Do you really need an extended warranty?

[Lou Hamilton]

Extended warranties are for people that are bad at math and also bad at being financially responsible. If you did the math you would see that about 12 percent of the money you spend on the warranty is actually used to fix your vehicle. And financially responsible people have a fully funded emergency fund and money saved for anticuoatee car repairs; they pay for repairs out of pocket.

And I would guess that less than 12% of Americans are financially responsible and have a cushion like that.

I know a number of people in various socio-economic classes that still live pay check to pay check. Many want to keep up with the Joneses so they have multiple car payments, a huge mortgage, lots of toys and hobbies, etc.

I sort of fall in the 12% but right on the cusp. Yes, I have a cushion, but it is not so huge that it could cover a disaster.

Also, if a tragedy happened so bad, I would have no issues getting rid of many of our "excess" wants -- NetFlix, high speed home internet, etc. I grew up relatively poor, my wife even more so. We have no issues living without. Heck, selling the house and living in our RV would probably be a dream, not a punishment. LOL.

 

[Bigfishfin]

FWIW...Extended warranties/insurance are always priced/sold as a profit item...The emotional side may give comfort and that could make for a rational decision, but it is gambling against a sure thing for the "house"...Me, never!...

 

[Lumos]

Extended warranties are for people that are bad at math and also bad at being financially responsible. If you did the math you would see that about 12 percent of the money you spend on the warranty is actually used to fix your vehicle. And financially responsible people have a fully funded emergency fund and money saved for anticipated car repairs; they pay for repairs out of pocket.

Something to consider:

Car breaks down, you bring in for repairs paying out of pocket: repair cost $1000.

Alternative:

Car breaks down (same issue as above), you bring in for repairs under warranty: repair cost $10 (but you don't have to pay because it's under warranty)

Repairs out of warranty are far more serious and always seem to cost way more than repairs under warranty.

 

[ssmock]

All negotiable on a new car. A high dollar used one as well.

 

[Calidad]

Follow up question - Do dealers give you a bad time if you do your own regular maintenance, like oil/filter changes? I would hate to drop $1700 bucks then tell me I voided the warranty by putting in a non-Motorcraft oil filter.

By law warranty can only be void if the warranty issue is related. So for instance if you bring in your vehicle for engine issues turns out damage typically seen by running no oil in the engine then yes self service question will surface. No different than a quick change oil shop forgetting to put oil in it. Ford won’t warranty damage caused by someone else. Can they tell? Yes!

Are warranties voided often? No! But they do deny warranty claims for obviously damaged vehicles due to miss use and such

 

[EWOregon]

In the last month The front A/C Blower sensor went out, $100 deductible, my Driver side from Wheel Bearing went, $100 deductible, and my Muffler started blowing long fiberglass witches hair requiring a new muffler, fully covered. WTF Ford ? I think that along with the included regular maintenance I have covered my extended warranty cost...I'm starting to lose confidence in the vehicle (2017 Limited).

Update.
Long Fiberglass threads coming out the exhaust...total cost to replace the muffler...$967 at Ford.

 

[Bigfishfin]

FWIW, my "strategy" is that any insurance should be bought/used only for catastrophic losses, not for the usual or customary...Buying high deductible insurance policies and keeping substantial emergency funds in reserve is financially prudent (the actuaries ALWAYS win)!...

 

[mwl001]

Actuaries win because they diversify risk... people buying one vehicle don't have that option. On average, you will be better off not buying a warranty, while in all likelihood the actuary will win either way (kind of like a bookie).

 

[Bigfishfin]

Good points! Insurance is bookmaking, just legalized. If more folks realized that, they would be more restrained in their use of it...It serves many purposes that are valuable, but self insuring as much as possible is a very prudent life strategy and economically sound...You can’t protect yourself against all hurts!

 

[NukeLife]

Extended warranties are for people that are bad at math and also bad at being financially responsible. If you did the math you would see that about 12 percent of the money you spend on the warranty is actually used to fix your vehicle. And financially responsible people have a fully funded emergency fund and money saved for anticipated car repairs; they pay for repairs out of pocket.

LOL
You might have had an argument years ago. Today? You’re way off.

It was an EASY decision to buy the extended warranty.
I knew with absolute certainty that my 2018 would incur over $1700 in repair bills over the additional 75,000 miles of my purchased warranty. Absolute certainty.
It’s not a Camry or a RAV4.

within the last 12 months I have had both turbos replaced, the VCT cam replacement, the sunroof tracks replaced, the IWE wheel hub replacement and TSB, the side mirror popping TSB, the passenger massage seat control repair, a coolant leak repaired and the transmission main control valve body replaced.

ALL OF THIS performed after the factory warranty had expired,... and it cost me a grand total of $200 out of pocket.
So including the initial cost of the extended warranty I’ve paid $1900 for all of these repairs,...

I don’t get to see “their “ cost, but I’m fairly certain I have made out like a bandit.
Oh, and their still troubleshooting a drivetrain issue and scheduling a third party repair for one the headrest video screens.

That math doesn’t take a genius.

 

[mwl001]

LOL
You might have had an argument years ago. Today? You’re way off.

It was an EASY decision to buy the extended warranty.
I knew with absolute certainty that my 2018 would incur over $1700 in repair bills over the additional 75,000 miles of my purchased warranty. Absolute certainty.
It’s not a Camry or a RAV4.

within the last 12 months I have had both turbos replaced, the VCT cam replacement, the sunroof tracks replaced, the IWE wheel hub replacement and TSB, the side mirror popping TSB, the passenger massage seat control repair, a coolant leak repaired and the transmission main control valve body replaced.

ALL OF THIS performed after the factory warranty had expired,... and it cost me a grand total of $200 out of pocket.
So including the initial cost of the extended warranty I’ve paid $1900 for all of these repairs,...

I don’t get to see “their “ cost, but I’m fairly certain I have made out like a bandit.
Oh, and their still troubleshooting a drivetrain issue and scheduling a third party repair for one the headrest video screens.

That math doesn’t take a genius.

This is where I come down, more or less. Now, it's very easy to get ripped off and over pay for an extended warranty, or a bad 3rd party warranty... but if you buy direct from Ford at or near cost (several easy ways online to shop for this), I think the odds you'll lose a lot of or all of your money is pretty slim - to your point, this isn't a Toyota. In the rare event you or I have 36k or 60k trouble free miles, so be it. But considering the purchase price paying $1500-2k for some more peace of mind and spreading that out over several years could potentially have a lot of upside if you plan on keeping the vehicle to 8yrs or 100k.

 

[Bigfishfin]

LOL
You might have had an argument years ago. Today? You’re way off.


That math doesn’t take a genius.

Genius has nothing to do with the issue, it is math!...Good for you that the insurance covered your repairs, but the actuaries are not tabulated for the insuror to lose overall, they win!...

 

[KJ-Idaho]

These are complicated cars. The closest thing left to a lump of an engine is probably Toyota's 5.7 and that will be going way of the DoDo pretty shortly.

My 2020 has dual fuel systems to combat Direct Injection issues, and even though it is an XLT with 2 options, there's enough electronic gee-gaws to cause a normal mech fits, so it will almost always be Ford's baby to fix. Besides, it already has quite a few minor warranty issues in less that 12K. So...

FWIW I have owned SEVERAL extended warranties, and only once did I ever break even on one. Most, I returned/sold the car and got a portion of the warranty $$$ returned for non-use. It is insurance if something catastrophic goes wrong, it is peace of mind, and I expect I will buy one for mine if I keep it past the factory one.

I don't know if you sell your vehicle's privately, but:
1. They are usually transferable for a small fee
2. It gives the next buyer peace of mind you ain't selling them a lemon (b/c you would of fixed it under the warranty in the first place).

YMMV...

 

[KJ-Idaho]

Ok.
Third option. If you sell the vehicle during the term of the contract, it can usually be transferred to the purchaser.

make sure to request a refund if you sell before the terms expire.

 

[Password]

I think generally, you can always buy one as long as you are still under the factory warranty, and I think you can buy outside the warranty if you have the vehicle inspected by a dealership. However the longer you wait the more expensive the coverage gets. Also pricing changes (increases) in February each year.

I was just going to ask that question, if its better to buy now or wait closer to the end of the factory warranty.

 

[lobsenza]

The warranty is less expensive before 12 months/12,000 miles. Between 12,000-36,000 1-3 years the only difference is price increases.

 

[JimW]

I bought my warranty through Lombard Ford at 26K miles when I purchased my truck. I was able to make zero interest payments, too. I'm usually not a warranty guy but with so many bells and whistles that could fail I had to.

 

[Jeff Schoch]

So does everyone go through the Ford dealer or go with a 3rd party? After checking out Lombard's site, the Ford one seems to come back in the $$$ ballpark. The 3rd party one(Endurance) was relatively close, but they said it included 3 oil changes per year, brakes/pads, and a few other items.

Any one have experience with a 3rd party?

 

[5280tunage]

I've always gone direct. I had one vehicle with a 3rd party and i had lots of issues getting prices for labor and parts negotiated with warranty related issues. And in most of their contracts, they describe the use of remanufactured parts, and its their discretion. So rather than getting new (OEM) parts, you often got remanufactured (OEM like) parts. Short term fixes in many cases. If the price difference isn't much, I've always had good response with manufacturer warranties.

 

[John I]

So does everyone go through the Ford dealer or go with a 3rd party? After checking out Lombard's site, the Ford one seems to come back in the $$$ ballpark. The 3rd party one(Endurance) was relatively close, but they said it included 3 oil changes per year, brakes/pads, and a few other items.

Any one have experience with a 3rd party?

A couple decades ago I had an extended policy through Warranty Gold. I think I had just about recouped the cost in the form of covered repairs when WG filed bankruptcy. I was one of the lucky ones.
Buy a Ford ESP. I got mine recently from Flood Ford. Shopped Lombard as well, and received a discount offer afterwards. Promo code is Z24819, and is good until 2/28, if you want to give it a try.