I agree, but in this case I got the warranty because I never got the car
checked out before I bought it, and I wanted to be able to drive away
without thinking about repairs. My last car threw a rod, and that's why I
now have the Escape. The math is simple: I spent 2200 on a
warranty/insurance, only had the car for two months and the money I spent
went towards a 2000 repair that I would have had to pay if not for the
warranty. Keep in mind I've only had the car for two months, and it's a 48
month 48,000 mile warranty, so I have a lot of warranty left to go.
True, I probably could have gotten the repairs cheaper at a private shop,
but once again, I have a lot of warranty left and it covers a lot. Was I
unlucky? Absolutely. Never heard of an AC unit disintegrating and taking
out the rest of the components. Did the warranty pay off? Absolutely. Was
I a sucker? Not in this case. :-)
$2200 minus $2000 means that you paid a lot more than you got out of the
warranty. Plus, as you admit, you could have gotton the work for less,
probably a lot less.
Ford doesn't sell warranty because it makes a great product - They sell
it because they make money on them. A lot of money. And, so do the
dealers (like 50%).
The VAST MAJORITY of used car warrantees - and even extended
warrantees on new cars are NOT sold by the manufacturer. They are sold
by third party "warrantee companies" who package an insurance product
as a warrantee.
Some are good, some are mediocre, and some are just plain crooked.
More accurately, few are good, few are mediocre and most are rip-offs.
Why anyone would buy warranties from insurance companies without
checking out how well the companies pay out claims is beyond me.
You might ask why anyone buys an extended warranty from ANYBODY?
Statically, less than 2% of all manufactures warranty ever pay our more than
the total cost of the extended warranty and the deductibles.
Interestingly, most buyers in our foreign brand stores bought the vehicle
they did because they believed the were "better." Yet we able to sell
extended warranties to a much higher percentage of our to import brand
buyers, than we could to buyers in our domestic brand stores.
The insurance cost $2200, but the charges were $2000. And the person
lost out on interest, too. Plus, the prices paid were dealer prices. THe
person could have gotton the same service for less at an independent dealer.
So, no, the person lost out.
He lost out on interest for a couple of months - not a biggie with
today's interest rates.
Yes, he could have paid less - but at a Ford dealership the warrantee
on what was replaced WILL be better than at the local AC shop.
But that wasn't my point. It appears this warrantee company paid to
have it fixed - in a timely manner - which some don't. I was
responding strictly to "Why anyone would buy warranties from insurance
companies without checking out how well the companies pay out claims
is beyond me." from the previous post.
Also, the OP stated he bought the vehicle without having it inspected
(OK - I know, that is generally a DUMB thing to do) and bought the
warrantee as a hedge bet. And it appears he may have been smart to do
that after making the dumb move of buying the vehicle without having
it inspected. Chances are pretty good he'll be using that "warrantee"
again before it expires.
That said - like I said before, they are generally NOT a good deal (or
as I said before, investment)
Yes, buying the car without a presale inspection was really dumb, but I have
to tell you the AC worked perfectly when I got the car. Normally I always
have a car inspected by an independent before buying, but I just had a good,
gut feeling about the dealership and the salesperson. They fixed everything
I found wrong, which wasn't much, before the final sale. As for interest,
not an issue. I paid cash for the car and the warranty. Also, I know the
warranty was probably not a Ford warranty, but I never had to pay a dime
when I picked up the car. I'll have to check, but I honestly don't know if
they will pay for repairs done outside of a Ford dealer. They will pay for
a tow and a rental if needed.
I mean, if the repair is going to be free I don't mind going to the dealer
even though it's 45 miles away.
It's the dealerships.... People need to realized that they are buying a
car from a dealer, not from the manufacturer. Too many people I know
think that when they are buying 'A' Ford, they are buying 'FROM' Ford.
They are not, and the extended warranties that are offered at the time
of purchase are from a 3rd party company that has a deal going with the
dealership, and not the manufacturer. The ONLY extended warranty anyone
should ever get (if you insist for some reason to have one - I don't) is
a Manufacturer's Extended Warranty, that way as long as Ford is in
business, your in business and can go to any dealer for warranty work.
The main reason for this is that most people work the cost of the
extended warranty into the final price of the vehicle. Most think it's
a "Ford" warranty, when in fact most are third party and people are so
excited to get in the new car, they don't take the time to go through
the fine print. Most cases, the extended warranty price is spread out
for 5 years (depending on the loan length). 6 Months after the purchase
of your car, you get notice that the 3rd party company that was to cover
the extended warranty on your car is going or is now out of business.
You are still under the manufacturer's warranty for now, but
congrats...you just paid for a service you will never be able to use
when you get to 30,001 miles. There is a reason dealers schedule all
the signing on the day your going down to pick up your shiny new car.
Be prepared to walk away, even if you have done all the legwork and loan
and have the certified check from the bank made out to the dealer on you.
I fully understand that these warranties are aftermarket warranties sold by
a third party. I also understand that there is a lot of profit in these
warranties, and in most cases one would never see $2200 worth of repairs
outside of normal wear and tear. I also understand that one can often get
repairs done cheaper, and sometimes better, as a private shop. But, in my
case the math doesn't lie. I trusted the dealer to sell me a warranty that
would serve me well, and AFAIK it is good at any Ford dealer. I also know
when you sign that contract and it says CAR SOLD AS IS the dealer isn't
going to do anything for me if something breaks.
It was a tough decision to spend that much on an extended warranty, and in
the majority of cases it would never pay off. You can look at these
warranties and repairs from a lot of angles, and most of you all make sense,
but I still think I did good in this case. Had I not had the warranty, and
let's say I took it to a private shop, I would still be out a bunch of
money. Just letting a shop "check" your AC often costs upwards of $200, and
unless you buy your components used, they also cost a bundle.
You don't by insurance with an expectation to "win or lose" in the
absolute sense. It's a game of probability. You assess the odds of
needing the insurance against what the insurance costs and decide if
in any particular situation it makes sense to buy it. By it's very
nature, most people who buy insurance WILL lose in strictly money
accounting terms. In the OPs case he has already come out ahead/even
by HIS assessment of HIS needs. And he still has a lot of time left
on his coverage and he might wind up in the minority who collect more
then the policy costs. Few people with understanding of insurance
would expect to "win" in the sense of "making money" on an extended
car warrantee just as most people won't "win" by trading in their 3
year old car on a new one. Not every decision in life is assessed
purely in terms of dollars and cents or we'd all be living in a 200 sf
house with no heating or cooling and riding a motorcycle to work.
Actually, that's taking the subway or riding a bike to work.
Insurance should just be for the major events in life that are too
expensive to cover by yourself and to protect others (like some
liability insurance). It is essentially sharing the costs.
Repair work on a car doesn't make the cut of worthwhile insurance (nor
does insurance on washers, driers or most computers).
Did it ever occur to you that when you buy a used car warranty, you are
betting you "new" car WILL need a repair that will cost in excess of what
you paid for the warranty. On the other hand the dealer is betting it
WILL NOT, yet HE does not pay anything if he win the bet, but you do?
The is like the old sucker bet, were I guys says, "I'll bet you your pay
check that you team looses." If they loose you must give him YOUR pay
check. If your team wins you get to KEEP your pay check. ;)
cost in excess of what you pay for the warranyt
In a sense, of course. But you are not making a bet so it's an
imperfect analogy. No one should buy insurance with the expectation
that they will come out ahead since the whole premise of insurance is
that the vast majority of participants will not.
There is one cercumstance where buying an aftermarket warranty can
When buying a used vehicle of unknown provinance from a dealer who's
reputation you do not know. If you get a warranty from one of the
"better" companies, it will cover the patched up tranny and damaged
engine the shyster didn't tell you about.
Better idea though, is to never buy a car from that kind of place in
the first place.
I know of numerous used car lots that lost the "right" to sell these
warrantees because they basically sold them on every car they sold -
and never did any repairs or even inspections before selling. The
contract they sign when they sell the warrantee to you states they
have checked the car and there are no known mechanical problems with
the car. When about 75% of the vehicles sold by these guys need major
repairs within 6 months - and many within weeks (like this Escape) you
know they are working a fiddle.
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