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To place a bet on a sporting game with a bookie is laying out $100 to risk $110. They call this the "Vig". it is the way bookies make money, they do not make it on your loss, they make it when they have 50% of people in the win, and 50% of people in the lose category by the end of the week. The Lose people pay out an extra $10 dollars on every $100 dollars, and this goes to the bookie.
Now look at auto financing department and extended warranties. It has to pay the finance department salesperson, the manager of the dealership, the owner of the dealership and the corporation of Subaru. All of them have to make a profit.
I would gather that it is MUCH more than 5% profit. Remember, the vig is 10% of losses, so only $10/200, 10% of the loss category not that full amount transacted during a given betting week.
It is clearly much better to make an informed bet on sports than it is to buy an extended warranty "insurance". Is it a stupid idea to buy the insurance with the manufacturer? No, not really. I think it is ok. I would hope that it is paid for without interest, removed from the loan, bought at a later date, and strongly shopped around and negotiated. You can negotiate and shop around for the same warranty if it is a true manufacturer's warranty. I do not know if they are locked into regions and distributor's groups however. Most warranties for products are sold in relation to stock purchased from a buying group. That is why they ask for serial numbers and not just model numbers when you do a warranty claim on any product. It has to link to a distributor list, some sort of buying group, as a product that had a specific warranty agreement prior to consumer purchase.
I also have learned that the prices for warranty work are crushed by the manufacturer. Their labor rates are denied and are forced to use Subaru's, or whatever company, rates not shop rates. They also make little on parts if at all, vs customers which have super high jacked up rates, and super high part prices on their bills. If a dealer can "prove" the work is out of warranty coverage agreements, the shop can charge you often double the amount or more.
The $5000 dollars saved that was quoted might be only $2000 saved as the original claim for this might have been denied by subaru, paying them only $3000 for the work. The bill shown and quoted to you was to make YOU happy and was a hopeful pitch to subaru that probably, probably was not fully the amount shown that was truly paid to the dealership's shop.
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