Extended warranty worth buying?

Ravensfan1996

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I did but depends on your circumstances. I drive 30k miles a year commuting to work so my warranty would be done in less then 2 years. Piece of mind for me. That said I’m still working from home now and have only put 2k miles on it in 4 months. But plan is to back in February. Still glad i got it with so many things that can go wrong on the first year.
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Accord07

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To give an example, suppose 10 people paid $1,000 each for such a policy. Maybe the company anticipates paying out $8,000 in claims, $1,000 to administer the program, and $1,000 as their profit when all is said and done. The average policy holder would get back 80 cents for every dollar they put in here with this example.
I think the cost of administering the program and commissions paid out to sales staff is considerably more than 10%, but you make a very good point. If one buys the same factory extended warranty at dealer's grossly inflated price, or one "backed" by third parties rather than the manufacturer, then the price is mostly profit.

I just think people should go into these plans eyes wide open about how they work, financially, from the company's perspective. Which goes back to the general point - if someone can handle an unanticipated car repair out of pocket, they are very likely to be better off passing on these plans, given that we can't tell what specific problems our vehicles will (or will not) experience in the future.
At the price point, buying a Mach-E is discretionary spending. How to spend one's money is obviously a personal decision. As for myself, if I couldn't handle unexpected repair expenses out of pocket, then I couldn't afford the car.
 

Accord07

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Two things to consider: insurance on your house is required if you have a mortgage. It protects the lender and also protects you from the major costs provided the insurance company accepts the claim. The same may come into play for a car on lease or a loan, but I'm not familiar with the lending terms.
The value of a house is much higher than that of a car, so a total loss would be a financial disaster to most homeowners, especially in places with high housing cost. The car loans I took out in the past had a $500 cap on deductibles for comprehensive and collision coverage. For me as the owner/operator of the vehicles though I am far more concerned with potential liabilities resulting from an accident than potential loss of the vehicle itself.
 

generaltso

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Some people think an extended warranty is worth it and some don't. Neither is wrong and no amount of back and forth will change people's minds. If you think an ESP is worth it, shop around on the sites listed here (Ziegler, Flood, Lombard, etc.). If you don't think it's worth it, then don't.

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Benny’66

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I’m not going to get into the amount of durability testing that is done at the OEM level. Each manufacturer knows statistically exactly when a component part will fail. And all parts delivered by suppliers have to survive at least until the end of the warranty period or they could be shipping a replacement “under warranty” to the Ford dealer directly.

The point I’m going to make is about costs. The replacement part costs are not linear after your warranty expires. As an example, the rear drive motor may cost the consumer $5000 to replace out of warranty, but it is only costing Ford (guessing) $1000 because they are still manufacturing the cars. Typically the OEM costs don’t go up until after the car is done being manufactured and the supplier has to maintain “service” parts for another 10 years or whatever the contract is. If OEM part costs were available to the end customer, no one would buy an extended warranty because “out of warranty” sales are big business for OEMs. Chew on this thought, do you think a manufacturer would rather sell an ESP at $1,500 or a motor at $5,000? The biggest issue on the ESP is the OEM still has to pay the dealer to install the part, that eats away at their ESP profits really quickly. Selling the dealer the part (which is also marked up by the dealer) is pure profit.
 

EELinneman

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The value of a house is much higher than that of a car, so a total loss would be a financial disaster to most homeowners, especially in places with high housing cost. The car loans I took out in the past had a $500 cap on deductibles for comprehensive and collision coverage. For me as the owner/operator of the vehicles though I am far more concerned with potential liabilities resulting from an accident than potential loss of the vehicle itself.
No argument with your logic. We added an umbrella policy a while ago to buy general liability coverage. It's really pretty cheap. These have limitations but did drop our other policy costs to the point where the added $2M in liability coverage is only costing me about $80/year.

Speaking of costs, we upped our auto deductable to $1000 and that paid for itself in 20 years months. Knock on wood, we haven't had a claim in a while.
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