Extended warranty

[ranferg]

I bought my edge used with several miles on it for it's year. It's a 2013 with 31K miles currently. Probably not a wise decision, but got a nice car for the wife for much less. Anyway, just curious on what others thoughts are on purchasing an extended warranty. Do these things have any kind of serious problems over time that would justify getting one? Thanks.

[ls973800]

Right now doing a search on this forum for just the words extended warranty returns 5 pages of results. In just the first 3 pages, there are 8 separate topics which are specifically regarding the extended warranty or ESP, not counting the one you started. There are 135 replies about the extended warranty within those 7 separate topics.

 

Should help you with your decision if you read those instead of needing a new topic. If you still have any questions after reading those, come on back and ask them.

 

http://www.fordedgeforum.com/index.php?app=core&module=search&do=search&andor_type=&sid=f8bfe4b735bccb5789006adb51fd0d30&search_app_filters[forums][sortKey]=date&search_app_filters[forums][sortKey]=date&search_term=extended+warranty&search_app=forums

[akirby]

There isn't much new to say that hasn't already been said in the other threads.

[flyinlow007]

From the research I did before I bought mine, it seems the power transfer unit (PTU) is probably your biggest concern if you have an all wheel drive. If not, no major concerns although they are machines and can break. Check out floodfordesp.com , very good prices on the Ford extended warranty.

[zsasbo]

I would add that I got an 8 year extended warranty from ford. It is a 4 year extended and talked them into 1/2 the price for 8 years. Cool thing is that if I don't use it, they pay me back in 8 years. Yeah right! Anyway, I would get something if I were you after seeing this: http://autos.yahoo.com/news/the-10-least-reliable-cars-181031192.html

5/10 of these vehicles were Fords...no edge, but who knows if the Edge didn't come in 11th place.

[akirby]

The reason there were so many poor ratings were due to MFT software issues and launch problems with the new Focus, Fusion and Escape. There is nothing to indicate any long term reliability issues with any of those vehicles.

[ls973800]

"I would add that I got an 8 year extended warranty from ford. It is a 4 year extended and talked them into 1/2 the price for 8 years. Cool thing is that if I don't use it, they pay me back in 8 years."

 

 

You may have bought it from a Ford dealer, but are you sure it is a Ford issued policy? I have only ever heard of some aftermarket policies having a pay back at the end if you don't use it, never a genuine factory issued policy.

Edited November 7, 2013 by ls973800

[JOEHIO]

I"m getting tired of stressing the importance of Fords Premium Care Extended Warranty. Some disagree with me, but I would not be without it.

Just a few weeks ago, had my wife's '09 MKS in for repairs - power steering pump, water pump, and cracked tranny bracket (whew) ! cost me my $100 deductible, without the warranty, would have been around $3,400. Now, is it worth it or not - YOU decide !

 

The car only had about 54,000 miles on it, is garage keep, and maintenance kept up on it, as per owners manual.

Edited November 8, 2013 by JOEHIO

[akirby]

I"m getting tired of stressing the importance of Fords Premium Care Extended Warranty. Some disagree with me, but I would not be without it.

Just a few weeks ago, had my wife's '09 MKS in for repairs - power steering pump, water pump, and cracked tranny bracket (whew) ! cost me my $100 deductible, without the warranty, would have been around $3,400. Now, is it worth it or not - YOU decide !

 

The car only had about 54,000 miles on it, is garage keep, and maintenance kept up on it, as per owners manual.

If that's the only major repair on 3 vehicles then you would still lose money. People win in Vegas too sometimes. But that doesn't change the odds to your favor.

[flyinlow007]

It really isn't about losing money, its about managing risk. If I pay $1200 now so that I don't have to pay more than that on a future repair, if it happens, then its up to each person on how they want to manage that risk. If you're the type of person who does not want to be surprised by a high repair bill then the extended warranty is an acceptable risk management tool.

 

If you are the type of person that wants to "self insure" then you put some money away each month for major repairs. Using the example above of the 09 MKS and assuming they bought new on Jan. 1 of 2009 and bought the warranty then, they would have needed to put away $57 per month, which is not a huge sum. ( I calculated through the end of this year to make it easy) but then their account is now empty and they are still driving the car, so if they run into another major repair that is going to be cash out of the pocket or they would have had to budget more dollars per month, lets say $100 per month to put away for repairs. They would now have had $6000 in the kitty, but had to spend $3400 for repairs, leaving them with $2600 in the kitty. They could have been drawing interest on that money, but lets face it, they would only get a couple of bucks of interest on the money they were depositing each month.

 

If you look at it a different way, they were able to spend $1200 and get $3400 of value out of it. Its a risk as they could have ended up spending $1200 and got nothing out of it. if we look at the same timeline, if they had not used the warranty it cost them $20 per month to manage that risk, but that is only calculated through the end of this year. If they had more repairs next year, the cost of that risk management per month would go down as we have increased our timeline but not had to make more of an initial investment. So again, it comes down to is it worth it to risk paying $20 per month for five years to hedge against paying more than that should I have a repair?

 

I work for a major financial services firm (the ones that "never took a bailout") and our entire insurance business is based on risk management. Its not always about simple dollars and cents, sometimes its about managing risk, and what is managing risk really but hedging, which is just a fancy word for betting.

 

Losing money is an arbitrary term. If you spent $1200 for an extended warranty and ended up with $3400 in repairs covered by the warranty, you didn't gain any money, no one handed you a check for the difference, you just didn't have to pay the $3400 bill 5 years after you bought the warranty. Similarly, if I spent $1200 on a warranty five years ago and never used the warranty 5 years later, I haven't lost any money because that money was spent 5 years ago, its done and gone. When it comes to new cars, there is not talking an investment that can appreciate so its an expense, and if its an expense then you have to figure out best how to manage your expenses. That differs from household to household and depends on family size, income and expenses.

 

All I'm trying to say is that there are different perspectives, there is no right or wrong answer and even the way people look at losing or gaining money is different from person to person. Its the same when you talk about buying cars, there are people that will absolutely not buy a new car because of the huge hit of depreciation you take in the first year. You could say that is losing money. To other people that is inconsequential as they want to buy the car new and may keep it for a long time.

 

For myself I don't understand why people would lease a car for 2-3 years then turn around and lease another one. They like to have a new car every couple of years and don't want to worry once its out of warranty. For those people you could make the argument that buying an extended warranty and buying the car instead of leasing and keeping it longer would put them ahead. I'm sure that's an argument for another place and time.

Edited November 8, 2013 by flyinlow007

[ranferg]

Thanks for everyones replies. Guess I shoulda done a search first instead of being kinda lazy about it. My bad. Thanks again.

[akirby]

It really isn't about losing money, its about managing risk. If I pay $1200 now so that I don't have to pay more than that on a future repair, if it happens, then its up to each person on how they want to manage that risk. If you're the type of person who does not want to be surprised by a high repair bill then the extended warranty is an acceptable risk management tool.

 

If you are the type of person that wants to "self insure" then you put some money away each month for major repairs. Using the example above of the 09 MKS and assuming they bought new on Jan. 1 of 2009 and bought the warranty then, they would have needed to put away $57 per month, which is not a huge sum. ( I calculated through the end of this year to make it easy) but then their account is now empty and they are still driving the car, so if they run into another major repair that is going to be cash out of the pocket or they would have had to budget more dollars per month, lets say $100 per month to put away for repairs. They would now have had $6000 in the kitty, but had to spend $3400 for repairs, leaving them with $2600 in the kitty. They could have been drawing interest on that money, but lets face it, they would only get a couple of bucks of interest on the money they were depositing each month.

 

If you look at it a different way, they were able to spend $1200 and get $3400 of value out of it. Its a risk as they could have ended up spending $1200 and got nothing out of it. if we look at the same timeline, if they had not used the warranty it cost them $20 per month to manage that risk, but that is only calculated through the end of this year. If they had more repairs next year, the cost of that risk management per month would go down as we have increased our timeline but not had to make more of an initial investment. So again, it comes down to is it worth it to risk paying $20 per month for five years to hedge against paying more than that should I have a repair?

 

I work for a major financial services firm (the ones that "never took a bailout") and our entire insurance business is based on risk management. Its not always about simple dollars and cents, sometimes its about managing risk, and what is managing risk really but hedging, which is just a fancy word for betting.

 

Losing money is an arbitrary term. If you spent $1200 for an extended warranty and ended up with $3400 in repairs covered by the warranty, you didn't gain any money, no one handed you a check for the difference, you just didn't have to pay the $3400 bill 5 years after you bought the warranty. Similarly, if I spent $1200 on a warranty five years ago and never used the warranty 5 years later, I haven't lost any money because that money was spent 5 years ago, its done and gone. When it comes to new cars, there is not talking an investment that can appreciate so its an expense, and if its an expense then you have to figure out best how to manage your expenses. That differs from household to household and depends on family size, income and expenses.

 

All I'm trying to say is that there are different perspectives, there is no right or wrong answer and even the way people look at losing or gaining money is different from person to person. Its the same when you talk about buying cars, there are people that will absolutely not buy a new car because of the huge hit of depreciation you take in the first year. You could say that is losing money. To other people that is inconsequential as they want to buy the car new and may keep it for a long time.

 

For myself I don't understand why people would lease a car for 2-3 years then turn around and lease another one. They like to have a new car every couple of years and don't want to worry once its out of warranty. For those people you could make the argument that buying an extended warranty and buying the car instead of leasing and keeping it longer would put them ahead. I'm sure that's an argument for another place and time.

 

 

Don't disagree except for the losing or gaining money part. That's simple math - just take the cost of the warranties on all your vehicle versus any covered repairs.

 

Extended warranties are nothing but insurance, and the rule with insurance is you only cover what you can't afford to pay for. I can afford to buy a new TV but I can't afford to buy a new house if my house burns down. I would propose that someone who buys an extended warranty out of pocket for $1500 (not financed with the car) can probably afford to pay for even a large repair. However, if you're on a fixed income or simply don't have enough savings or credit to pay for a large repair then I recommend getting the warranty but financing it with the vehicle so you're only paying $20/month. That makes perfect sense. You're not doing it to save money you're doing it to avoid an uncoverable large expense.

 

It also makes sense if you think a particular vehicle might cost you a lot more than the warranty costs and you're willing to take a gamble - but it's still a gamble. If there are known problems then the odds might be more in your favor but it's still betting against the house. Sometimes you win but most of the time you lose.

 

It doesn't make sense to buy them just because you think it will save you money overall in the long run.