Extended Auto Warranties

[wasy]

I bought a used 2005 Ford Explorer from a Ford dealer about 6 months ago. The original 3yr/36,000 is about to expire so I inquired about an extended PowerTrain warranty, the dealer quoted me $1,080 for a 6yr/75,000 $100 deductible. I go online and find the same warranty from discountfordwarranties.com for $745. This web site claims to be an authorized Ford dealer but I'm reluctant to pull the trigger.

 

[Rob_k]

I bought a used 2005 Ford Explorer from a Ford dealer about 6 months ago. The original 3yr/36,000 is about to expire so I inquired about an extended PowerTrain warranty, the dealer quoted me $1,080 for a 6yr/75,000 $100 deductible. I go online and find the same warranty from discountfordwarranties.com for $745. This web site claims to be an authorized Ford dealer but I'm reluctant to pull the trigger.

I have heard of that site, and know of people on another forum who have used them as well with no issues (of course, YMMV), personally, I bought mine from the dealership (pretty much same deal $75.00 deduct, full coverage on everyhting to 100k).
Did you know you can negotiate the price on the warranty? I did just that, and the warranty price was around $1200, I played the game and was reluctant, the finance guy said, "Tell you what, since you are a repeat customer of the dealer and you know the service manager, I can let you have it for $850.00, how's that?" I told him to write it up. Remember, warranties are pure profit for the dealer, costs them virtually nothing to do, and most of the service is under written by the manufacturer (Ford, Toyota, etc).

 

[grateful1]

I bought a used 2005 Ford Explorer from a Ford dealer about 6 months ago. The original 3yr/36,000 is about to expire so I inquired about an extended PowerTrain warranty, the dealer quoted me $1,080 for a 6yr/75,000 $100 deductible. I go online and find the same warranty from discountfordwarranties.com for $745. This web site claims to be an authorized Ford dealer but I'm reluctant to pull the trigger.

My mother bought one when she purchased a used Lincoln a few years back...after the first year of ownership, the original warranty ran out and the extended kicked in...well - within the next 2 years they replaced the air-ride suspension, transmission(twice) and the ENGINE!!!

It was well worth the $1800 or $2K that she paid upfront.

I had one on my used truck...make sure the warranty is transferable if you plan on selling before the it's up.

My girlfriend has one on her Subaru...they just replaced the tranny...it would have been a LOT.

My car has one from the dealer - some dealers who sell them - only offer the warranty if their shop does the repairs....I think I saw that once....not good.


Here's a good linky!

 

[mysterea]

I'm of the understanding that it depends on the car.

For an american made (nothing personal) vehicle I've seen alot of things fail having to do with the 'power train' fairly early in the life of the car. That being said, I wouldn't pay for the same service on a reputed japanese car, since the chances of something serious dying is much less (at least within the mileage max offered in the warantee.

That's my 0.02$

~R

 

[jgohlke]

Like most insurance, it's a good deal for the insurer and not a very good deal most of the insured. Also, like insurance, it can be a real checkbook saver if you have an expected and expensive problem.

Generally, the dealer keeps (profit) about 1/2 of the cost of the insurance. You can figure that the insurance company is betting that most people that buy your particular car, won't have claims in the insurance period that are over 1/2 of your insurance premium. It's all a gamble...with the house making a profit.

Also remember that you are likely paying double for some amount of time. Whatever warranty comes with the vehicle already covers you for that period of time (cost of this is built in to the vehicle price by the factory). The "extended" warranty extends your primary warranty. They like to call the extended warranty a 5-year warranty...but it isn't. I really extends your original warranty from 2 or 3 years to 5. You have to break down the cost by the actual period covered.

Say for example, you bought a brand new car from Ford (3 year/36 mile warranty) and they wanted to sell you their 5-year bumper-to-bumper warranty for $1000.

First you have to deduct the original warranty period for bumper to bumper coverage....lets say that's 1 year. Then the remaining manufacturers warranty covers drive train, etc for 2 more years (ending the 3 year period).

The "5-year" warranty is really only 4 years (years 2-5), with years 2 & 3 covered by the manufacturer for most main (expensive) problems. Really, the "5-year" warranty just extends your original warranty by 2 years (years 4 & 5).

Let's say the dealer keeps 1/2 the premium as profit. The insurance company gets $500. That's only $250 a year for year 4 and 5. Keep in mind, the insurance makes money, so most folks have fewer than $250 worth of claims in those years. You *probably* will too.

For me, I'd rather buy a decent car and pay whatever real repair expenses come my way. I figure on average, that I'll be paying less than $250 year for those 2 years....Paying $1000 to cover those possible expenses doesn't seem like a good deal to me. For some cars, I may not have any repair expenses. Of course, this does leave me exposed to unexpected catastrophe, but I figure, averaged over my lifetime of car ownership, I'll still come out ahead, even if I have to replace an engine or a transmission once or twice.

Hope this helps....

 

[Devil Doc]

I never bet on having bad luck.

Doc.

 

[grateful1]

Like most insurance, it's a good deal for the insurer and not a very good deal most of the insured. Also, like insurance, it can be a real checkbook saver if you have an expected and expensive problem.

Generally, the dealer keeps (profit) about 1/2 of the cost of the insurance. You can figure that the insurance company is betting that most people that buy your particular car, won't have claims in the insurance period that are over 1/2 of your insurance premium. It's all a gamble...with the house making a profit.

Also remember that you are likely paying double for some amount of time. Whatever warranty comes with the vehicle already covers you for that period of time (cost of this is built in to the vehicle price by the factory). The "extended" warranty extends your primary warranty. They like to call the extended warranty a 5-year warranty...but it isn't. I really extends your original warranty from 2 or 3 years to 5. You have to break down the cost by the actual period covered.

Say for example, you bought a brand new car from Ford (3 year/36 mile warranty) and they wanted to sell you their 5-year bumper-to-bumper warranty for $1000.

First you have to deduct the original warranty period for bumper to bumper coverage....lets say that's 1 year. Then the remaining manufacturers warranty covers drive train, etc for 2 more years (ending the 3 year period).

The "5-year" warranty is really only 4 years (years 2-5), with years 2 & 3 covered by the manufacturer for most main (expensive) problems. Really, the "5-year" warranty just extends your original warranty by 2 years (years 4 & 5).

Let's say the dealer keeps 1/2 the premium as profit. The insurance company gets $500. That's only $250 a year for year 4 and 5. Keep in mind, the insurance makes money, so most folks have fewer than $250 worth of claims in those years. You *probably* will too.

For me, I'd rather buy a decent car and pay whatever real repair expenses come my way. I figure on average, that I'll be paying less than $250 year for those 2 years....Paying $1000 to cover those possible expenses doesn't seem like a good deal to me. For some cars, I may not have any repair expenses. Of course, this does leave me exposed to unexpected catastrophe, but I figure, averaged over my lifetime of car ownership, I'll still come out ahead, even if I have to replace an engine or a transmission once or twice.

Hope this helps....

Good points.

Wasy - also look at repair costs when determining if you should buy the extended warranty.

 

[wasy]

You guys are certainly informative and have ne rethinking the need for an extended warranty!

I really only wanted it because the Explorer is notorious for having transmission problems but according to the link posted by grateful1 those problems seemed to be addressed in 2002.

Thanks you the great info.

 

[Maggs44]

Extended warranites are like gambling, sometimes you win and sometimes you lose. I bought an extended new car warranty when I bought a 1991 olds. It cost me $780 and I used it once during the life of the car (got 9 years out of it). I paid $25 for a $250 alternator. So I lost on that one.

In 2003 I bought a new LeSabre and didn't buy the warranty. Guess what, a year after the 3 year warranty, I get a $350 leak in something with the cooling system.

So, it's a gamble.