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Extended warranty or cash?

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  • Extended warranty or cash?

    Hey guys, I've got a bit of a dilemma, looking to get some financial experts' advice here. We bought a Chevy Traverse last year, and apparently Chevy fudged their MPG numbers on the window sticker (not that that really had any bearing on us buying a large SUV to tote the kids around in, but I digress). It was bad enough that their now offering anyone who bought it an incentive: you can either choose $750 Visa debit card (essentially as good as cash), or you can opt for a free Platinum Extended Warranty for 4 years/60,000 miles. The warranty, as I understand it, would cover most any repair work that needs done, excepting the stuff that you'd expect to replace over the course of a vehicle's lifetime (brakes, oil, belts, etc.)

     

    So, the question is, take the money or the warranty? The way I see it, I'm essentially paying $750 for the warranty, since I am giving up that money to get it, and I know the general rule is to never buy these things. In addition, I know these warranties are timed out to not even be useful; what are the odds of your engine or transmission needing big repairs before 60,000 miles? I'm definitely leaning toward taking the gift card, but was wondering if anyone else had any experience or opinion on the matter.

  • #2
    I would take the money. Odds are you will blow through 60k miles without an issue if you havent already had something.

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    • #3
      Take the money. If you want a win-win, save it in your emergency fund for car repairs.
      Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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      • #4
        You can buy extended warranties from a variety of third parties.  Just figure out how much they sell them for your vehicle and then take the more valuable option.   You probably have to discount the price of warranty slightly, since all insurance is going to provide you less value than what you pay.  So if the extended warranty costs $800, then $750 cash is probably better.  But if the warranty costs $1500, then that's probably the better deal.

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        • #5
          Sounds like you guys all are thinking the same as me. Thanks for the advice, looks like I'm taking the money!

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