Purchasing 2007 LX with existing warranty

[phargoh]

Hi all, new to the forum. Purchasing a 2007 LX470 from a private seller. Just curious how much additional $ you would pay above fair price if the vehicle comes with a 3 year (remaining) full comprehensive coverage warranty at local Lexus dealership . The seller paid around $3500- $4000 for a 5 year warranty and wants to get something back on it. I Definitely see value in the remaining 3 years but not sure how much to add to the offer. Any thoughts?

 

[e9999]

Welcome!
I would be rather surprised if the dealership would have issued an actual "full comprehensive" warranty related to Lexus for an 11 or 12 year old truck, and especially for that kind of money. So I am guessing this is from some aftermarket outfit that might cover some work at a dealership. Assuming this is even legit and in effect (I'd 2x-check), there may be some very significant exclusions and fine print. Think about it, anybody with an iffy engine in a 10 year old truck would jump on a warranty that would cover engine repairs "comprehensively". So I would suggest caution. Aftermarket warranties are notorious for problems, in general. And if the seller made it sound much better than it really is, I'd walk away or at least be very careful with the deal. As to how much it is worth, if it's legit, that would again depend on the details, but if it is from the type of company I envision, I would not buy one in the first place and it would not be worth much at all to me.

 

[AussieHJCruza]

Most of those warranties aren't worth the paper they're written on IMHO, read the fine print very carefully.

 

[planomateo]

Find out who the warranty is with, call them and inquire about it being transferable and what the coverage/deductible is.

Only real way to make a decision on value in my opinion.

 

[ramangain]

If the warranty is transferable AND there is no potential refund to the seller by the company, you are in a mighty fine negotiating spot.

 

[brm98]

If it is a Lexus factory warranty (which I can't see how that is possible) then it would be worth something. If it is a 3rd party warranty company then it's not worth the paper it's written on. I was an F&I guy and in the car business for 7 years, I was also a rep for GE when they sold aftermarket warranties. The PO got taken for a ride with paying that much for a warranty.

 

[BullElk]

^^^^ Agree. I sold warranty’s and service contracts for a few months. I learned quick how crooked and deceptive everyone was. It was clear to me you had to be a liar or deceptive to be “successful” in that business. I hope they all go bankrupt.

 

[phargoh]

Thanks for the responses. Looks like it’s a third party warranty company that is owned by the Lexus dealership owner. $100 deductible, comprehensive coverage and it is transferable. They paid $4000. All service the last 5 years was done at this Lexus dealership. Other Lexus dealerships with prior owner. From what I am hearing it Sounds like there’s minimal value in the warranty and should negotiate based on vehicle alone. 110,000 miles, clean.

 

[ramangain]

Negotiate that you'll pay the $100 deductible to get the truck fixed, and give the seller a $100 kickback every time.

These warranties may also have a cost associated with the transfer. Have you spoken directly with the warranty company about the warranty? Get the contract # from the current owner and tell him you need to do some research on it first; blame it on the interwebs "Debbie Downers"

 

[phargoh]

Negotiate that you'll pay the $100 deductible to get the truck fixed, and give the seller a $100 kickback every time.

These warranties may also have a cost associated with the transfer. Have you spoken directly with the warranty company about the warranty? Get the contract # from the current owner and tell him you need to do some research on it first; blame it on the interwebs "Debbie Downers"

Haha yes spoke to the dealer that sells/owns it- $50 transfer fee.

 

[brm98]

Thanks for the responses. Looks like it’s a third party warranty company that is owned by the Lexus dealership owner. $100 deductible, comprehensive coverage and it is transferable. They paid $4000. All service the last 5 years was done at this Lexus dealership. Other Lexus dealerships with prior owner. From what I am hearing it Sounds like there’s minimal value in the warranty and should negotiate based on vehicle alone. 110,000 miles, clean.

I sold those type of plans. It's basically an investment for the dealer. All the money from the purchase of the contract goes into an investment account (pool) and the dealer is the one making the calls on repairs. It's basically a way for the dealer to make additional money on the front end (when they sell the contract) any returns on the invested money and then what's left after not paying claims.

Honestly I don't see any added value with that warranty. I'm sure the seller does since he paid almost a quarter of the value of the car for a warranty. But as a bonus for the sale I wouldn't pay extra for it.

What happens if the dealer goes out of business? No more warranty. What happens of they decided to pay out a lot of claims and the pool dries up? Of he decides this "self funded warranty" is too risky and does away with it.

Too much risk vs. the reward IMO. But to each their own.

 

[phargoh]

I sold those type of plans. It's basically an investment for the dealer. All the money from the purchase of the contract goes into an investment account (pool) and the dealer is the one making the calls on repairs. It's basically a way for the dealer to make additional money on the front end (when they sell the contract) any returns on the invested money and then what's left after not paying claims.

Honestly I don't see any added value with that warranty. I'm sure the seller does since he paid almost a quarter of the value of the car for a warranty. But as a bonus for the sale I wouldn't pay extra for it.

What happens if the dealer goes out of business? No more warranty. What happens of they decided to pay out a lot of claims and there pool dries up? Of he decides this "self funded warranty" is too risky and does away with it.

Too much risk vs. the reward IMO. But to each their own.

Very interesting - thanks for the insider insight!

 

[ramangain]

From personal experience, my only "success" with non-OEM extended warranties was with an 08 M5 I bought from Carmax and got their fabled extended warranty some 6 years ago. It cost $3300 with a $300 deductible for non-Carmax repair service (read: BMW dealership), and one deductible covered all associated costs for authorized repairs for a single service. I never overly-abused the policy, but I did have the dealership get a hub replaced under warranty when I accidentally stripped a couple of wheel bolts and the threads on the hub (this was where I REALLY learned not to start threaded bolts/nuts with a tool and always start by hand).

I totaled up how much Carmax paid for warranty work when the warranty ran out .... $17k IIRC.

Do it right, on the right vehicle, you'll probably win. Otherwise, chances are you won't win.

 

[ramangain]

In essence, any place that sells their own extended and proprietary warranty should be avoided. They have the right to deny "extended warranty work authorization" for any reason, silly or not. Using a 2.4A USB charger for your phone? Oops, that puts too much stress on the electrical, so your dead alternator isn't under warranty. Etc etc.

Who can you appeal to for a better resolution? No one. The owner of the shop and the warranty are the same entity.

 

[brm98]

In essence, any place that sells their own extended and proprietary warranty should be avoided. They have the right to deny "extended warranty work authorization" for any reason, silly or not. Using a 2.4A USB charger for your phone? Oops, that puts too much stress on the electrical, so your dead alternator isn't under warranty. Etc etc.

Who can you appeal to for a better resolution? No one. The owner of the shop and the warranty are the same entity.

Yep, and everything will be spelled out in the fine print. Which EVERYONE always reads.

Just think of it this way, the benefit for the dealer is to deny as many claims as possible. He stands to make more money that way.

So I would put little value in the warranty when making an offer to buy the car. It was the PO decision to buy it, not yours. Warranty is just peace of mind while owning your new car. There is a reason manufactures put time/mileage limits on vehicles, exposure.

 

[brm98]

This was the company that backed our dealer funded plans

Automotive

Protective Asset Protection offers a range of vehicle service contract plans for new and pre-owned vehicles as well as limited warranty programs, GAP and ancillary products. Protective has been increasing revenue and customer satisfaction in franchise and independent auto dealerships with our...

protectiveassetprotection.com

Not a bad company as a whole but still, if the goal is to make money you're not eager to pay claims. Just saying.

 

[e9999]

OP, you keep mentioning "comprehensive" warranty. That is a smokescreen word that means nothing outside of what is actually in the fine print. Best to get that notion out of your mind if you don't want to be unduly influenced.
Personally, I don't think that the fact that the dealer issued it makes much difference. Lots of very shady dealers out there...
I would look at it as not being much relevant to your offer figure, basically. Just think of it only as a potential pleasant surprise backup plan. Would I pay the $50 transfer fee? Yea, maybe if the dealer looks OK. Cuz that's cheap. But basically I would go in not counting on it to cover me much at all.

However, it's also worth remembering that many sellers are influenced by emotions. It is likely a bitter pill to swallow for the guy to have spent 4K a couple of years ago so that may indeed make him stand his ground, whether rational or not. You may want to think about how to handle that. Nothing wrong with ostensibly offering 2K for the warranty if you price the truck 2K below FMV... If that makes the guy happy and ready to deal. Kinda like what dealers do with trade-ins, in reverse.

Finally, you surely know this already but do keep in mind you are buying an inherently very expensive old vehicle that will likely take a ton of money or a lot of DIY to keep running. Very good, sure, but possibly very costly to run. (Which is of course the fear that those shady warranty companies count on...) You will be shocked by the bills if you have to rely on dealers to keep the beast on the road. Best to keep that in mind when deciding on your offer.
Good luck!

 

[phargoh]

OP, you keep mentioning "comprehensive" warranty. That is a smokescreen word that means nothing outside of what is actually in the fine print. Best to get that notion out of your mind if you don't want to be unduly influenced.
Personally, I don't think that the fact that the dealer issued it makes much difference. Lots of very shady dealers out there...
I would look at it as not being much relevant to your offer figure, basically. Just think of it only as a potential pleasant surprise backup plan. Would I pay the $50 transfer fee? Yea, maybe if the dealer looks OK. Cuz that's cheap. But basically I would go in not counting on it to cover me much at all.

However, it's worth remembering that many sellers are influenced by emotions. It is likely a bitter pill to swallow for the guy to have spent 4K a couple of years ago so that may indeed make him stand his ground, whether rational or not. You may want to think about how to handle that. Nothing wrong with ostensibly offering 2K for the warranty if you price the truck 2K below FMV... If that makes the guy happy and ready to deal. Kinda like what dealers do with trade-ins, in reverse.

Finally, you surely know this already but do keep in mind you are buying an inherently very expensive old vehicle that will likely take a ton of money or a lot of DIY to keep running. Very good, sure, but possibly very costly to run. (Which is of course the fear that those shady warranty companies count on...) You will be shocked by the bills if you have to rely on dealers to keep the beast on the road. Best to keep that in mind when deciding on your offer.
Good luck!

Thanks for the advice! I think I’ll work it into the offer in some way as you said.

Appreciate everyone’s thoughts!

 

[e9999]

Of course, and as you surely know, don't say anything outright to the effect that the warranty is all but worthless cuz that is also telling him that he is an idiot. Not the best negotiating tactic... If you really want the truck , make him feel good. For all you know, his wife has been on his case already for buying the damn warranty, so he may be quite sensitive about this...