Thank god for extended warranties

wrote:


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. :-)
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Sheldon wrote:

$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%).
Jeff
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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.
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snipped-for-privacy@snyder.on.ca wrote:

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.
Jeff
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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.
wrote:

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Well, it seems this one paid out OK - RIGHT?
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snipped-for-privacy@snyder.on.ca wrote:

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.
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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)
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wrote:

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.
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dr_jeff wrote:

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.
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wrote:

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.
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Sheldon wrote:

Yeah, you lost interest on the money and you paid more for the insurance than the repair would have cost you. You lost.

You trusted a dealer?

Bingo!
Except that you spend more for the warranty than you would have paid for repairs.

Whatever. You're still behind.
Jeff
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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.
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Ashton Crusher wrote:

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).
Jeff
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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

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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.
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Mike Hunter wrote:

The dealer doesn't care if you use the insurance. He makes his cut when he sells you the policy.

No this is like the sucker lottery bet: The state takes in $100 and pays out $50.
Jeff

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wrote:

There is one cercumstance where buying an aftermarket warranty can make sense. 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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snipped-for-privacy@snyder.on.ca wrote:

If that's the case, one would wonder why you are considering the car at all, unless the price is really, really low.

See, I hate to tell you so. But I knew it.

Working a fiddle? I never heard that expression.
Jeff
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It's a British or colonial expression. It was a common expression among the British Expats in Zambia in the years I spent down there.
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