By Tony Barthel
Should you buy an extended warranty? It’s one of the most frequently asked questions and something, again, for which there isn’t just one answer. So, should you?
As we shared in our previous column, an RV extended warranty is basically legalized gambling. You’re gambling that something big will go wrong; the warranty company is gambling that it won’t. As with all forms of legalized gambling, the house generally wins – which is how warranty companies stay in business. If they paid more than they took in, they’d go broke.
Knowing that your chances of fully recouping your investment are less than 100%, why would you buy an extended warranty? There are many logical reasons to do so, actually.
Your finances play a role
One of the factors to absolutely consider is your own finances. While some folks might find that a big expense is nothing more than an inconvenience, others could be significantly set back by something like a refrigerator or air conditioner failure. Not everybody has the reserves available to cover the cost of a big repair, so an extended warranty can represent a lot of peace of mind.
If you have an RV with a big commercial diesel engine, the cost of fixing something that breaks in an inconvenient spot can be in the many thousands of dollars.
Spreading out the cost of a warranty in the payment plan of an RV can also make it more doable for some. You could either look at it as $2,000 right now or just a few dollars a month. It’s still that same money spent, plus interest, but including a warranty in the RV payment can make it much more doable. And motorhome extended warranties are significantly more money but so is the cost of engine work, particularly on anything with a diesel engine.
Of course, you’re not limited to buying the warranty only from a dealer at the time of purchase. Depending on the warranty company, you often have a full year to decide if it’s right for you, although you wouldn’t be able to roll this into the payment of the RV.
There are also dealership plans where you could buy the plan and then choose to cancel before a time specified in the warranty. So you could buy the warranty at the dealership, look around to make sure you bought the best plan for you, and then cancel if you didn’t. One thing I will caution you if you choose this method – I would take any refund issued by the warranty company and apply it directly to the amount you’ve financed. There’s no reason to pay interest on a refund.
There are people who seriously make out with an extended warranty. The cost of one big repair can sometimes almost completely make the warranty worth having. Adding a second big repair and you’ve made out like a bandit.
I have a friend who broke even when the first of two turbochargers went out on their diesel pusher. By the third turbo, it was clear that they had invested wisely, though they also realized there was a much bigger problem with the motorhome.
There is no one answer to why you’d want to consider, or avoid, an RV extended warranty.
We will continue this series with more insight into how these warranties work and how you can find the best warranty for your own situation.
In future columns, we’ll talk about how to look at the company you’re considering, whether you should buy from a dealer or not, and more. If you have an RV warranty-related question you can submit them here and we’ll do our best to get back to you. —Tony