Extended Warranty - worth it? Items to inspec upon pick-up?

[EnlightenedOne]

I don't buy warranties on anything. Electronics, appliances, cars... EXCEPT, I bought one on my 1. I read too many stories online about multiple expensive repairs. To me the warranty is worth it since I was able to finance it into the car payment. For about $50 a month I can be sure that while I am making payments on the car I will have zero unexpected costs if something goes wrong.

To me this makes more sense than saving the money to cover repairs. If 2 years from now the car needs a $3000 repair I will have only saved $1200 using the same $50 a month plan. I would still have to come up with another $1800 out of pocket.

I see the argument about what happens if you never use it, then you are just out all of the money, but in this case I just treat it like insurance. I've spent untold thousands of dollars on insurance and haven't gotten a penny of that money back either. To me the risk on BMW justifies the warranty. If this was a Honda I wouldn't even ask how much the warranty was before declining it... but BMW reliability is not on par with Honda.

[Walt White Coupe]

I wonder why anyone would buy these cars, if they are so unreliable. Isn't it something about German engineering? If they actually were so unreliable, I sure wouldn't buy one. I'm on my third.

[Mach1er]

Originally Posted by EnlightenedOne

I don't buy warranties on anything. Electronics, appliances, cars... EXCEPT, I bought one on my 1. I read too many stories online about multiple expensive repairs. To me the warranty is worth it since I was able to finance it into the car payment. For about $50 a month I can be sure that while I am making payments on the car I will have zero unexpected costs if something goes wrong.

To me this makes more sense than saving the money to cover repairs. If 2 years from now the car needs a $3000 repair I will have only saved $1200 using the same $50 a month plan. I would still have to come up with another $1800 out of pocket.

I see the argument about what happens if you never use it, then you are just out all of the money, but in this case I just treat it like insurance. I've spent untold thousands of dollars on insurance and haven't gotten a penny of that money back either. To me the risk on BMW justifies the warranty. If this was a Honda I wouldn't even ask how much the warranty was before declining it... but BMW reliability is not on par with Honda.

Pretty much exactly why I bought an extended warranty. Peace of mind.

[dcaron9999]

The recent BMW reliability, especially on turbo cars (N54 and N55 engines) is not what is used to be. Engine bay and other areas are cramped, and harder to work on, more so on the 1-series. People still buy them because they drive great.

Another good reason to get the warranty - N54 + N55 based cars are harder to sell when they are out of warranty. They stay on the market for a longer time, and the depreciation is greater. At least, this is the case in my neck of the woods (Quebec, Canada).

[bimmerfile]

Originally Posted by Walt White Coupe

Here is something I posted on a Corvette forum a few years ago on this subject and it explains in detail why I never buy extended warranties.

xxxxxxxxxxxxxxxxxx

Extended warranties are for people who don't understand the real risk of equipment failure and the economics behind the warranties. I’ve never bought an extended warranty on anything I’ve ever bought. Why? Simply because they don’t make economic sense. An article in Consumer Reports that studied the statistics from reader surveys found that only one in five responders said they had a net savings with an extended warranty. For automobiles 2/3s of the people with extended warranties recovered less than the warranty cost. Most of the other 1/3 recovered what the warranty cost and a few recovered more. Not very good odds in my opinion.

As a mechanical engineer I know something about equipment failure scenarios. A new machine will have a higher than normal failure rate when new because of manufacturing and assembly errors that are inevitable. Sometimes called infant mortality. We don’t have to worry about those failures because that’s what the manufacturer’s warranty covers. So you have a free warranty that covers the car for 36,000 miles or 3 years and the power train for 100,000 miles or 5 years. After that time period almost all manufacturing and assembly errors will have been found and repaired and we then enter into the normal failure mode where the failure rate is very low. After a period of use the machine finally goes into the “worn out” failure mode where the failure rate once again begins to rise until the machine breaks. For an automobile the “worn out” failure mode rate begins to rise at around 100,000 miles. So the main reason that an “extended warranty” most often isn’t even used is because it covers the most reliable part of an automobiles life.

As a general rule, you should only insure for those losses that you can’t afford to cover yourself or for which there is an abnormally high and unpredictable risk factor. That’s why automobile insurance, health insurance, homeowners insurance make sense. Most people can’t afford to cover the potential catastrophic losses that these risks present. And the risk is always there. The risk doesn’t change over time. At any moment you may have a heart attack, a drunk driver runs into you, your home catches fire, etc. But automobile failures are not the same as discussed above. They are actually fairly predictable. High when new, low during the normal life and high again as they wear out. A number of people note that the C6 has a lot of costly electronics that can fail. All that I’ve noted above for mechanical failures also applies to electronics as well. In fact it is even truer for electronic failures.

So it really comes down to playing the odds. The people selling the extended warranties know what the risk is that they are taking. They are the house. They have all the statistics. If they are selling a policy for $1500 they know that the vast majority of owners will make claims that are well below that number and that’s how they make money. If you can afford a C6 (of course there are a lot of people out there making unwise financial decisions because they have to have one), you can afford to be the house and cover the potential costs of repairs.

If I needed that illusive “peace of mind” that people are looking for with extended warranties, I would put that money that you were going to spend for an extended warranty into a savings account and use that account to cover repairs. If you buy new, for the first three years I’d put $50 a month into that fund. After three years you’d have $1800 saved and I’d continue to fund that account as long as I had the car. Most likely when you are ready to sell the car, there will still be money in that account that you can use to cover your new car.

Bottom line, the best extended warranty is a savings account.

The same logic/argument could be used for any insurance plan (home insurance, car insurance, life insurance, extended health/dental plans, etc.)
They all make money for the providers, they all assume you will pay more than you will consume and, statistically, you'd be financially better off self-insuring.
Personally, I prefer to transfer the risk to a 3rd party and am willing (and able) to pay the premium.

[Walt White Coupe]

I guess you didn't read this part:

As a general rule, you should only insure for those losses that you can’t afford to cover yourself or for which there is an abnormally high and unpredictable risk factor. That’s why automobile insurance, health insurance, homeowners insurance make sense. Most people can’t afford to cover the potential catastrophic losses that these risks present. And the risk is always there. The risk doesn’t change over time. At any moment you may have a heart attack, a drunk driver runs into you, your home catches fire, etc. But automobile failures are not the same as discussed above.


Transfer the risk? No, you said I'll pay for repairs upfront even if they never occur. Most likely they will not happen but you paid for them anyway. 90% of what people worry about never happens. Remember Alfred E. Newman, "What me worry?"

[Fume]

Originally Posted by bimmerfile

The same logic/argument could be used for any insurance plan (home insurance, car insurance, life insurance, extended health/dental plans, etc.)
They all make money for the providers, they all assume you will pay more than you will consume and, statistically, you'd be financially better off self-insuring.
Personally, I prefer to transfer the risk to a 3rd party and am willing (and able) to pay the premium.

There are some differences. Having health insurance not only gets you coverage, but gives you access to lower cost of service since the health insurance companies negotiates deals with the hospitals. Costs for health care sky rockets if you don't have insurance since you don't have the same negotiating power as an insurance company.

Anyway, I think it's best to get insurance for things that have a low chance of occurring but if it occurred, the expense would be so high that I can't afford to cover it. To me that includes health insurance, driving insurance, and house insurance. Laptop insurance, probably not. Car insurance is somewhere in the middle.

[EnlightenedOne]

Right. I didn't prepay for the repairs in advance. I paid a much lower price which I am okay with losing completely vs. having to pay a lot more out of pocket should something go wrong. If I paid $3000 for a warranty and it ends up repairing $6000 worth of stuff I'm going to be way ahead of the "put the same money away in case you need it plan". I'm not familiar with what the BMW extended warranty covers but the one I bought from CarMax covers me up to 125,000 total miles on the car or until the middle of 2019 on a 2011 model year car.

[Walt White Coupe]

I guess I just like playing the odds in my favor. Over the long run I always win. And I'm in it for the long run. Car repairs are not something that are going to affect my way of life no matter how much they are. So self insurance makes sense to me.

[vertebra]

Originally Posted by Walt White Coupe

I guess I just like playing the odds in my favor. Over the long run I always win. And I'm in it for the long run. Car repairs are not something that are going to affect my way of life no matter how much they are. So self insurance makes sense to me.

You quoted a Consumer Reports survey that included all makes and model cars. They recently upgraded the 135i to "Average". Not sure how the odds are in your favor but I sincerely wish you the best of luck.




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[granracing]

Good points on both sides. I do agree that if one has a large amount of money allocated where they could take a large hit (say the engine goes), it becomes less of a risk.

[dcaron9999]

Facts:

• Replacement of two turbos on N54 engine (ealry 135i, 335i, etc) is $6000.
• A/C Evaporator replacement on N55 engine (newer cars) is $4000.

Both of the above issues are common. On my 2011 135i, BMW has released four iterations of the weak Evaporator module, which requires a complete disassembly of the dashboard (18 hours of labor).

Im an owner of a 135i with 30,000 Miles. For this specific car, nobody is going to convince me that saving money in a repair fund is a better idea than a base or extended warranty, for long term peace of mind, and to add value to the car when I eventually sell it.

[bimmerfile]

Originally Posted by Walt White Coupe

Transfer the risk? No, you said I'll pay for repairs upfront even if they never occur. Most likely they will not happen but you paid for them anyway. 90% of what people worry about never happens. Remember Alfred E. Newman, "What me worry?"

There is no right or wrong answer to this except to the individual making, what is essentially, an economic value decision (you may recall that from your ECO101 class back in the day).
The extent to which a good or service gives satisfaction is always personal.
Extended warranties are an option to a vehicle purchase, much like, say, the Nav system is.
Personally, I get more satisfaction of having an additional 3 years warranty ($1800), than a do a Nav system ($2000).
Similarly, because I enjoy performance and handling I'm willing to pay $45K for a 1er vs $25K for a Chevy Cruze.
Life is all about choices.
The financial ones you make should be based on what you value, not on anyone else's opinions.

[Walt White Coupe]

Their are opinions and there are facts. They are two different things. The facts are that the odds of an extended warranty paying for itself in repairs are low. And the corollary is that the odds that the insurance company will make a profit are high. The best conclusions and opinions are based on facts. I don't understand why, given the choice, a person wouldn't want the odds that a gambling house has over that of the odds of the gambler. And that's what it comes down to. But "worry and fear" sells over logic to the people that just don't get it.

[dcaron9999]

Originally Posted by Walt White Coupe

"worry and fear" sells over logic to the people that just don't get it.

Out of curiosity,how much mileage on your 135i? Are you planning to keep it beyond 50,000 Miles?

[granracing]

I need to re-read this as I don't fully understand how the turbocharger and wastegates interact. Also want to confirm with BMW, but it sounds like in some (many?) cases it would be covered:

The emissions warranty for the turbocharger wastegates has been extended to 8 years or 82,000 miles, whichever one occurs first, for a failure of a turbocharger caused by a defect in a turbocharger wastegate that does not otherwise fall within exclusion to coverage under the warranty. Any applicable TeileClearing or Diagcode requirements still apply.

The turbocharger wastegates’ 8 year/82,000 miles warranty supersedes any applicable coverage provided under the BMW Certified Pre-Owned program or any BMW Group Vehicle Service Contract in effect. This component’s warranty extension applies to the above-listed models only. It is applicable to eligible vehicles which are registered and operated in all 50 states. The existing warranty coverage for all other parts has not changed.

BMW is informing all eligible Settlement Class Members of their extended turbocharger wastegates warranty.

http://www.e90post.com/forums/showthread.php?t=729833

[dcaron9999]

Originally Posted by granracing

I need to re-read this as I don't fully understand how the turbocharger and wastegates interact. Also want to confirm with BMW, but it sounds like in some (many?) cases it would be covered:

The emissions warranty for the turbocharger wastegates has been extended to 8 years or 82,000 miles, whichever one occurs first, for a failure of a turbocharger caused by a defect in a turbocharger wastegate that does not otherwise fall within exclusion to coverage under the warranty. Any applicable TeileClearing or Diagcode requirements still apply.

The turbocharger wastegates’ 8 year/82,000 miles warranty supersedes any applicable coverage provided under the BMW Certified Pre-Owned program or any BMW Group Vehicle Service Contract in effect. This component’s warranty extension applies to the above-listed models only. It is applicable to eligible vehicles which are registered and operated in all 50 states. The existing warranty coverage for all other parts has not changed.

BMW is informing all eligible Settlement Class Members of their extended turbocharger wastegates warranty.

http://www.e90post.com/forums/showthread.php?t=729833

Only N54 turbos and HPFP are covered by this ...

[granracing]

But I'm talking about an '09 which is an N54 (correct me if I'm wrong here). In that case, the turbo is covered? Or just under certain circumstances? Based on what I can tell, N54 turbos and HPFP are the two bigger issues with the 135. If covered by BMW orig warranty, the extended seems to not be as attractive (let's assume it was a bit, okay Walt ).

[Walt White Coupe]

Originally Posted by dcaron9999

Out of curiosity,how much mileage on your 135i? Are you planning to keep it beyond 50,000 Miles?

It's got around 12,000 miles and not sure how long I'll keep it. It will surely be beyond the standard warranty. I have no plans to sell it anytime soon and I'm sure what you are getting at is that it will probably be a relatively low mileage car since I have two, I'm the only driver and I'm retired so don't have to drive it to work. But once a car gets over 20,000 miles or so any part that is suspect would have most likely failed and been replaced under warranty so I don't see over 50,000 miles as really relevant. With new cars even at 100,000 miles it should be reliable.

[dcaron9999]

Originally Posted by Walt White Coupe

It's got around 12,000 miles and not sure how long I'll keep it. It will surely be beyond the standard warranty. I have no plans to sell it anytime soon and I'm sure what you are getting at is that it will probably be a relatively low mileage car since I have two, I'm the only driver and I'm retired so don't have to drive it to work. But once a car gets over 20,000 miles or so any part that is suspect would have most likely failed and been replaced under warranty so I don't see over 50,000 miles as really relevant. With new cars even at 100,000 miles it should be reliable.

I now understand why you are not into extended warranties, as you are likely not going to reach the 50,000 Miles mark anytime soon. Let's assume that expensive parts start failing juast a little before that mark, will you keep the 135i past the base warranty, get rid of it, or reconsider getting an OEM extended warranty?

Im running on base warranty too at this point. So far (2 month of ownership), about $5000 worth of work has been done on my 2011 135i by my dealership. If the odds are against me, and this trend continues on this "new" car, I will have to choose between getting rid of the car, or getting an extended when Im close to the 50,000 Miles/4 year mark. No need to "waste" money now on an extended warranty.

That is my 2 cents logic ...

[dcaron9999]

Originally Posted by granracing

But I'm talking about an '09 which is an N54 (correct me if I'm wrong here). In that case, the turbo is covered? Or just under certain circumstances? Based on what I can tell, N54 turbos and HPFP are the two bigger issues with the 135. If covered by BMW orig warranty, the extended seems to not be as attractive (let's assume it was a bit, okay Walt ).

N55 engine was implemented on the 2011+ 135i's. I would say that turbos and High Pressure Fuel Pumps on the N54's are covered by these extended policies, and would tend to agress that the extended warranty on pre-2011 cars is probably not as attractive.

[Walt White Coupe]

Originally Posted by dcaron9999

I now understand why you are not into extended warranties, as you are likely not going to reach the 50,000 Miles mark anytime soon. Let's assume that expensive parts start failing juast a little before that mark, will you keep the 135i past the base warranty, get rid of it, or reconsider getting an OEM extended warranty?

Yes, I will keep it until I don't like the car or I feel it's time to sell before it loses too much value. I kept my 2001 325i for 10 years. It had a window regular go bad just out of warranty and the dealer and I split the difference for something like $125. That was the only failure in 10 years. (Actually I replaced a camshaft sensor myself for about $30) If this 135i breaks out of warranty, I'll just get it fixed. No big deal. Eventually, I may have to pay for an expensive repair but since I've never paid for an extended warranty in my life (approaching 70) and have never had an expensive repair on any of my cars just standard maintenance, I figure that's just the cost of doing business. And it may never happen. I like being my own insurance company because I dislike insurance companies and don't want to add to their profits if I don't need to.