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I'm at a small independant shop, we do 3rd party extended warranties and for most of our customers who have one, it's a great value...
--- BUT ---
That's because we SELL them, and we sell the right level of coverage. 3rd party warranties sold in a dealership finance office is good for minimal coverage and maximum cut of the price going to the F&I department, that's because most dealership segregate their departments financially and they're all out to eat the other alive. The F&I agent isn't looking to sell you the best warranty for you, he's looking to sell you anything and pocket a cut. Electronic rust proofing? SOLD! Ceramic coating? SOLD! Clear bra? SOLD! Window tint? SOLD! Remote starter? SOLD! Extended warranty? SOLD!
When we sell an extended warranty we only sell the big daddy "everything is covered" tier, there are exclusions of course, like shocks and wear items, but many many times have we had customer spend 3K on a warranty and the warranty paying out over 10K over the life of the car. It had gotten so ridiculous that they've put a spending ceiling, now they'll stop at the market value of the car :lol
Long story short, it's not in the F&I's interest to sell you the good warranty because he's not going to see a cent on the repairs, he'll sell you the cheap tier with a huge markup and make it look good with F&I lingo.
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