I’ve gotten a lot of traffic by talking about the ins, and outs of extended vehicle warranties.
Pretty much the only extended warranties I endorse at this point, are first-party warranties. In this economy, there is just too much uncertainty with third-party providers. I don’t care about the credit ratings or reliability-ratings of an underwriter… because all it takes is for the warranty provider to throttle claims with fraudulent rejections of valid claims.
Being the last Pontiac man, my extended warranty of choice is the General Motors extended warranty, the General Motors Protection Plan, or GMPP. It’s actually not run by GM anymore, it’s administered by Ally, formerly GMAC.
A lot of people were concerned when GMAC was broken off into Ally that there would no longer be a strong cohesion between GM and Ally Financial regarding things like warranties and good financial terms on new cars. I suspect largely that hasn’t been an issue because the Treasury Department still owns a majority of both companies, effectively making them one joint investment (via TARPfail).
My GMPP was for 60 months and 75,000 miles on my G6, and I bought it at 34,000 miles. That is the most miles that are offered on a used car extended warranty from GM.
There are a couple of good times to buy extended warranties via GMPP, and it depends on what you want from your warranty. If you want the best bang for your buck, the best time to buy a GMPP is within the first 12,000 miles. That is when GMPPs are the cheapest. They get very expensive in the last 1500 to 2000 miles of your warranty.
You must purchase your GMPP warranty while your car is within its original bumper-to-bumper coverage. (There is one exception, and that is for used cars, I’ll explain in a bit). You can purchase a GMPP for a non-GM vehicle, but I only suggest doing this if your local dealer services both that brand and GM. That way, you have people that can work with Ally/GMPP and work with your car under one roof. GMPP can be a lot cheaper than other brand’s extended warranties.
Of course, if you buy within the first 12,000 miles, you wind up narrowing the amount of warranty you can purchase. 75,000 miles added to 12,000 miles leaves you with a maximum coverage of 87,000 miles. If you want more coverage than that, you have to purchase at the time the car leaves the dealership brand new. Then GM Ally offers plans up to 100,000 miles for brand new cars with bumper-to-bumper coverage.
In my opinion, it’s best to wait. First, if your car gets wrecked in the first three years or 36,000 miles, you will lose a lot of money on the warranty, and pay up front for a feature you may not use. While you can get a refund on the warranty, it winds up being a raw deal.
In addition, you can save a good grand or two by comparison shopping. My original offer form the dealer was $3,500 for my GMPP. I negotiated them down to $2,500, almost at-cost. How? I got some online quotes. In the end, they knew other GMPP providers, and other dealers, would ink the deal just to meet quotas, and that I would be a happier customer.
There are only two times you have to pay for dealer markup on a GMPP. One is if you are buying a car brand new, and want the longer term coverage options that are available for new models. The other is if you are buying a used car beyond the bumper to bumper. Both can be rolled into the deal.
Remember how I said above that there was one exception to the requirement that you must buy a GMPP within the bumper-to-bumper coverage? Now’s a better time to explain. Any GM dealership can sell a GMPP on a used car on their lot. However, you have to purchase the GMPP at the time of the vehicle’s sale. You cannot buy a GMPP even a day later.
You can purchase a GMPP on a used car on the dealer’s lot up to seven years or 75,000 miles. The layout is pretty much the same, GMPP will offer plans that take the car up to around 110,000 miles. After 110,000, Ally knows that GM all cars start to become unreliable. This is why only the shady companies tend to offer longer extended warranties, they mitigate this typically by refusing to pay on a lot of valid claims.
And you can extend a GMPP too. This is especially useful if you bought a lot of miles, but haven’t driven through them. Same as above, you have to extend your GMPP before the car hits seven years or 75,000 miles. Any GM dealer can do this, and you may be able to call Ally directly and work this out with them there too.
One final thing on GMPP in general. You must, must follow the recommended maintenance schedule for your vehicle, as proscribed in the owner’s manual. GMPP can, and will, deny your claim on a major repair if you don’t. For most vehicles, this means getting your coolant flushed by the fifth year, and changing transmission fluid. The vast majority of the maintenance schedule can be done during the complementary inspection done at your oil change. I recommend doing those at a GM dealer to be sure, but you can have the service done by any ASE-certified mechanic, just keep documentation of it.
I started this lengthy primer on GMPP saying that it’s already paying off. Within 2,000 miles of leaving bumper-to-bumper coverage on my Pontiac G6, the coolant sensors failed. GMPP paid for the $500 repair, and gave me $166 in free car rental for four days. During those four days I fell in love with the Chevy HHR (Delta I platform and all), but that’s for another article. In the first 10,000 miles of my GMPP, I’ve gotten $666 back on my $2,500 investment. At this rate, my warranty will pay for itself before it’s half used up, and before my standard powertrain coverage even expires.