. So on this basis if I keep extending for the next 7 years (to 10 years old) my additional warranty cost would be more than £5,000 - which is 10% of the original cost of the car.

Sounds a bit steep! £5k in a jar in the kitchen looks a better bet to me.

The usual comments apply:

1. The cost of the insurance (warranty) will most likely exceed the actual cost of claims over the period

2. Having said that, one claim could, if you were really unlucky, eat up a fair chunk of your £5,000 budget

3. Of course if you want to modify your car in any way, the warranty route is not an option.

My personal view is that the warranty is worth having for peace of mind - I had a Porsche warranty on my 997 for the 8 years I owned it, and was able to sell it with 18 months' cover remaining, which was very attractive for the (private) purchaser.

Looking back, with the benefit of hindsight, to determine whether the cost of the warranty was more or less than the cost of warranty repairs to justify the decision (or not) is not beneficial in my view.

[mdianuk]

It is hard to put a value on what additional interest your car will have come sell it as a result of an existing warranty, however, if that doesn't factor in your mind at all, then typically putting the money away will leave you in a financially better position. As for me, I'd pay the warranty, at ~£60/month, that would be acceptable for peace of mind.

[Ozzie Osmond]

Interesting comments.

As regards the "attractive to buyers" point I checked the terms again. It seems you can buy the warranty at any time up to the sooner of 10 years or 125,000 miles. The car just has to pass a full inspection at OPC (cost £216) and then you can buy the warranty at £700 for one year or £1,400 for 2 years. In other words, the warranty doesn't have to be continuous from new.

I guess the risk is how many things the OPC finds which "need fixing by us before you qualify to buy the warranty"!

[sidicks]

Ozzie Osmond said:

Interesting comments.

As regards the "attractive to buyers" point I checked the terms again. It seems you can buy the warranty at any time up to the sooner of 10 years or 125,000 miles. The car just has to pass a full inspection at OPC (cost £216) and then you can buy the warranty at £700 for one year or £1,400 for 2 years. In other words, the warranty doesn't have to be continuous from new.

To be accurate, I think a car can have a warranty up to 10 years of age, meaning that you can add a 2-year warranty on an 8-year old car, but only a 1-year warranty on a 9-year old car etc.

Ozzie Osmond said:

I guess the risk is how many things the OPC finds which "need fixing by us before you qualify to buy the warranty"!

Hence a car already with a warranty is attractive!!

[Ozzie Osmond]

sidicks said:

To be accurate, I think a car can have a warranty up to 10 years of age, meaning that you can add a 2-year warranty on an 8-year old car, but only a 1-year warranty on a 9-year old car etc.

Correct. My "10 years" was shorthand for the web but the £5,000 figure is correctly calculated.

sidicks said:

how many things the OPC finds which "need fixing by us before you qualify to buy the warranty"! Hence a car already with a warranty is attractive!!

Agreed, although as a seller you'd want to be sure you were recovering value for your significant investment. Where it falls down for me is that if I want to extend the warranty again in 2 years time the car has to go back through the "things that need fixing by OPC before you qualify to buy the warranty" process all over again.

It's interesting to weigh the pro's and con's though!

[Trotmant]

mdianuk said:

It is hard to put a value on what additional interest your car will have come sell it as a result of an existing warranty, however, if that doesn't factor in your mind at all, then typically putting the money away will leave you in a financially better position. As for me, I'd pay the warranty, at ~£60/month, that would be acceptable for peace of mind.

Can you actually pay it monthly or are you just expressing it that way...and if the former, can you off the bat after 2-3years sign an agreement for 7-8years cover on a new car? Or is the max 2years at a time before you need an inspection..