Smartest idea I've seen in a long time. However you can't spend the rest of the money -- you need to keep it in the fund. Think of it going towards your retirement, if not the next major car repair.

Self-insurance for calamities you can afford is always the smartest move. But you need to have the money saved up to meet the "afford" requirement, and, sadly, people in the US have a very poor savings rate.

 

Bear in mind the cost for the extended warranty is set by the manufacturer. They have done extensive durability testing on the product, frequently to the point of failure. So, they know statistically how likely they will have to pay out on the warranty. They set the price so they will never lose money on the extended warranty. You are betting against them and they have all the data.

 

Yep, that is it in a nutshell. "Just add the extended warranty to my payments 'cause I don't have any savings to pay for a repair". Like going with a zero deductible auto insurance policy - same logic.

 

That's the entire concept of all insurance, though. The question is how much is "peace of mind" worth to you? I could go (well theoretically, health ins is about to be come legally required in MA) without any health/auto/etc insurance at all too, on the assumption that I can't possibly win or they wouldn't insure me, but when you need it, and you're that one guy whose internal organs blow out or car gets crushed or whatever, you're pretty glad there's all those other people out there willing to pay to cover your costs, aren't you? I figured 4 years of "peace of mind" on the HDTVs was worth the 50 or 60 bucks or whatever it was. Especially as my parents are getting older, live out in the boonies, etc, etc. I've never done any other kind of extended warranty (and man I wish the constant stream of messages on my answering machine would stop already!! I swear I get 10 a week about how this is the last chance I have to get extended coverage! I'm just glad I pulled the battery from my home phone's handset and don't have to hear it ring, or answer it to be harassed that often!).

 

Yea thats my husband's philosophy...Cannot wait to see the sales spiel they give me Saturday when I go pick up my fully loaded TCH in gorgeous red!!!!!YIPEEEE!!!
Oh back to the warranty... I HATE talking to the 'business' manager. Already on the phone he gave me the price of remote start YIPES $700 and getting me the price of additional alarm....Do I really need that with the engine immoilizer????

 

Don't worry, the good thieves use a flat bed truck.

 

Sounds like you made a well though out decision that was right for you.

 

I keep all my cars 10+ years whenever possible.
I've always purchased an 7 year lowest mileage possible extended warrantee since I am not a high mileage driver.
Every Toyota Extended warrantee I've owned has paid for itself. Usually several times over towards the end of the warrantee period.
A heater core is almost a thousand dollars these days. I won't guess what it costs to fix a moonroof, smart entry, NAV, CD Player. Those are all big buck items.
Cough up the $700 and get a warrantee but the dealer will ask more than that most likely. Just tell them you can get a genuine Toyota warrantee on the Internet for $700 and most likely they will come close to matching it if you stick to your guns. If they don't budge give Toyota of Greenfield (or one of the other warrantee sellers ... check the messages on this board for choices). You don't need to purchase the warrantee at time of sale.
Also there are other perks that come with a warrantee. Like rental car reimbursement if your dealer does not offer loaners. Are there still dealers that don't offer loaners for overnight repairs??

 

I'm sure you are sincere, but it is poor logic to use anecdotal evidence to prove a point. Do you honestly think these extended warranties are priced to lose money? If you were the manufacturer would you look at your reams of service data and set a price that guaranteed you to pay out more than you charged? Google "extended warranty profitability" and look at the facts.

http://www.businessweek.com/magazine...3110_mz020.htm

 

If I followed your logic I (personally) would be thousands of dollars poorer than I am today.
I agree, it's sort of a crapshoot but so far I'm so far ahead of the game a I just "let it roll" and get the warrantee.
Obviously if I did not keep my cars for more than 7 years I would rethink my logic. But I hold on to my cars (generally) and that seventh year in the extended warrantee has been a godsend for me every time. Not just once but at least the last four Toyota's I've held on to.
YMMV.
It doesn't take much for ANYTHING to break on even the best cars. And at $700 for the policy (which is FAR below MSRP) I think it's fairly cheap insurance at that and Toyota may not be making much at that price point.