I haven't replaced one yet on the current flavour of Exploder (I don't
recall any of the other guys doing one either). I have my own opinion of
extended warrantees and I wont bore you folks with what's been discussed. I
will mention that you should read the conditions VERY CAREFULLY before
signing the cheque.
I disagree with this:
Save your money, preferably in a bank. Historically less than
I own a 2000F150 that is WELL maintained and all service done on time and
maintenance items watched. On a recent trip to NY I had a major starter
failure that created a large load on the battery cables as well as starter
that actually caught fire before the fusible link cut in.
Towing, new starter, starter solenoid, starter relay, new battery cables,
rental truck for 5 days and labor that WAS all covered under warranty
exceeded the cost of my orig. Ford ESP cost when I bought it.
Buddies tranny went out at 43,000 miles due to a internal part failure--cost
was way over his warranty cost.
Guy I work with had the #3 plug blow on his Lightning and cost of new head,
labor, coil and etc was way under his warranty cost also.
All 3 of our plans have 50.00 deductible with the premium care and 1 repair
has already paid for the warranty on each. All 3 vehicles are all well
serviced and maintained at required service intervals and most times sooner.
Any more repairs after this are all more benefits to be had with a 50.00
deductible with any warranty repair. You never know when a major part can
fail EVEN when well maintained and cost could be in the
So much for the 1% idea in my opinion and better safe than sorry if you plan
on keeping a vehicle for 5-6 yrs nowadays with repair costs getting higher
It depends largely on the vehicle - you have to realize that Ford is
selling the ESP on gazillions of vehicles like the Taurus/Sable &
CV/GM/TC that have a very low claim rate... and it's easy to sell too
because it can be paid for with the ultra-low interest rate loans available.
I'll bet that the 1% is pretty darn close...
Extended service plans are just a form of insurance. Ford
(and everyone else) who sells them has better information on
the claims rate than you do. With this superior information,
they should know how to price them so that they make money.
Most extended service plans have very high profit margins. I
have heard that dealers make as much as 50% right off the
top. Then there is the cost of administering the plan,
advertising the plan, and finally paying actual claims. I
doubt if more than 40% of the money paid in for the policies
actually goes towards paying for repairs (probably a lot
less). This implies that for the "average" person, extended
service plans are a very very bad deal. You get a better pay
out playing blackjack in Vegas.
Does this mean you shouldn't buy an extended service plan?
Well no. That still depends on you. I have bought them on
several vehicles and never gotten a cent out of them (1981
Audi, 2001 Mustang, 2003 Expedition). In fact I have never
owned a vehicle where an extended service plan was a
"winner" for me. So why did I buy them? My explanations
(rationalizations?) are as follows -
'81 Audi Coupe - I loved the car, but friends (including two
Audi owners) warned me that they were maintenance
nightmares. So, I bought the extended warranty. At 50K
miles, the car was running fine, but I was tired of it and
sold it. No claim was ever made against the extended
2001 Mustang GT - When I bought the car I expected to only
keep it for 2 to 3 years. However I drive a lot (20K miles a
year on this one car). So I looked at the extended warranty
as a sales tool for the used car (3 year old car with 60K
miles). In the end I traded the car in at around 40K miles.
I had the Ford ESP and they rebated me about 35% of the
original cost of the ESP when I canceled it.
2003 Expedition - This was the first year of the "new"
version Expedition. I had a 1997 Expedition that in 148,000
miles only required about $500 total of out of warranty
repairs (one coil pack, one alternator). However, given the
changes in the 2003 (IRS, smaller transmission, more
powerful engine, etc.), I believed there was increased risk
that the vehicle might suffer from some unforeseen problems.
So far (50K miles), these fears have proven groundless.
However, I still don't feel too bad about the money spent.
In the end, extended warranties are like any other insurance
policy. They mitigate risk. Compared to policies for some
other areas (home owners, or even regular car insurance)
they are way over priced (at least in my opinion). The
dealers mark them up way too much. I also won't touch a
policy from a third party. I know some are just fine, but if
I am going to spend the money, I am going to buy it from the
vehicle manufacturer. If you want a policy, you should also
negotiate the price. The dealers have a lot of room to lower
the price on these policies without affecting the coverage.
If having the insurance makes you more comfortable, then I
say spend the money. Just don't expect it to make financial
sense on its own merits. I am very sure I if I had put the
money in the bank for the three policies I have bought, I'd
be ahead financially. On the other hand, if the engine in my
Expedition goes south tomorrow, I may decide I did the right
thing. I am getting a significant "warm feeling" because I
have the ESP. So far I still think it was worth the cost.
"Tom C." wrote:
I agree with most of the posts so far. Extended warranties are almost
always overpriced, and seldom pay for themselves (the clerk at Office
Depot tried to sell me an extended warranty for a $20 answering machine
the other day. Couldn't understand why I wouldn't buy it. Cost of the
warranty? $20!) I make it a policy NEVER to buy them.
However, there is one question that no one has yet asked. Do you have
any signs of incipient failures?
When I bought my 02 Explorer V-8 XLT, I refused the extended warranty
even though the dealer pushed it hard. I haggled with him a while (I
wanted to see where he would go), and he cut his price substantially. I
had no intention of buying it, but I kept his paperwork and his quote.
However, by 30,000 miles, I experienced the infamous "howling rear end",
had the rear end replaced at Ford's expense, and had the new rear end
begin to howl. In addition, I began to have transmission problems that
everyone assured me were "not a problem". At 35,000 miles, I got
nervous, bit the bullet, and bought the ESP Plan direct fgrom Ford.
Haven't used it yet (65K miles), but I feel a lot more comfortable. The
rear end continues to howl (which may not be a problem), but the
transmission continues to deteriorate, and I may yet need it.
Interesting detail - I bought the plan directly from Ford, and paid $400
less than the dealer's "best" price. On a $1000 policy, that's a lot.
The second link you provided gets you the Ford plan, but through a
dealer. You can bet that he takes a big bite as your money passes
I would take the money and put it in the bank. If you do this for every
vehicle you own, you will come out ahead. If I put $1000 for the ESP in my
bank account on my 1997 Contour, I would have about $1150 there now.
sure. but you didn't. most people don't have cash lying around.
they finance this expense too. it doesn't just buy repairs.
it buys peace-of-mind. it's like locking in your mortgage rate.
it may be higher than it needs to be, but you KNOW you
can carry it. same with the ESP. i always recommend it.
what i do just before it expires is go to the NHTSA web
site and review all the TSBs for my vehicle. then i go
to the dealership and pretend i feel some of the symptoms.
they check and sometimes i get stuff fixed that hadn't
yet shown up.
That could work well. In my case I had a 1989 Mustang with a Ford
Extended warranty from the dealer. When the vehicle decided to start
idling at 1200 -2200 rpm sometimes, and the only way to stop it was shut
off the engine and restart, fun while driving, I took it in under
warranty. The dealer the 3 times I took it in couldn't find any problem
and said $75 each time for diagnostic fees, since nothing was found
there was nothing to warrant.
The one time I bought a warranty was on a used Mitsubishi Eclipse.
After the deal was done, the dealer started on the warranty; he wanted
$1,200. We finally settled on $250 and some change. That should give you
an idea of the profit margin on those things.
Check out your credit union, your driving club (AAA), etc. They
typically offer decent warranties at far lower cost.
The dealer offers peace of mind but at a horrendous markup. I really
think that they could offer the warranty straight-up at something like a
hundred a year, going up as the vehicle got older, but that's too simple.
That's really what you want; someone who will sell you mechanical
insurance on the vehicle, based on loss history and not dealer fluff.
o__ > | A roadie who doesn't ride a mountain bike has no soul.
Read the warranty CAREFULLY to see what is and what is not covered.
Most of the extended warranty plans I've seen have a specific list of
parts they will cover. If the part(s) that failed aren't on the list,
you're SOL. If the contract doesn't have the list, call the warranty
administrators and ask them to send you the list.
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