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How Much Does An Extended Warranty Add To The Resale Value?

Illustration for article titled How Much Does An Extended Warranty Add To The Resale Value?

As Jalopnik’s resident car buying expert and professional car shopper, I get emails. Lots of emails. I’ve decided to pick a few questions and try to help out. This week we are discussing selling a car with an extended warranty, avoiding markups with employee pricing, and buying a high mileage hot hatchback.

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First up, if you are selling a car with an extended warranty can you get more for it?

“I have a 2016 Focus 1.0 Ecoboost, 50k miles, manual, that I’m not sure I wish to keep.

Fortunately, according to KBB, the trade value is only slightly behind what I owe; private sale value is pretty much break-even. My soul is prepared to lose a little bit of cash if the right replacement came along.

The car was bought certified pre-owned and I bought every warranty Ford offered. The car is covered bumper-to-bumper, maintenance and consumables included (sans tires, of course) until 100,000 miles. These warranties (as I understand it) are transferable to a new owner.”

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Before I get into the warranty piece I will say that KBB tends to be on the higher side of trade-in evaluations and it’s rare that a dealer will give the full KBB price, so be prepared for a lower offer in the real world.

As for the warranty, while it is transferable and that may have some value to a private buyer, a dealer isn’t really going to care all that much and likely won’t give you anything more for it. If you had a high-end or specialty car like a Range Rover or a Ferrari that warranty balance could make a big difference when it comes time to sell it, but even a private buyer isn’t likely to pay a significant premium for a warranty balance on a Ford Focus.

Next up, can Ford’s X-plan pricing help me avoid markups?

“I think I’m in the market for a 2020 Ford Tremor. I realize these may sell like Raptors with a mark-up, but I’m hoping not. My wife just started a new job and has access to the Ford X-Plan through her employer. My question is two-fold: First, does the X-Plan guarantee me the best price possible? Second, should I assume I’ll still be subject to an ADM using the X-plan, or does the plan exempt me from mark-ups? I appreciate any input you have here.”

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Ford’s X-plan pricing and other similar partner or friends and family-based programs can often make things a lot easier when it comes to haggling for the price of a car. However, on a specialty car like a Tremor, Raptor, or GT350, the dealers are under no obligation to honor the X-plan and if they want to sell their Tremors for over MSRP there is no real mechanism in place to guarantee your X-plan price. In fact, Ford will often exclude those specialty cars from the X-plan program.

Finally, how much of a gamble is buying a Golf R with almost 100,000 miles.

“I don’t drive a lot, maybe 5k miles a year. But when I do drive, I want it to be fun! I’ve had my eye on a 2016 Golf R with 89k miles for under $22k with a full-service history.

On the one hand, I figure it’s a bargain that won’t depreciate too much further in a few years since I will barely increase the mileage. On the other hand, it seems nuts to pay $22k for an economy-based car that’s already seen nearly a century. Is this an insane idea?”

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On the one hand, you have a German-engineered hot-hatchback that is pushing 100,000 miles, but on the other, you have a pretty-excellent hot-hatchback that is about $18,000 cheaper than when it was brand new. The full-service history is a good thing, and I’m going to assume that most of those 89,000 miles are highway based, which tends not to put as much wear on a car. While this is somewhat of a risky purchase, a good inspection can reveal any serious issues that are pending. If the car was well cared for and you have some buffer money for maintenance, this could be a solid opportunity to get a Golf R for a decent price.

Tom is a contributing writer for Jalopnik and runs AutomatchConsulting.com. He saves people money and takes the hassle out of buying or leasing a car. (Facebook.com/AutomatchConsulting)

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DISCUSSION

jeremyswindlehurst
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$22k is sure a lot of money; that could get you into a lot of newer, younger, lighter, and only slightly-slower GTI.

Either way, I’ve taken seven VWs past 100k, six of them post 2006-models; it’s kind of like taking your own body past 40. Even with maintenance and gentle care from a professional, the age definitely starts to show. In my case, in the knees, in their case, the expensive interior bits and obscure engine parts like cam followers and fuel pumps, besides rings, which I’ve had some bad luck with.

I’m currently the proud seventh-owner of a 2007 GTI with 150k. It’s super fun to drive, and I regret nothing. But it’s a piece of junk now. The headliner, the upholstery, the paint, the weird rattles and creaks, the sunroof that insists on opening a bit every few hours...I chose to focus my car-cash on keeping it running perfectly and air-conditioned. And it’s working.

They’re fun and great and all. I love them, and I’m sure an R would be outstanding in all the ways I would like, like my car.

But my car only cost $6k.

I love them, bu they aren’t Toyotas. That depreciation resistance is going to fade when you hit 100k, I PROMISE.