Extended warranties are cash cows for the dealer and the company and everybody else except for the buyer
Why is it that people think the dealer makes so much on the warranty? Is it because some try to sell a $3K warranty for $12K? I have never heard of that until the post above but I also think some people's math is off. Is the $12K is if you financed it along with the car and is not any worse than paying $52K for a $30K car because of interest? I got lost in the grammar and spelling so apologies. So really the first number is $5K where
I would still say is too much.
How much of the price of the warranty goes to the dealership? You must know since you said they are a cash cow. Self-financed extended warranties are extremely rare so nearly all dealers sell one backed by a third party or the manufacturer and therefore a normal dealer will earn around 6% of the price of the warranty, just like the margin on selling the car. Wow what thieves!
What company are you referring to that is separate from the dealer? If you mean the manufacturer, they get nothing at all from the sale of a warranty unless they are the ones offering it. Either way the dealer isn't making big bucks unless they heavily inflate the price ... which is not common in my experience. Yes, the warranty company makes money on playing the odds but the dealer makes a reasonable "fee"
once then benefits from getting the work into the shop as well. I feel like some people think the dealer takes the price of the warranty and puts it in the bank in a big pile with everyone else's money and hopes to not pay for repairs but that is simply not true. Aftermarket warranties work more like car insurance than factory warranty. Extended warranty would not pay for a cracked screen so she was wrong there.
Here are typical prices for the most common repairs:
A/C compressor $1700
Transmission $9K
Thermostat $1200
Turbocharger $2700
Oil leak repair $1200-5000
Radio $1700
Buying during Covid was a really bad choice for most because there was no inventory and everyone was racing to buy up all the cars. We got down to 11 new vehicles when we generally keep 175-200.
There's a phenomenon where men like to brag about how poorly they've been treated yet some have had no issues whatsoever. Weird.
There isn't many things I hate more than car or truck shopping. Some of the dealers are now charging up to $800.00, non-refundable, just to test drive one of their vehicles. My wife's cousin had that happen to him at a Kansas City Toyota dealership. $800 to test drive a new Toyota, then you had to pick from whatever they have in stock on the lot. If you decide not to buy you are out the $800. He told them what to do with their dealership. I've been looking for a new truck for months and dealing with almost any dealership in this area has been a PITA!
Wow! What a racket!! I'd like to see the fine print on that as it sounds highly illegal.
Balance the desire and need with availability and go drive one. The next part is easy.
Email every dealership within 200 miles (I'm near a major metropolitan area) and get their out the door cash price. Someone wants your business.
Pay outright or use your own financing and bring a check. Bring said check to the finance meeting and place it on the desk.
They have to ask, but you don't have to say yes.
Yes, all this. It really is this simple and without all the male drama spoken of in other posts. I will add that in general if you stay in the same area and your salesperson works at a decent enough place that he stays with them, you can start with him the next go 'round.