All I can say is WOW.

First off, let me reiterate as so many have previously said, “Read the fine print”. Chris, you’re making the general assumption that every warranty is going to some how screw someone over by more than likely never being used. The warranty I had on my previous Ford vehicle (2000 Lariat) had NO DEDUCTIBLE. So, when I had 4 wheels replaced due to very tiny dots of rust, it cost me ZEEEEERO. Each wheel (at the time) would have been approximately $350 from Ford. Doing the math brings me to $1400 on simply the wheels. That doesn’t factor in tax, labor (mount/balance tires). Since I paid about $1100 for that warranty all I can say is CHA-CHING !!!! Now, fast forward two years and I have a seal which keeps coming out on the rear sliding window. Ford had to replace the whole window. The total cost of that was nearly $400. Again, CHA-CHING !!! Only two problems I ever had with that truck. I hardly classify that as a lemon, yet the warranty paid for itself the very first time, at least IN MY CASE.

Don’t generalize warranties as all inclusive as is implied by your statement “…No survey, no study, EVER showed a value to extended warranties.” Seriously, one simply cannot compare the warranty on a plasma set from BB to a warranty on a $40+ 4x4 vehicle. Definitely not apples to apples.

“if even 1 in 3 persons 'broke even' on an extended warranty, they would not offer them.” You are completely right. We’re talking about a major investment here, not said example above (plasma set from BB). An extra grand or so (1600 is a bit on the high side though)on an extended warranty on that major investment helps many sleep better at night. We are all well aware that most people will probably never have to use their warranty. If they did, Ford would quickly be out of business, not only because of the financial loss, but also from diminishing customer loyalty. It all comes down to what is actually spelled out in the warranty. The warranty I got from my dealer on my 06 cost me $1100. It’s good for 100,000/7yrs and has no deductible (just like my previous warranty).

Now most “normal” people who get an extended warranty at the time of purchase roll it into their loan, and would more than likely never set it aside to earn interest. So nix the hypothetical because some here do have a grasp of economics. If one paid “x” amount for a warranty, then it’s “x” amount, period. You’re assuming that this person would have invested that “x” amount, but everyone’s needs are different. Besides, do you honestly think that the labor rates today will be the same “4” years from now? Odds are they will be higher, which means that “x” amount warranty is even more lucrative if you ever have to take advantage of it in the future.

Oh, and one more thing….”…it may cost you the 19% interest you pay on your credit cards” 19% ???? Who in the heck pays 19% these days? Maybe some 20-something trying to start out, but anyone with a credit card having an interest rate more than 6-9% should close it and go somewhere else.


An extended warranty on a Honda Civic is probably an unwise choice. An extended warranty on a 4x4 F150 costing 2-3 times that Honda….might be worth looking into.

 

Wow.. good discussion. Keep it going guys.

I've bought extended warranties on every vehicle I've owned so far, and on every vehicle it ended up paying for it self. My Jeep Grand Cherokee needed a new tranny, which was covered. My wife's Hyundai A/C went out and needed $1200 worth of work.. which was covered. One never knows whats going to happen. I don't have $1200 sitting around to cover incidental repair work needed..

I've had this truck 1.5 years now, 31K miles. I don't plan on getting rid of this truck for a couple more years.. so I really think it will be worth it.

 

Any thoughts on this?

 

Sounds like you know what you need to do. If you don't get an extended warranty, it sounds like you would be kicking yourself if something ever goes wrong. It sounds like you have had a good experience with extended warranties BUT with products from Jeep and Hyundai an extended warranty is a smart buy!

 

Just curious, but why did you get an extended warranty for a Hyundai?

They already have a 10yr/100K mile warranty.

 

That is the assumption that the people who sell you the warranty make. If not, they would NOT sell you the warranty. They are in business to make a profit, not help you.

Warranties are sales tools. You don’t actually think they sit around a board room and suggest, gee, how can we help those poor customers?

This isn’t anti-business, this is fact. They sit around the board meeting and say “how can we help ourselves, our stockholders? How can we maximize profits?

Businesses are not welfare states. Businesses are not in business to do you a favor, help mankind and be charities.
If they were, they would be 1. out of business instantly. 2. Closed down by the SEC/shareholders/owners.


There is nothing wrong with profit. The assumption that they are there to help people, be charitable, etc. is nonsense.
They are there to make profit.
You don’t found a business to ‘help people’. They MAY found a charity to help people, not a business.
Not slamming business, I’m slamming people who think business should be some sort of charity-public good foundation. Business are good for the world, but not because they are charities. They make and contribute things. They are NOT SUPPOSED to be there to ‘help’ you.

If they sell insurance, which of course, is what an extended warranty is, it is because they have actuarial tables that show it to be a better deal for themselves than the customer. PERIOD

As to deductibles, depends on what warranty you buy. There are now thousands of companies offering extended warranties.
Can we assume they are not all charities…?

They offered me a collection of 10 different plans at the ford dealer, prices from 600-3000. Deductibles, etc.
There is a LOT of profit in selling insurance, (extended warranties are insurance).



This is called a sample of one. Period. This is like saying “a guy won 200 million on the lottery. WOW, it’s a great deal.
I was referring to the actual math that shows that for the vast majority of people the extended warranty is a dead loss. Look it up.

On a personal note, 3 times I have bought sets of 4 Lariat wheels with tires, new, for 200, 300, 300 bucks. This is the going price. Putting them on the truck was not too expensive… Seriously, you are making this personal. Look up extended warranties, look up the various companies selling them. Look up why they sell them. It’s no secret, it’s no conspiracy, and it’s just good marketing.

 

Sorry that’s a quote from Consumers Union. It was also confirmed in the congressional investigations five years ago. CSPAN covered every minute of it. As I have some financial interest in this, I watched it all. Boring, but insightful.


You do realize this last quote makes my point? It’s not a good deal for the customer; it’s a good deal for Ford.


As to the prices quoted, they are all over the map. Depends on the city you are in, the company that is underwriting it, etc. etc. etc. My quote was below average for a California warranty. Way below average for a New York warranty.


I was using an example. This is not the place for a 200 page dissertation on personal finance.


This is also what is called an example. However, in the credit counseling I still do for ex-employees, I have found many are still paying 19-23% on credit cards.
And they can’t move the cards to other rates, due to the fact that they are in financial difficulties.
Many have bought new cars that they could not afford, extended warranties that they could not afford, and oddly, have maxed their credit cards and must pay these high rates.

If you are financially well off enough to not pay high rates, you don’t need the extended warranty.
This is a simple fact. People who can ‘afford’ the warranty can also afford to ‘self insure’ on their vehicle, and keep the profit that would go to the insurer.


The Honda Civic has a fairly high repair/cost ratio. My Ford has needed far less repairs than the last couple Honda’s we owned.
Honda’s have a ‘halo’ effect, same as Toyota. Check into the actual costs of ownership, not the results of interviews.

Still, we agree, if you have a ‘trouble vehicle’ get the warranty, (or ditch the lemon).

Chris

 

It was bought used. They don't tell you out front, but with most 100k mile warranties, they are for the original owner only. Once you trade it in, its only a 60K mile warranty.

It had 25K on it when we got it, and this was 5 years or so ago, closer to when Hyundai was still trying to rebuild their name.. I think it was a 2000 or 2001. It was also our first "non-domestic" vehicle,so we weren't sure what to expect..

 

Hi Chris,

Seriously, you sound like a one note horn. If you look back at my original post, you will see that I whole heartedly agreed that Ford (or whom ever) is making a profit from the warranties they offer. As I stated in that post, they wouldn’t be around very long if they were in it for “charitable causes”. LOL. Who actually thinks that way???

Listen….no one is denying the fact that the company behind the warranty is in it strictly for the profit and for no charitable reason at all. Not one person, myself included has argued that case, yet your entire post seems to imply otherwise by going on an on about it. Thanks for pointing out the fact that I am indeed a single sample amongst millions. The veritable drop in the ocean if you will. Pretty obvious. My point is that a warranty on a new vehicle gives most people peace of mind knowing that what ever happens during that period is covered! Period End of debate.

You try to analogize my wheel experience to going out and purchasing those same wheels somewhere else for much cheaper, then taking them to be mounted/balanced. Seriously, who the heck wants to deal with all that? Spend time searching around to find a place local that has what you need, or worse get them shipped and roll the dice that all is as claimed by the seller. Then you have to make the time to take them and have them mounted/balanced. Lets see…drop the truck off at the dealer and pick it up later in the afternoon. Hmmm. Done and “free” And guess what, if something else happens next week, next month, next year, it’s STILL NO $$ OUT OF MY POCKET, nor any hassle! Ponder that for a moment. Again, we are discussing my single sample out of the millions of warranty owners out there who will never, ever, ever, ever use one dime of the $1000 warranty. Big flip’n deal.

My time is too important to me to have to worry about a contingency plan when I have a major out of pocket expense on my vehicle. It’s really that simple! Pretty cut and dry actually. Problem arises, drop it at the dealer and get it fixed or…..your way.

Every single one of us has a reason why we do and don’t do something. The purchase of an extended warranty is obviously a personal choice and one that MORE THAN LIKELY will prove a waste of money in the ultimate end, but you know what….I’m willing to take that risk knowing full well I am protected just in case.



Please try not to apply your reasoning to everyone. Those same financially competent folks may choose to not want the headache of farming out repairs, myself included. I would consider myself very financially competent and can very well pay for any issues that arise, but seriously Chris, if I can just drop it off at the dealer, then why bother? I for one feel much more confident in the dealer than rolling my dice on the local mechanic. I can already hear some of the ridiculous replies now…”..I trust JoeBlow mechanic WAY more than any Ford lackey”….Well, what ever. I don’t. I am also well versed in auto mechanics (built a 10second street car), so I have the luxury of knowing when some one is trying to feed me a line of BS.



As I see it, a person has three choices :

1) get the extended warranty and never worry again until it expires
2) pay out of packet each time a problem arises (if they ever do arise)
3) never address the issue

 

Gotcha.

 

It’s obvious to see that we all have our own reason for and against an extended warranty. For those that choose to get one, great. For those that choose not to get one and deal with the problems (if ANY) as they arise, that’s great too. Please do not imply that because one chooses to purchase an extended warranty that that person is somehow incompetent both financially and in mechanical inclination.

Please note that this post was not quoting any other post….

 

Hi rms8
You make my point for me;
These are the snipped salient points;


The ‘extended warranty’ is a matter of convenience for you as you have enough money/resources/knowledge to make it unnecessary.

Or why people pay retail, have their service work done at the dealership, only buy brand name, shop at designer stores, etc.

This is fine.
Without lots of people spending like that the economy would be much smaller.
This is all very good, and I mean that.

However, anyone who has to make a decision about buying the extended warranty, not just toss the paltry 1100 bucks on the table for connivance… is in a different situation than you are.

They must decide if the cost is justified, not if it is easy…
Remember, 90% of the population lives from check to check. The other 10% don’t understand them much…

You misunderstood on the Lariat Rims/tires. Those were 18 inch with the tires still on them, still stubbly. I didn’t have to rebalance them, just install them. Stock rims and tires for any truck are 300-600 for the set at most dealerships. I don’t pay retail so I bought them out of the recycler. For just the rims 200 is way too much for stock stuff. This kind of part is pretty cheap.



Just personal between us, to compare our situations;
My time is less important than yours as I am retired.

I’m financially competent, I guess, as I retired at 39 and haven’t had to work since. Didn’t stop me from starting up a couple businesses, but that was hobby, not need.





As to a 10 second street machine, not bad at all.

My first quarter-miler (Desert Rat) barely did 12’s, but then, that was 1972… Desert Rat II did a little better, but still didn’t win at the 78 Winternationals.
Did convince me that guys with the big bucks would always win, so I gave it up.

My last ‘fast’ street machine was a 1981 Vette. I pulled the stock motor (L81), put in 1976 710 core block with roller rockers/roller hydraulic cam, 400 crank (383 kit) hypereutectic pistons, etc. it did high 11’s on the street, with the A/C and all power hooked up. It also passed California smog… and didn’t overheat in LA traffic… Though it was more for top speed. At 151 the headlight pods would force themselves open so I never found how fast it could go top end on the El Mirage dry lake. I could have taped them, but the paint was still new…

Of course that was in the early 90’s.
We didn’t have the neat parts you can buy off the shelf today. If I was 10-20 years younger I would build something on the new body Mustang.

Chris

 

If you're going to get a warranty the only one to consider is a FORD ESP. Honored by ford at all Ford locations, the rest just suck.

The best pricing I've seen to date is online. Go to google and search for FORD ESP. They'll ask you 5 to 10 simple questions and then give you rates.

www.fordwarrantys.com is a site that will quote online. A 7/75k Powertrain for your truck is 1,155.

Any ford dealer can sell you a FORD ESP, and a couple have taken to the internet with deep discounts to win business.

 

You were building race cars in 1972? And I thought I was considered "old" on these forums...LOL..... JUST KIDDING !!!!!!!!!!!!!!!!!!!!!!!

Yes, I got the warranty out of convenience, but trust me, I would much rather work on it myself, but I doubt I could pull the motor in my truck in the 3 hours it takes me to extract the 347 out of my mustang. I’m a very hands on person, so I never let anyone do anything for me (except welding, I don’t have a welder, so this gets done by a friend).

Lots of good points,
Take care Chris

 

Ok, here is the truth. Most personal finance experts will advise you to skip the extended warranty. At the end of the warranty period, you don't get any of your money back so you could potentially pay $1200 and not ever get anything from it. Instead of putting $1200 into a warranty that only covers things for your truck they will tell you to put that $1200 into a good high yield CD. If anything ever goes wrong with your truck, this CD is earmarked for your auto repairs. If nothing ever goes wrong then you keep your money and it keeps growing and you end up with more money in your pocket.

But.... If you know that you will not put this money into a CD or hold on to it in some fashion then you are not getting the true benefit. Also, if purchasing the extended warranty gives you peace of mind then $1200 is money well spent in my opinion. Like I said above the financial experts have it right if you stick to their prescribed method, however, you know yourself better than they do. Just weigh the options and ultimately you have to choose what you are comfortable with.