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#2 ·
The markup on extended warranties/vehicle protection plans is typically several hundred percent over what the dealer pays for those plans and over what the expected payout in claims will be. Even if you can find someone to sell you those plans at a steep discount, there still will be a very large markup/profit for the seller.

A dealer can sell a customer a car for minimal profit or even a slight loss, but, if that dealer can convince the customer to buy one or more high profit add-ons, such as an extended warranty, a pre-paid maintenance plan, a wheel and tire protection plan, etc., that dealer can turn the deal into one of its biggest profit deals.

If, instead of buying the protection plan, you put its cost into some form of savings designated specifically for unexpected car expenses, you are almost guaranteed to end up way ahead. And, over the course of ownership of 4 or 5 cars, you are almost guaranteed to end up thousands of dollars ahead.
 
#3 ·
There isn't a good way to answer if it is worth it.

It's up to you to negotiate the best price they will give you. Then it's like an insurance policy.

If you want to spend $3000 on a repair of the infotainment system, go for it. If you have a warranty for $2200 and have the infotainment system replaced, you will have saved $800.

I declined any added warranty but will purchase one further down the road. I have 3 years from Toyota, no need to spend the extra couple grand today for the future. Lets say I have the car 4 years and no trouble, then the warranty was a waste.

This is my first Toyota so I don't really know what the 10 year plan is. If it is a Toyota thing, it's probably better than an aftermarket warranty.

I don't really want to advocate for the Channel, however the YouTube Channel has a video talking about how much the markup is on a warranty..... I think the example was a consumer was charged 5 or 6-thousand for a warranty that cost the dealership less than $2 grand (they estimated). Or something like that, the details are fuzzy and that channel is a bit over-dramatized.
It's YAA or maybe YourAutoAdvocate.
They have neat topics but you have to look past the added drama.
 
Discussion starter · #5 ·
lesz said:
The markup on extended warranties/vehicle protection plans is typically several hundred percent over what the dealer pays for those plans and over what the expected payout in claims will be. Even if you can find someone to sell you those plans at a steep discount, there still will be a very large markup/profit for the seller.

A dealer can sell a customer a car for minimal profit or even a slight loss, but, if that dealer can convince the customer to buy one or more high profit add-ons, such as an extended warranty, a pre-paid maintenance plan, a wheel and tire protection plan, etc., that dealer can turn the deal into one of its biggest profit deals.

If, instead of buying the protection plan, you put its cost into some form of savings designated specifically for unexpected car expenses, you are almost guaranteed to end up way ahead. And, over the course of ownership of 4 or 5 cars, you are almost guaranteed to end up thousands of dollars ahead.
Click to expand...
Wow, brilliant idea of investing the money and keeping it safe to use later if needed. I really like that idea. I temporarily paid for the platinum plan with the broken down cost of $30 / month for 7 yrs. which, I guess could be worse. I usually do not gamble on possible break downs and usually do not pay for things on an "if basis". your idea is more inline with how I operate. Thank you! I have 60 days to make a decision and still get 100% refund.
 
#6 ·
always-hike-up said:
Wow, brilliant idea of investing the money and keeping it safe to use later if needed. I really like that idea. I temporarily paid for the platinum plan with the broken down cost of $30 / month for 7 yrs. which, I guess could be worse. I usually do not gamble on possible break downs and usually do not pay for things on an "if basis". your idea is more inline with how I operate. Thank you! I have 60 days to make a decision and still get 100% refund.
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A number of years ago, I was involved with the business of brokering car sales. When I saw how large the profit margins were for extended warranties (and other add-ons that dealers sell), I was shocked, and, in good conscience, I had to advise my customers not to buy them. It was also amazing just how gleeful dealers were when they were able to convince car buyers to buy extended warranties and other add-ons.

Yes, there is a chance that, if you buy an extended warranty, you will recover more than its cost in payouts for covered repairs, but the chance of that happening is quite small. Further, as I said in my earlier post, if you do not buy extended warranties for your next 4 or 5 car purchases, you are almost guaranteed to be thousands of dollars ahead.
 
#7 ·
I did buy the warranty. I managed to get a bit of a discount on it. i never bought one before, last car was a 2008 and not even a usb port on it. But my Rav has so much in it, I decided on getting the warranty. I also keep my cars a long time. If you get new cars every 3-5yrs I wouldn’t bother with one.
 
#9 ·
always-hike-up said:
Wow, brilliant idea of investing the money and keeping it safe to use later if needed. I really like that idea. I temporarily paid for the platinum plan with the broken down cost of $30 / month for 7 yrs. which, I guess could be worse. I usually do not gamble on possible break downs and usually do not pay for things on an "if basis". your idea is more inline with how I operate. Thank you! I have 60 days to make a decision and still get 100% refund.
Click to expand...
If you are that disciplined in saving money then that may be a good approach but keep in mind you'll have to pay for ALL repairs. It is very expensive to service a car these days. If an AC condenser or infotainment system goes out, you will get back the cost of the extended warranty and then some with 1 repair. In addition, you will not have to pay for any additional repairs after that which may be significant. If you go the savings route, you'll pay for all of those repairs.

In addition, the better extended warranties will provide you with a car rental while your car is in the shop which is another expense to consider. Typically, they can be cancelled at any time and you will get the pro-rated balance back. Some also are transferrable if you sell the car which adds to the resale value.

So my recommendation would be that if you are going to keep the car long term (greater than 5 yrs) and if you can get a good deal on the warranty ($2k or less) I think it would be worth consideration.
 
#10 ·
NoMoreDomestic said:
There isn't a good way to answer if it is worth it.
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I agree. I recently bought my 2022 RAV4 XLE Premium hybrid with the most bells and whistles I’ve ever had on a car. So many electronic systems and motors it’s kind of scary thinking of all the things that could go wrong if you intend to keep your vehicle a long time. Most people will say an extended warranty is not worth it because Toyota is so reliable. If you look at it like insurance where you don’t expect to make money but as protection against an unknown future and as peace of mind it can be worth it, IF you can buy it at the right price. I was offered the Toyota Platinum, zero deductible 8 year/75,000 option for $2295.

On this forum I learned they can be purchased much cheaper from certain dealers. I am about to purchase the same warranty with coverage for 10 years/100,000 miles for $1365. I could also choose the 8 year option my dealer offered for $765. That’s nearly a third of the cost. I can also purchase an extended Toyota maintenance plan that extends the 2 year/25,000 Toyota Care plan to 5 years/55,000 miles for about $550.

So for me, yes, I think it’s worth it, but there’s no uniform answer to the question.
 
#11 ·
Bernie707 said:
I agree. I recently bought my 2022 RAV4 XLE Premium hybrid with the most bells and whistles I’ve ever had on a car. So many electronic systems and motors it’s kind of scary thinking of all the things that could go wrong if you intend to keep your vehicle a long time. Most people will say an extended warranty is not worth it because Toyota is so reliable. If you look at it like insurance where you don’t expect to make money but as protection against an unknown future and as peace of mind it can be worth it, IF you can buy it at the right price. I was offered the Toyota Platinum, zero deductible 8 year/75,000 option for $2295.

On this forum I learned they can be purchased much cheaper from certain dealers. I am about to purchase the same warranty with coverage for 10 years/100,000 miles for $1365. I could also choose the 8 year option my dealer offered for $765. That’s nearly a third of the cost. I can also purchase an extended Toyota maintenance plan that extends the 2 year/25,000 Toyota Care plan to 5 years/55,000 miles for about $550.

So for me, yes, I think it’s worth it, but there’s no uniform answer to the question.
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I wish I could buy the discount warranty from the US. But I read that if you live in another country you can’t. Country of warranty has to match Country of residence.
 
#12 ·
Asking whether it is worth it to buy a VSC is like asking what your favorite flavor of ice cream is. Some people feel strongly for and against it. You have to decide what works best for you. My only advice would be if you decide to get it, DO NOT buy it at the dealer where you buy your vehicle, as there is a 99% chance they will overcharge you. If you decide to get it, the best deal going is through Wolverine Toyota. Don't worry, you don't have to live near the dealer in Michigan to buy the VSC. They sell the platinum level factory Toyota extended warranty with a zero deductible.


Jennifer Taylor
Wolverine Toyota
16490 Tecumseh, Dundee, MI 48131
734-242-3900
jtaylor@gowolverinetoyota.com
GoWolverineToyota.com
 
#13 · (Edited)
So for me, yes, I think it’s worth it, but there’s no uniform answer to the question.
Click to expand...
I too feel purchasing an extended warranty is worth it - especially if you purchase one at a substantial discount. In my case, the primary factor is peace of mind if something goes wrong. There is another benefit I've found with an extended warranty that hasn't been mentioned above. When you get ready to sell your car, a private sale is MUCH easier with a transferable extended warranty. And you can ask more for your car. Potential buyers like the safety net an extended warranty provides - it's definitely a differentiator (particularly since it's a genuine Toyota Platinum warranty with zero deductible that will be honored by any Toyota dealer in the U.S. and Canada). The extended warranty goes a LONG way toward easing potential buyer's concerns about buying a used car from a complete stranger.

If you're the type who likes to trade-in your cars, consider this. Dealers aren't going to give you any extra for the extended warranty since the warranty is only transferable on private sales. If you sell privately, you'll also have substantially more money in your pocket than a dealer trade-in. In my experience, this difference alone offsets the entire cost of the extended warranty.

I have purchased my Toyota Platinum Warranty's from Wolverine Toyota (Jennifer) located in Michigan. I have no association with Wolverine.
 
#14 ·
Bernie707 said:
I agree. I recently bought my 2022 RAV4 XLE Premium hybrid with the most bells and whistles I’ve ever had on a car. So many electronic systems and motors it’s kind of scary thinking of all the things that could go wrong if you intend to keep your vehicle a long time. Most people will say an extended warranty is not worth it because Toyota is so reliable. If you look at it like insurance where you don’t expect to make money but as protection against an unknown future and as peace of mind it can be worth it, IF you can buy it at the right price. I was offered the Toyota Platinum, zero deductible 8 year/75,000 option for $2295.

On this forum I learned they can be purchased much cheaper from certain dealers. I am about to purchase the same warranty with coverage for 10 years/100,000 miles for $1365. I could also choose the 8 year option my dealer offered for $765. That’s nearly a third of the cost. I can also purchase an extended Toyota maintenance plan that extends the 2 year/25,000 Toyota Care plan to 5 years/55,000 miles for about $550.

So for me, yes, I think it’s worth it, but there’s no uniform answer to the question.
Click to expand...
My plan is to shop around when I get a bit further down the road, but before the vehicle would require an inspection to cover it.
I chuckled to myself when the finance dude assume me I'd never find it for the cost he offered it to me.
I don't look like I am 25 years old, but I guess they have to assume every buyer believes what they are being told.
 
#15 · (Edited)
My thoughts on buying a Toyota “Extended Warranty” for your Toyota Rav4 hybrid



  • The so-called Extended Warranty is really a form of Vehicle Service Agreement (VSA). You are paying in advance of receiving any service.
  • Vehicle Service Agreements | Toyota Financial will lead you to the sales brochure. But the contract is the controlling document and that is only sent to you after you buy. Dealers generally have a book available in the service waiting area which contains the warranty/VSA documents.
  • An Extended Warranty is only as good as the ethics and finances of the company that is backing it. You want someone there to pay the bill when you need the service done. So, if you are going to buy an Extended Warranty, buy from a strongly financed company like Toyota Financial.
  • The VSA is not like the bumper to bumper warranty you get when you buy a new car. It has limits and exclusions. Many of those exclusions are very very significant. Read the contract, it is the only binding document. The only parts covered are the ones listed and Toyota gets to define what the terms mean even in the case of the new car warranty. For example, the main cable that provides power from the motor generator to the rear drive motor that is reported by many to corrode if the car is driven in areas where they use salt on the roads is not covered for even the new car warranty nor is it covered by the best Platinum VSA (as of this writing) and it is a $5k to $7k cost to replace. Search Cablegate on 4.5 RAV4 Hybrid (except Prime).
  • There are varying VSAs available from Toyota. The one most often cited is the Toyota Extra Care Platinum zero deductible. The Platinum comes in many variations of deductible, years and miles.
  • The Platinum provides 24/7 roadside assistance and reimbursements for covered vehicle rentals, meals, and lodging. Restrictions apply. The Platinum provides 5 days of car rental and 5 days of lodging only if you are more than 150 miles from home but there are $ limits. Mighty short time and cost limits.
  • If you have AAA coverage now, you could cancel that and apply the cost to the VSA. Consider that AAA no longer prints travel books by state and may not even print maps. Or do you have roadside assistance coverage through your car insurance company? That could be a savings.
  • The Platinum is priced to the dealer so the financial side of Toyota makes money at the price the company sells the policy to the dealer. The price the dealer intends to charge is guaranteed to bring the dealer an immediate profit. Salesperson too. So that gives you an idea of what Toyota thinks they will have to spend over the lifetime of the VSA.
  • However consider that labor rates and parts cost increase with inflation so you will have to pay more in the future than today is you need service outside a VSA or warranty.
  • You can buy the VSA any time before your new car warranty of 3 years and 36k miles runs out. So why buy when you get the car. It is priced the same no matter when you buy.
  • There are salespeople who specialize in selling VSAs at a very significant discount. The products they sell are the same as the ones all Toyota dealers sell. Search for contact info for Troy or Jennifer on 4.5 RAV4 Hybrid (except Prime). And those salespeople and dealers make money so imagine the profit on the normal dealer’s price.
  • The Platinum VSA is transferable one time to a private party that buys your car, but not if you trade in your car or sell it to a dealer.
  • If you have already bought a Toyota VSA and not used it you can cancel the contract within 30 days for a fee of $50.
  • Toyota dealers also sell various advance payment plans for routine service and for emergency service.
  • I insure for the things I can’t cover in the normal course. My house, personal liability, vehicle liability, flood, etc. I don’t insure against things I could afford to pay for myself. Your situation may be different.
  • As I write this, my car is in it’s out of warranty. I didn’t buy a VSA nor any service plan.
  • Buying a VSA is like visiting a casino. A very few will come out ahead, a very few will break even, most will lose and the house always wins.


Troy Dietrich

Factory Discount Warranty

Toyota & Ford of Greenfield

Fathers & Sons Audi & Volkswagen

Tel. 413-772-0989

Fax. 413-773-0196

Web. http://www.FD-Warranty.com



Jennifer Taylor
Wolverine Toyota
16490 Tecumseh, Dundee, MI 48131
Tel: 734-242-3900
jtaylor@gowolverinetoyota.com
GoWolverineToyota.com



There is also Toyota Care Plus described at What is ToyotaCare Plus? | Toyota Owners. This a prepaid maintenance plan. You can buy it if you are within 31k miles or 37 months and it extends your prepaid services to 4 years or 45k miles whichever is first and gives you roadside assistance and towing. There are limits and exclusions so again read the contract. Mostly oil changes and tire rotations. Things you could do yourself. Though there is also multi-point inspections. But no repairs.



I prefer to pay as I need the service. Who knows if I will still have the same car by then.
 
#16 ·
Another factor to add in to one’s calculations is price inflation. What will repairs that cost, say $800 now cost 7 years from now? I assume they will cost substantially more. At current standard maintenance costs per the users manual, they would cost a little less than what I am paying for a 5 year/ 55,000 miles extended Toyota care (factoring in the free, first two year/25,000 miles standard service). My dealer charges $109, I believe, for the 10,000 mile service. Five years ago I think it was $69. I’m in a position where I can afford Years 2-5 at current prices and I don’t want to be pissed off 3-4 years from now when they charge $175 for each 10k service. This way, I won’t have to get depressed for the next five years- then, if I’m still alive I’ll be too old to give a dang. 😀 My 2 cents.
 
#17 ·
always-hike-up said:
Is this just another way for the dealership to make money or is it worth it for 10 yrs/ 100K miles? Any thoughts?
Click to expand...

I wouldn't get it. Normally the companies that sell these policies sell it very low to dealer and then dealer sell it 3 to 5 times more than what they paid. There are many clauses in them. So and they will give you the round about when filing a claim. If they diagnose the wrong thing and fix it and then it's not what it is wrong then you will have to pay for it yourself. I heard stories of dealers also not submitting the application and then when you call the company they tell you that they never got any paperwork and even after going back and forth between the company since the paperwork wasn't submitted within two weeks of the purchase they denied the claim. You are better off putting 1500 into a vehicle saving account and add 100 dollars every month. When I purchased my 2020 Rav4 XLE Premium I turned down every plans the dealership was selling. The financial guy was really angry but I left happy.
 
#18 ·
Only 45% of people collect anything on a extended warranty, and of those 45% only 25% or about 12% of total will collect as much as they paid. Add in that you are buying a Toyota, your chances of collecting as much as you spend is probably less than 5%. Therefore a extended warranty on a Toyota is a poor investment.
 
#19 ·
always-hike-up said:
Is this just another way for the dealership to make money or is it worth it for 10 yrs/ 100K miles? Any thoughts?
Click to expand...
I bought the warranty. It’s one of those things you never want to use, but glad you had it if something happens. I would also say it depends on the purpose of your vehicle. If you plan to buy a new car in 3 years, you have the manufacturer warranty. If you plan to keep it longer, perhaps get the extended warranty. I did have a car that I used the extended warranty a bunch. I got a new A/C, transmission, throttle body, coils and a mass flow sensor. That was extreme, but I didn’t pay a dime.
 
#20 ·
Roy Goble said:
Therefore a extended warranty on a Toyota is a poor investment.
Click to expand...
Roy Goble said:
Therefore a extended warranty on a Toyota is a poor investment.
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That's true, if you look at any insurance or warranty as an INVESTMENT. But an investment can only be something that one expects to earn an increase on over time. A vehicle is not an investment, it's a depreciating asset. I'm guessing less than 45% - to use your estimate for a vehicle warranty, use their homeowners' insurance and that less than 5% of homeowners will make more on their insurance expense over their lifetime of home ownership. It comes down to a personal decision based on many factors it can't be reduced to blanket "yes or no".
 
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