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Extended Warranties: To buy or not to buy?

North7

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2012 Xterra: I only had one issue with this car (also ac related). I bought it used and the Nissan dealer I bought it from sold me a 3rd party extended warranty. Not sure if its a Nissan thing but went to have 2 different local dealers look at it and got push back since it was a "third party extended warranty". They advised me I needed to go where I purchased it which I will be honest seems more of an inconvenience so I have learned to live with the annoying sound I get from the valve flap thingy that diverts air from inside to out (and vise versa).
Great example.

In case anyone missed it:

NEVER, EVER, BY A THIRD PARTY EXTENDED WARRANTY OR A DEALER HOME BREW.


Only buy the genuine Ford Protect Extended Service Plan (ESP), it is good at any ANY Ford dealer.

(no, I do not own any Ford stock)
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BeerForMyHorses

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I am my extended warranty ;)
This is how I plan to do it.

For those curious, this is an alternative to extended warranties.
Wife and I set up a budget for every need. Car budget right now always has $2000 in it for any pop up monthly expenses. It's usually just gas, but we take money out of it for any repairs, insurance deductible, vehicle accessory purchases, etc, and deposit money into it end of month to bring it back up. I'm probably not going to get the extended warranty and just throw a little more money into the car budget. Maybe increase it to $3k or $4k incase there's a huge repair after the factory warranty expires. I'd rather I have that money and not need it, than give it to someone else and not use it.

I’ve bought several new cars in my life, bought an extended warranty once, and never used or needed it. There is a reason they trap you in the back room at the end of your sale to talk about these items....you’re in a rush to get out of there finally after shitty negotiations and they know people don’t willingly need or want this stuff.
Recent funny story about this exact situation! Some guy hit me and totaled my car so I went and bought a Corolla Hybrid to bridge the gap until bronco. Found a hell of deal on a 2020 with only 7000 miles. Anyway, I bring my wife and 4 month old with to the dealership. Paperwork, salesman, every part of the process is going too slow for my taste. I wanted to be out of there by 4:30 pm and it's 6pm and I still haven't "signed the dotted line".

They finally bring us to that private back room you mentioned around 6:30, and he starts his sales pitch about some paint and window treatment levels, tire protection, yada yada yada... Stuff I don't need, and I have a car budget for if it breaks (see above).

I literally had to be rude to him to tell him I was not buying anything except a car. He still kept pushing, meanwhile it's 6:45pm and my baby starts fussing because bedtime is 7. I said "Josh, I'm a nice guy. If we don't speed this process up, that baby is gonna be more rude to you than I ever could be".

His entire demeanor changed, he almost went lifeless, but he finished the sale in about 2 minutes. He went from smiley, trying to be buddy buddy with me, to I'm just another face and let's get this guy out and on to the next one.
 

Beachin 74

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AZshot

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Same thing happened to me 30 years ago. Got my first good job after the Navy and College, went to the Ford dealer and negotiated for a Taurus SHO that had been a demo car. Then they ushered me, my young wife, and baby into the back room. A young hard charger started trying to convince me to buy the Ford ESP. I said no, firmly. He started his sales talk again. He LITERALLY would not take no for an answer. He kept calling it a "bumper to bumper" warrantee. Keep reading, it's not.
After about 45 min, I told my wife to take the baby and go out in the lobby. No change, he kept selling. At one point I asked "are you telling me I cannot buy this car unless I add the warranty you are describing?!" He said I could but blah blah blah. I was young, he eventually wore me down, and after about 2 hours, I agreed. In retrospect, it was standard interrogation tactics: you deprive the person of sleep, food, water, peace until they tell you what you want.
The Taurus needed 2 new clutches (one was a broken clutch spline I determined later) and 3 new sets of brake rotors over the years. Nothing was covered. It was all deemed "normal wear items" even if broken parts, warped rotors, etc.
If anyone buys an extended warrantee today, they should be sure to ask for an ID 10T form to fill out.
The next time I bought a Ford, I ordered it (2002 F-150) and told the dealer on the phone "no shenanigans - I will NOT buy an ESP. They said fine. Called me when it was in, I got a ride and picked it up, out of there in 15 minutes.
The next time I bought a new car, I drove it, met the salesman, and went home. A few days later I CALLED him with my offer. "They really prefer to negotiate in person..." he said. I said no way, I live far in the country, take it or leave it. He called me back 20 min later and said "we'll take your offer." I set up my loan, walked in, got it.
 

DC9atnight

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In my humble opinion, insurance companies are like the House in Las Vegas; they ultimately always win the bet. It’s easy to tell the areas that insurance companies don’t make massive profit in because they quickly leave that sector (earthquake insurance in California for example) For this reason, it seems any insurance is only necessary if you cannot afford the replacement cost of the insured item. I don’t have a ton of faith that my Bronco won’t have problems but I have a ton of faith that the insurance payment will make the insurance company more money than the customer saves on covered repairs.
 

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Brad Fx

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I did the same plan as you but from Florida. Came up the original price for us,$3065. Too many old people here(me included) for the discount you received being from Washington. Oh well... :)
If you have the option, pick a dealer that includes the lifetime powertrain warranty for a glimmer of reassurance. Then take that $3,000 and put it in a Roth IRA. You can have multiple Roths to keep it separate, just label that one Car Repairs. If/when you need the money, you should have more than enough. Your Roth “contributions” can always be taken out tax free at any time and your earnings taken out after age 59 1/2.
 
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XirallicBolts

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I'm on the fence. I'm almost thinking not with the Bronco because it'll be my wife's -- she puts less than 10,000 miles/year on her current car.

I bought the ESP for my Flex and realized that I'm basically paying $2,200 upfront assuming I'll have a major failure between 60k and 100k, between 2019 and 2022. Short of a massive powertrain failure or many small issues, that's not terribly likely. Besides the annoyance that the "5 year" was from original purchase date, not my purchase date.

If it was a bunch of small issues, I'd still have to deal with the $100 deductible each time and the hassle of scheduling appointments at a dealership.
 
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j_marinelli

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In my humble opinion, insurance companies are like the House in Las Vegas; they ultimately always win the bet. It’s easy to tell the areas that insurance companies don’t make massive profit in because they quickly leave that sector (earthquake insurance in California for example) For this reason, it seems any insurance is only necessary if you cannot afford the replacement cost of the insured item. I don’t have a ton of faith that my Bronco won’t have problems but I have a ton of faith that the insurance payment will make the insurance company more money than the customer saves on covered repairs.
Completely agree with your an analogy! It would not be offered if it wasn't profitable.

To continue with the Vegas theme, think of it as Texas Hold 'em. You get your cards and you have an idea what you got. As the dealer flips the other cards over you start to see what you really have. By the river you know if you are going all in or not. Plan is to wait towards the end of the factory warranty and see if the Bronco has any large problems. If it does, I will probably pick up a ESP package that covers the parts in question. If I have had zero issues or only minor issues, I will probably pass on the ESP.
 

NoleDawg

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Bought it on my 2019 Ranger via Flood just short of a year after I took delivery on the truck. The process was very easy and way cheaper than what back room guy tried to push at the dealership. I may be an idiot for buying it but I always keep my cars for eight years at least and this way I have very little to worry about (I think).
 

Gasherbrum

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I'm not a fan of extended warranties. I've had a few auto dealerships as clients and saw that in general they typically make surprisingly small margins on new car sales (Internet makes it very easy these days to compare pricing) but they make very good margins from selling financing contracts and a LOT from selling extended warranty contracts. Yes there are a number of people who have used a warranty contract to their benefit, but there is a much greater percentage of people who bought one and never used it. Take your pick.
 

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If you have Geico for insurance really look into their MBI. Super cheap and pay as you go.

I am amused how everyone has had the same horrible experiences with the finance guy sales pitch at the end of the process. They must get some online training on how to lie and just be overly pushy to customers before getting the keys to their backroom closet offices.
 
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Hoofnmouth

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If you have Geico for insurance really look into their MBI. Super cheap and pay as you go.

I am amused how everyone has had the same horrible experiences with the finance guy sales pitch at the end of the process. They must get some online training on how to lie and just be overly pushy to customers before getting their backroom closet offices.
Oh yeah its legendary after hours of beatdown its to the backroom for more undercoating,paint protection,alarm system ,gps tracker,gap insurance ,extented waranty,snake oil additive,scotchguard seats,no no no no no just the truck please.
 

AZshot

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I just looked at the Ford ESP site just for fun. Clicked the yellow button for highest option. Clicked Brakes. Read the fine print of xyz being covered then "except for friction items" in parenthesis. "Friction items" kinda covers a LOT, doesn't it?

It appears they are doing exactly the same as what they did in 1991 with my Taurus: listing a lot of broad, vague areas of what is covered, but nothing that can be tied down. Hidden info is what they use to NOT cover those items.

During my saga with my clutch failure I talked to the Ford people in Dearborn. The pedal had "snapped" one day when pushing the clutch in, at about 20,000 miles. Floppy petal, like a broken cable.

I took it to the dealership for my "bumper to bumper" repair. I asked if it would be covered. Their answer was "we won't know until we get in there". Ok, so now I have to let them start work without knowing. Then they called and said "yep, just like we thought, clutch worn down to the rivets!" I said to replace it. Then as an afterthought, said I wanted my old parts back. When I picked up the SHO I was presented with a $900 bill, a box of parts, and an excuse that "it's not covered." I had to pay, but took the old clutch plate to my friend who is a mechanic. He showed me it was totally in spec, not worn, and was fine. He showed me on the invoice a suspicious $25 part "clutch spline" or some such, no old one in the box of old parts. Said that's what caused the "snap" and floppy pedal. I called them back, they defended their decision, saying when they looked up the parts, they were not covered. I asked if ANY part in, on, or related to a clutch was covered? They couldn't answer, saying "we'd have to know a part number and look it up."

I started calling and writing letters to Dearborn customer complaints, ESP program office, etc. NO ONE would tell me exactly WHAT parts are covered, and what are not. They use generic catchall terms like "normal wear item." I showed my invoice of clutch plate, throwout bearing, clutch spline being replaced...got shrugs. Guess what happened again, 2-3 years later? Yep, needed another clutch (took it to a non-Ford repair).

So if you have a bad dealer, and the brake rotors warp due to faulty design or clutch spline breaks due to faulty part, they'll lump it into "normal wear" item and you get blamed for the problem by your driving style. You pay the total repair, all parts and labor.

I tell my story to help the next generation, who is at risk of being screwed by these bogus "bumper to bumper" sales pitches. Skip them.
 
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AZshot

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BTW, I could tell MANY stories from friends over the years of an ESP NOT covering expensive items. Yeah, they'll replace an electronic window motor. But may not cover a total engine failure or transmission. I'm sure in the internet era there are statistics of how many not covered vs covered events occur.
 

HarderCorer

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... Then take that $3,000 and put it in a Roth IRA...
What your paying extra for with the warranty is the ease of use. Hopefully you have a great dealer that doesn't screw you. If your not positive on that, you'll be much better on your own. But be honest with yourself first, are you responsible enough and willing to do the extra paperwork? Do you trust your financial advisor?
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