Is it ever worth purchasing an extended warranty for a vehicle?

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CobraKai
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Is it ever worth purchasing an extended warranty for a vehicle?

Post by CobraKai » Mon Jan 21, 2019 12:46 pm

I know Dave Ramsey and Consumer Reports are against extended warranties.

I recently purchased a Ford and the original manufacturer's warranty will be running out very soon. I have pondered the idea of purchasing an extended warranty (from the manufacturer, NOT after market). I have been pondering a couple of options:

100k miles/6 year (actually 3 years since year one actually begins when the car is brand new) for $1200
125 miles/7 year (4 years) for $1800

I drive approx 25k miles per year.

I am not good at working on cars nor are there any mechanics nearby that I fully trust not to rake me when there is a problem that is beyond my understanding.

Can it be worth it to purchase a warranty in this situation or is it always a rip off?

Rus In Urbe
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Rus In Urbe » Mon Jan 21, 2019 12:50 pm

I trust Consumer Reports. So we never fall for the extended warranties.

If a new car is well-made (check Consumer Reports for their analysis), it should be trouble-free if well-maintained.

Spend time finding a trustworthy mechanic. They do exist. Ask friends and family. Interview some. Check around.

Having a good car mechanic is as important as having a good family doctor. And when you need one, it's too late to start looking....
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certifiedfordtec
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by certifiedfordtec » Mon Jan 21, 2019 12:54 pm

Yes, one module or transmission can cost you over $1000. Shop online for best deals on factory warranties. Flood Ford or Zeigler usually have best pricing.

dbr
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by dbr » Mon Jan 21, 2019 12:56 pm

I have one experience with not buying the extended warranty that would have saved me $4500 in repairs if I had the warranty. YMMV

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CobraKai
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by CobraKai » Mon Jan 21, 2019 12:57 pm

certifiedfordtec wrote:
Mon Jan 21, 2019 12:54 pm
Yes, one module or transmission can cost you over $1000. Shop online for best deals on factory warranties. Flood Ford or Zeigler usually have best pricing.
Those are actually the top two dealers I was considering. Another concerns is the electronics, these newer vehicles have a lot of electronics.

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Ben Mathew » Mon Jan 21, 2019 12:58 pm

We typically don't buy the extended warranty. But for our last car (2015 Subaru Forester), when we said no, they just kept reducing the price to some very low number, until we said yes. I can't remember what the final amount was was. But I would guess something like half the original price. Still don't know if it was a good deal (didn't try to calculate odds of needing it etc.), but it was at a price much below sticker. That makes me think the sticker price is way overpriced, if they have that much room to cut.

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CobraKai
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by CobraKai » Mon Jan 21, 2019 12:59 pm

Rus In Urbe wrote:
Mon Jan 21, 2019 12:50 pm
I trust Consumer Reports. So we never fall for the extended warranties.

If a new car is well-made (check Consumer Reports for their analysis), it should be trouble-free if well-maintained.

Spend time finding a trustworthy mechanic. They do exist. Ask friends and family. Interview some. Check around.

Having a good car mechanic is as important as having a good family doctor. And when you need one, it's too late to start looking....

I've never fallen for one but would have come in handy with my last car which needed some repairs prior to 100k miles. My brother purchased the extended warranty and ended up with 4k in repairs that needed to be done so it worked out for him. I see it as an insurance plan. I almost never buy warranties for other products (other than an expensive appliance). These newer cars have more bells and whistles (that can break) than the older cars.

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by RickBoglehead » Mon Jan 21, 2019 1:01 pm

The house wins. Just like a casino. The consumer rarely does, that's what Dave Ramsey and Consumer Reports tell you to never buy one.

The good news is if you just bought a new Ford, you don't need to make any decision for a while. If you wait until after your first year, it costs $100 more. And you can buy up to 36 months / 36,000 miles when your bumper to bumper runs out, so don't make any decision until you're close to one of those numbers.

It's insurance, just like any other insurance. If you can afford the loss (repair), don't buy.
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CobraKai
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by CobraKai » Mon Jan 21, 2019 1:03 pm

RickBoglehead wrote:
Mon Jan 21, 2019 1:01 pm
The house wins. Just like a casino. The consumer rarely does, that's what Dave Ramsey and Consumer Reports tell you to never buy one.

The good news is if you just bought a new Ford, you don't need to make any decision for a while. If you wait until after your first year, it costs $100 more. And you can buy up to 36 months / 36,000 miles when your bumper to bumper runs out, so don't make any decision until you're close to one of those numbers.

It's insurance, just like any other insurance. If you can afford the loss (repair), don't buy.

Bought it used but it is set to run out very soon.

Global100
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Global100 » Mon Jan 21, 2019 1:16 pm

I think it might be worth the cost if the type of driving (city vs. highway) is more prone to repairs for your model, like transmission, etc.

DSInvestor
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by DSInvestor » Mon Jan 21, 2019 1:21 pm

You have told us that you drive 25K miles/year. How many miles on your car now? You may get different suggestions if it has 95K miles or 30K miles.
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by CobraKai » Mon Jan 21, 2019 1:22 pm

Global100 wrote:
Mon Jan 21, 2019 1:16 pm
I think it might be a game to take if the type of driving (city vs. highway) is more prone to repairs for your model, like transmission, etc.
I drive mostly highway miles.

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CobraKai
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by CobraKai » Mon Jan 21, 2019 1:22 pm

DSInvestor wrote:
Mon Jan 21, 2019 1:21 pm
You have told us that you drive 25K miles/year. How many miles on your car now? You may get different suggestions if it has 95K miles or 30K miles.

It's just over 35k, pretty close to the end of the original warranty.

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wander
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by wander » Mon Jan 21, 2019 1:25 pm

For me, extended warranty is not worth it. It's up to you to decide.

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Toons » Mon Jan 21, 2019 1:28 pm

Extended Warranty?
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Teague » Mon Jan 21, 2019 1:28 pm

The problem is you don't know if it's worth it until you sell the car. Maybe, it is, maybe not. On the aggregate, it's not a great bet. But maybe it will be a great deal in your specific case. Who knows?
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by whodidntante » Mon Jan 21, 2019 1:29 pm

RickBoglehead wrote:
Mon Jan 21, 2019 1:01 pm
The house wins. Just like a casino. The consumer rarely does, that's what Dave Ramsey and Consumer Reports tell you to never buy one.

The good news is if you just bought a new Ford, you don't need to make any decision for a while. If you wait until after your first year, it costs $100 more. And you can buy up to 36 months / 36,000 miles when your bumper to bumper runs out, so don't make any decision until you're close to one of those numbers.

It's insurance, just like any other insurance. If you can afford the loss (repair), don't buy.
Agreed. I wouldn't buy it.

OP, put 4 grand in cash for a catastrophic failure if it makes you feel better. I really doubt you'll need it.

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BogleFanGal
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by BogleFanGal » Mon Jan 21, 2019 1:30 pm

The only value I'd see in an extended warranty is the one thing it doesn't cover (without paying a ridiculous premium,) which is all the electronics. I had two different electrical issues (bad modules) under original warranty that would have run me $1500-2000 if replacing out of pocket. I have full faith in the mechanics and build of my car - but not the electronic gremlins.
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Jack FFR1846 » Mon Jan 21, 2019 1:31 pm

Only directly from the manufacturer.

I can’t remember the brand.....either ford or subaru had a page that explained why to buy only a factory extended warranty. They said that from the 10 biggest warranty companies ten years ago, all were out of business
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by siriusblack » Mon Jan 21, 2019 1:36 pm

If you do it, definitely shop around! Some dealerships price much lower than others. Many years ago I bought a used Toyota from a friend/dealer who goes to auctions for people-- it was within original manufacturer warranty but I wanted a little extra peace of mind so I found a 7 year / 100,000 mile warranty at a very good price by buying it from an out-of-town dealer that sells very high volumes of extended warranties all over the country as part of their business strategy (I'm sure the other dealers dislike when they do that)-- but the pricing was a LOT less than other/local dealers.

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by bottlecap » Mon Jan 21, 2019 1:41 pm

Yes, it is worth it when seller of the warranty wants to lose money.

Otherwise, if you have a sneaking suspicion that the seller wants to make money on the warranty it is seller, forget it.

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by The Wizard » Mon Jan 21, 2019 1:45 pm

I bought my first new car in 1975.
I've bought a number of new cars since.
I've never bought an extended warranty.
And at age 69, I'm not starting now...
Attempted new signature...

rgs92
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by rgs92 » Mon Jan 21, 2019 1:46 pm

I always buy it if it is from the manufacturer.

HIinvestor
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by HIinvestor » Mon Jan 21, 2019 1:46 pm

We just bought our 2nd extended warranty—10 year/100,000 mi for $2007 and the dealer will fix it all. The 1st was for our TOYOTA van—7 yr. we were able to get transmission replaced on it just before warranty expired.

We bought Prius Prime and suspect many electronic parts may fail before 10 years, even tho its a Toyota.

We transferred the Cadillac extended warranty to me when I got my dad’s car and was able to get transmission replaced under warranty.

It’s really peace of mind and how long you keep your cars, imho. Lots of things can go wrong in a plug in hybrid in 10 years—I’d rather not pay for them.

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Glockenspiel » Mon Jan 21, 2019 1:48 pm

Short answer: No.

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Stinky » Mon Jan 21, 2019 1:50 pm

I was in the insurance business.

The insurance company makes money on the extended warranty. The dealership makes a LOT more money when they sell it to you. The dealership finance/insurance office is a huge profit center.

The profit for the insurance company and the dealership is a cost for you.

I've never bought an extended warranty. Even though I've had a few repairs over the years that might have been covered by a warranty, I'm confident that I'm well ahead financially for not buying the warranties.
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harrington
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by harrington » Mon Jan 21, 2019 1:58 pm

Never a good idea......They push these for a reason.....

BigoteGato
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by BigoteGato » Mon Jan 21, 2019 2:04 pm

I bought one for my first car. Dealer always had an excuse, refused to take care of bad starter motor in VW Rabbit. Got tired of missing work to argue with them. Never again.

02nz
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by 02nz » Mon Jan 21, 2019 2:09 pm

An extended warranty can be seen like a form of insurance. On average, the company selling that insurance will come out ahead. You should always self-insure for risks that won't cause financial hardship for you. Car repairs fall into that category (if they would cause financial hardship, you don't have enough of an emergency fund). So the answer would be no.

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Watty
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Watty » Mon Jan 21, 2019 2:39 pm

I know you have already bought the car but as a general rule I would not buy a car that I was tempted to buy an extended warranty for. Some Fords are actually pretty good these days but the Hondas and Toyotas that I have owned rarely require non-routine maintenance in the first 100k miles and when they did any initial problems usually showed up in the first year of ownership when it was still under the full warranty It will vary by the model but I would suspect that most Fords will also not need much non-routine uncovered maintenance between 36 and 70k miles. If the car has needed few repairs in the first three years that is a really good sign that you don't need an extended warranty.

Before you decide you really need to read through all the details like;

1) What does the extended warranty actually cover? Most likely it is not a "bumper to bumper" warranty and if you need something like new brakes it will not cover that. You should check carefully to see if it actually covers all the expensive electronics, as I recall some of them may actually exclude some electronics.

2) What other warranties does the car have? It probably has a powertrain warranty that may go for 5 years/60,000 miles. That would cover many of the big expenses like engine or transmission problems.

3) Is there a separate emission warranty? This may vary by state. I once had a car totally die when I had just moved to a town I was not familiar with. For lack of a better choice I had it towed to a dealership that evening when the service department was closed. It had something like 70K miles on the car. I called them in the morning and they said they would call me back when they had an estimate. I was getting ticked off when I had not heard from them by lunchtime so I called them and was ready to read the riot act. It turned out that the computer ($$$$) was being replaced under the emission warranty for free and the car was just about ready and they were waiting to call me until it was done so that they could be sure that the car was working well. I didn't even know that I still had any of the emission warranty left.

Between the exclusions and what is covered by other warranties you may not really be getting much extra coverage which is mainly in year 6 and 7 of a 7 year extended warranty.

4) What is the best price for the extended warranty. As others have said you can buy it from any Ford dealership and the price is very negotiable.

5) What happens if the car is totaled. In some cases you may get a partial refund but you need to know the details.

One potential problem with an extended warranty is that you may then tend to take the car into the dealership for routine service which is not covered. Most dealers will suggest $500 dollars of service when the manufacturers recommend service is basically just and oil change, tire rotation, and some inspections. You need to know what the manufacturer recommends and just stick with that.

One positive for an extended warranty is that if you plan on selling the car before it expires then that will help you get a better price. As much as people scoff at the dealer service departments a car that has been serviced by a dealership and has some time left on an extended warranty will get a higher resale price.

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Boglegrappler » Mon Jan 21, 2019 2:44 pm

I haven't bought one, but I think they can make sense at the right price. As one poster above noted, the dealer has a lot of discretion about what price to charge for this.

On enthusiast forums for particular cars, you can sometimes find a reference to a dealer who will sell you the manufacturer's extended warranty at a much more reasonable price than will the dealer from whom you bought the car.

You might use this thread as a reference.


https://slickdeals.net/f/3137454-ford-e ... ars?page=7

fire0216
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by fire0216 » Mon Jan 21, 2019 2:55 pm

For me extended warranty purchase was determined by issues related to Ford's water pump in 3.5l engine. If you have the 3.5l engine, you should know that Ford water pump in 3.5L is internal & can cost about $4k to replace. Worse is that there is little notice of the water pump failure, so wp failure can ruin the engine. Failure rate is about 4%.
I purchased 8 year total / 150k mile total warranty, $50 deductible for about $2,400 ( so add'l 5 yrs & 114k miles warranty) .

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by adamthesmythe » Mon Jan 21, 2019 3:00 pm

I would not buy an extended warranty.

The exception would be if I bought a vehicle with really really bad reliability, like a Land Rover. But then I wouldn't buy that vehicle.

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Blake7 » Mon Jan 21, 2019 3:13 pm

I only buy cars with a solid reliability record, and never buy an extended warranty. Even if that turns out to be a bad bet on one or two cars over the years, I'll still most likely come out ahead over my lifetime. Extended warranties have high profit margins for a reason.
Last edited by Blake7 on Mon Jan 21, 2019 7:21 pm, edited 1 time in total.

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by jminv » Mon Jan 21, 2019 3:14 pm

An extended warranty can only ever be worth it in hindsight and even then, it's only worth it to a small fraction of the people who bought them. This is because they sell you a policy that for the average (and not even average, see next bit) purchaser will have a positive payoff to Ford and a negative payoff to the purchaser. 55% of the purchasers of these never claim a single dollar of repairs. $0. You also have to think that people with extended warranties are also more likely to claim on them for minor things but 55% of them don't. Most of the rest have total claims that are less than the purchase price of the warranty. You only get a positive payoff if your vehicle has a tail end event. It's a terrible deal and you should now understand why they are pushed so hard - they're the highest margin part of the business. Insurance should be purchased for risks you can't afford on your own. This wouldn't really fall into that category and if it does, one should get a less expensive (and known for reliability) vehicle. I see people stating that you should get a warranty if you buy a vehicle known for not being reliable but then this fact would already be priced into the warranty, so it would still be a poor deal.

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by RickBoglehead » Mon Jan 21, 2019 3:16 pm

HIinvestor wrote:
Mon Jan 21, 2019 1:46 pm
We just bought our 2nd extended warranty—10 year/100,000 mi for $2007 and the dealer will fix it all. The 1st was for our TOYOTA van—7 yr. we were able to get transmission replaced on it just before warranty expired.

We bought Prius Prime and suspect many electronic parts may fail before 10 years, even tho its a Toyota.

We transferred the Cadillac extended warranty to me when I got my dad’s car and was able to get transmission replaced under warranty.

It’s really peace of mind and how long you keep your cars, imho. Lots of things can go wrong in a plug in hybrid in 10 years—I’d rather not pay for them.
The warranty that covers the hybrid / PHEV components is a lot longer than the base warranty. We just bought a PHEV and the warranty is 8 years or 100,000 miles for those components. Electronic components usually fail right away, or last for a long time.

We sold our 2010 hybrid, purchased in August of 2009. We had the following service done in just under 9 years we owned it (besides oil changes, tire rotations, air filter, and new tires) - dash computer replaced at the end of year 1 due to a glitch in it, new rear brakes, front suspension (pothole, covered by insurance), and some software updates (one outside warranty, $125). So we found it LESS likely to need repair than a non-hybrid / PHEV.
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by lazydavid » Mon Jan 21, 2019 3:18 pm

We have purchased it on our last several cars, and other than the Audi Q7 we bought 4 months ago, they all have paid for themselves.

Bought it for the Lexus RX350 because at the time there were widespread issues with the HID headlights seals failing and water getting inside. Replacing one headlight would have cost about the same as the warranty. As luck would have it, we never had issues with our headlights, but needed the PCM (engine computer) replaced twice (first time might have been under factory warranty, don't remember anymore), head gaskets once, along with some belts and pulleys. We came out WAY ahead.

Bought it for my BMW 335d because it was a low-volume model with an engine that had a replacement cost of $25k and some relatively new/unproven emissions equipment. Primary DEF tank got replaced and my first carbon cleaning done under the extended warranty, along with some smaller miscellaneous stuff. Definitely worthwhile.

The current Q7 has a TON of electronics, so we bought a warranty that includes pretty much everything--and yes, I spent quite a bit of time reading the fine print. Still under the factory warranty and no issues so far, so I won't know about this one for a while.

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Broken Man 1999 » Mon Jan 21, 2019 3:45 pm

I have purchased one extended warranty on a vehicle. When I bought my first van after my accident, my mental health was fragile to say the least. My wife and BIL picked out a van for the conversion process to make it into a vehicle for me.

After everything was finalized, I simply didn't have the bandwidth to deal with anything else. I told wife and BIL to purchase the best extended warranty available, I just couldn't make any more decisions.

We actually got our money's worth out of it, but honestly I didn't care one way or another.

Today, I would not buy an extended warranty, as I can handle things I couldn't while recuperating.

Here is something many overlook: Some people are worriers (DW) and it causes stress on them in dealing with issues or matters that they aren't comfortable with, or knowledgeable about. DW can always bounce auto issues off her brother, who is a MB mechanic. Sometimes I do the same, just for another opinion. But, he is in south Florida, little chance of fully diagnosing a particular mechanical problem, living a couple of hundred miles away, though his input is very useful.

I keep my vehicles for at least 10 - 12 years, though my current one was purchased after DW retired, so it is racking up far fewer miles. I'm thinking maybe 15 years is easily doable with this one.

So the next vehicle will probably be purchased nearer when we are both 70 years old. And, I will probably purchase the best extended warranty that is available. Mainly to keep stress off of DW. She has enough stress just being with me day to day. :D

In the grand scheme of things, whatever the extended warranty might cost, it will be a pittance, as the cost wouldn't be that critical to us. And, if it relieves DW of some stress when things go wrong on our chariot, it is totally worth it. I'm not sure what my faculties might be when I'm 70, or for that matter, tomorrow.

So, there are many reasons people buy extended warranties, though as with many decisions, to buy or not to buy a particular product/service sometimes is not a financial decision at all. It simply is not a financial decision for DW or me today, and has never been. When I felt I needed one, I bought one, and when I feel I need one again, I'll buy another.

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by ChrisC » Mon Jan 21, 2019 3:46 pm

jminv wrote:
Mon Jan 21, 2019 3:14 pm
An extended warranty can only ever be worth it in hindsight and even then, it's only worth it to a small fraction of the people who bought them. This is because they sell you a policy that for the average (and not even average, see next bit) purchaser will have a positive payoff to Ford and a negative payoff to the purchaser. 55% of the purchasers of these never claim a single dollar of repairs. $0. You also have to think that people with extended warranties are also more likely to claim on them for minor things but 55% of them don't. Most of the rest have total claims that are less than the purchase price of the warranty. You only get a positive payoff if your vehicle has a tail end event. It's a terrible deal and you should now understand why they are pushed so hard - they're the highest margin part of the business. Insurance should be purchased for risks you can't afford on your own. This wouldn't really fall into that category and if it does, one should get a less expensive (and known for reliability) vehicle. I see people stating that you should get a warranty if you buy a vehicle known for not being reliable but then this fact would already be priced into the warranty, so it would still be a poor deal.
Extended warranties like other forms of insurance, on average are not prudent purchases, but when the events you're insuring against happens to you, then the average means little to you. It's like people who say you have a 100000 in 1 chance to have coronary heart disease, but when it happens to you, your chance is 100 percent, right? Those who say never purchase an extended warranty are just primarily saying that the average odds of you using the warranty are not in your favor and that the "house" generally wins.

I think we all should make reasoned judgments but just spouting off the odds of using insurance policies and having that the determinative and only factor strikes me as not a sound way of figuring out whether the extended warranty (or any other form of insurance) is "worth" the purchase. I've made a number of new and used car purchases over the years; never purchased an extended warranty for any new car I've purchased for a number of reasons, but I once purchased a one year old Dodge Van from Thrifty Rental Car's used fleet and with the purchase I bought an extended warranty which added a few years to the the manufacturer's warranty. it worked out well for me as the head gasket cracked on me a few years after the purchase, outside of the original manufacturer's warranty, but within the extended warranty period. This saved me a lot in repair costs.

Jez saying odds and costs are two important factors but they shouldn't be the only ones.

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Broken Man 1999 » Mon Jan 21, 2019 4:30 pm

When I get/have something, I'm not sure I would have much comfort in being
ChrisC wrote:
Mon Jan 21, 2019 3:46 pm
jminv wrote:
Mon Jan 21, 2019 3:14 pm
An extended warranty can only ever be worth it in hindsight and even then, it's only worth it to a small fraction of the people who bought them. This is because they sell you a policy that for the average (and not even average, see next bit) purchaser will have a positive payoff to Ford and a negative payoff to the purchaser. 55% of the purchasers of these never claim a single dollar of repairs. $0. You also have to think that people with extended warranties are also more likely to claim on them for minor things but 55% of them don't. Most of the rest have total claims that are less than the purchase price of the warranty. You only get a positive payoff if your vehicle has a tail end event. It's a terrible deal and you should now understand why they are pushed so hard - they're the highest margin part of the business. Insurance should be purchased for risks you can't afford on your own. This wouldn't really fall into that category and if it does, one should get a less expensive (and known for reliability) vehicle. I see people stating that you should get a warranty if you buy a vehicle known for not being reliable but then this fact would already be priced into the warranty, so it would still be a poor deal.
Extended warranties like other forms of insurance, on average are not prudent purchases, but when the events you're insuring against happens to you, then the average means little to you. It's like people who say you have a 100000 in 1 chance to have coronary heart disease, but when it happens to you, your chance is 100 percent, right? Those who say never purchase an extended warranty are just primarily saying that the average odds of you using the warranty are not in your favor and that the "house" generally wins.

I think we all should make reasoned judgments but just spouting off the odds of using insurance policies and having that the determinative and only factor strikes me as not a sound way of figuring out whether the extended warranty (or any other form of insurance) is "worth" the purchase. I've made a number of new and used car purchases over the years; never purchased an extended warranty for any new car I've purchased for a number of reasons, but I once purchased a one year old Dodge Van from Thrifty Rental Car's used fleet and with the purchase I bought an extended warranty which added a few years to the the manufacturer's warranty. it worked out well for me as the head gasket cracked on me a few years after the purchase, outside of the original manufacturer's warranty, but within the extended warranty period. This saved me a lot in repair costs.

Jez saying odds and costs are two important factors but they shouldn't be the only ones.
Yeah, sometimes the odds of something happening are very low, but say with medical screening activities I'm OK with a very low percentage positive test, even when the odds of me having A, B, or C might be low. The fact that 99.99% might not be afflicted, means nothing to me.

I don't think I would take a lot of comfort in being able to say, "Yeah, I have A,B, or C, but 99.99% of the population doesn't."

Broken Man 1999
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by dwickenh » Mon Jan 21, 2019 5:13 pm

Toons wrote:
Mon Jan 21, 2019 1:28 pm
Extended Warranty?
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+1 As always direct to the point!!
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by WhyNotUs » Mon Jan 21, 2019 5:41 pm

If I was buying a Jaguar, Alfa Romeo, or Land Rover I might buy one.
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Winston19 » Mon Jan 21, 2019 5:51 pm

I wouldn't buy on at the time of purchase. I would consider buying one near the end of the manufacturer warranty period if the car has not been reliable or if there have been serious reliability issues with that model.

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by hudson » Mon Jan 21, 2019 6:15 pm

I don't buy extended warranties because I think that they are a rip off. I've never had any regrets.
I dislike the sales pitches for extended warranties. Before I drive to a dealer to close on my next vehicle, the salesperson will have to agree that there will be no sales pitch for an extended warranty.
Last edited by hudson on Mon Jan 21, 2019 6:18 pm, edited 1 time in total.

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Artful Dodger » Mon Jan 21, 2019 6:17 pm

I had a 2003 Audi A6 turbo that I bought new. It came with a 50k mile warranty. When I was close to the 50k mark, I bit the bullet and bought another 50k extension. I think it was $2400. I had been reading the Audi message board on Edmunds, and the general opinion was lease the cars, then trade up and never be without some type of warranty. There were too many things that could go wrong. The cars are a pleasure to drive, but expensive to fix. It worked out in my favor. I had about three things go wrong that would have cost me $4500 to $6000 out of pocket.

One piece of education I got was one time when the Audi dealership gave me the invoice after a repair. It showed their estimate, and what the warranty had actually paid them. They had billed $2400, but the warranty only paid them $1700. They just told me since they had sold me the warranty, they would eat the difference. After the warranty had expired, I used that for the remaining time I owned the car. Whenever I got an estimate, I'd ask the manager if they would discount it 15-20%, and pretty much always got it. I know I probably could have got a similar lower cost just going to an independent shop, but I was happy with the quality of the Audi dealer service, and always got a loaner for free or very low cost.

I also bought a warranty on the used 2011 Genesis I bought a little over three years ago. I had negotiated them down a little, and the additional warranty pretty much evened out to their original asking price. I will admit, I was still a little gun shy after my Audi experience. (I had kept the car too long and spent about $3500 in repairs the last year of ownership). I went three years with the Genesis, and not one claim. So that was great. I bought a reliable car. Part of the deal on the warranty was if no claims were made, I would receive a 50% refund, so that was a plus.

When I helped my daughter buy a new Ford Fiesta, the dealer offered a 50k extension of the manufacturer warranty for a low cost; I think it added 6% to the total cost. She was living 2000 miles away, and I just felt more comfortable with the extra protection. She's still got the car, after six years, and I think very little use out of the warranty. But, I appreciated having the extra peace of mind.

I have also bought plenty of lower cost used cars over the past twenty years, and skipped the warranty offers. The cost of the warranty in relation to the buying price of the car and my expectation of future repair costs didn't convince me to add the additional cost.

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by FIre Fighter » Mon Jan 21, 2019 7:14 pm

RickBoglehead wrote:
Mon Jan 21, 2019 1:01 pm
The house wins. Just like a casino. The consumer rarely does, that's what Dave Ramsey and Consumer Reports tell you to never buy one.
Exactly right. These are huge profit centers for companies. Of course some people come out ahead, but the odds are stacked way against you (same is true for lottery tickets). Sure, new cars have lots of electronics, etc. but that’s all factored into the price to ensure the company still comes out ahead and make money.

I’m not sure why anyone would take on such a low probability proposition unless a major repair would lead to major financial hardship for you. Save the money and “self-insure” as it’s cheaper a majority of the time.

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by PugetSoundguy » Mon Jan 21, 2019 8:12 pm

Normally I think extended warranties for vehicles are a bad deal and I don't buy them -- with one exception.

I did buy an eight-year plan (covered five years beyond the standard three-year warranty) for our Toyota Sienna minivan. I was concerned about all the motorized doors and electronics including a DVD player. I had heard a horror story from a friend about how much it cost to repair an automatic side door. I was able to get competing quotes from various dealers for the plan. The dealer where I planned to take the van for warranty service (not the dealer where I bought the van) met the lowest price quote I got for the Toyota plan so it was quite a bit less expensive than rack rate.

Well, all those expensive things I was worried about of course were fine, but some other work resulted in just about a break even situation. The Toyota plan as written (at least in 2011) was quite inclusive, although I had to push the service department a bit. For example, they said I needed new front struts, so I said fine, looks like it's covered. They said no way, that's an ordinary wear and tear item. I know how to read a contact and it was covered, or rather not excluded, and a call to Toyota Financial confirmed that. It also covered things like replacing PCV valve, repairing front and rear wiper assemblies, and replacing a rear spring-loaded sun shade.

So that deal I think turned out OK, but in general they probably are not a good value. I also read something about not being able to buy the Toyota plans from out-of-state dealers any longer so there may be somewhat less price competition now, which of course could change the calculation.

By the way, I worked in high school as a salesperson for an appliance store and the sales people were judged primarily on how many extended warranties they sold. That should tell you something....

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by abuss368 » Mon Jan 21, 2019 8:33 pm

CobraKai wrote:
Mon Jan 21, 2019 12:46 pm
Can it be worth it to purchase a warranty in this situation or is it always a rip off?
Hi CobraKai -

Knock on wood but I have never purchased an extended warranty for a car or any other product. My understanding is in many cases this is a huge money maker for the seller.
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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Dmanse02 » Mon Jan 21, 2019 9:05 pm

Not a fan of warranties myself because the odds are with the insurance companies. However, I do like the extended warranty that comes with CPO vehicles

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Re: Is it ever worth purchasing an extended warranty for a vehicle?

Post by Morgan Dollar 1921 » Mon Jan 21, 2019 9:44 pm

A lot of good advice already here, the price is negotiable, yes! The F & I person has penetration quota's to hit in some stores.

It is a mechanical breakdown insurance contract in almost all cases, with a deductible in most cases, the worst factor in my opinion for most contracts is the insurance company is the deciding party in the quality of your repair, the part used for the repair, ( I have seen used salvage yard components shipped in from 3 states away, the shop in some cases, and the testing and diagnosis procedures. Many Aftermarket companies and agents sell a contract that does not cover all components or failures. Large print gives, small print takes it away. Missed routine services can void or reduce coverage also. In some states the dealer writes his/her own paper, meaning the indemnify the claims, one store forced the techs and parts dept to handle those claims at no profit when the claim bank reserve was empty for the dealer's sub-company. Shortcuts were often the case in those repairs.

I would only consider a OEM contract with service done but the dealer body, thus any franchised dealer in the country can do repairs, using genuine new parts with work performed by factory trained techs.

One of the best deals I ever had on a used vehicle was a 79 Olds Delta 88 Diesel. I worked for the dealer where it was traded in on a new 84 Delta 88, 59K miles, I could add a GM Costguard contract for $450 as an employee. The dealer added $100 over the trade value so I grabbed it at $1500 + $450 for the contract + taxes. Knowing the issues behind the Olds gas conversion diesel, I knew that I would get a new Target engine and anything else that would fail in 24 months. Well the miserable 200 Turbo went down too, so I got a car I drove for 4 plus years for $2k. Diesel was less than regular gasoline then too. Many farmers seemed to leave the farm with a full tank in their Olds diesel for even lower operating costs. I can still recall the fuel filter part number for those models, GM# 560355.

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