Except in California, where we can only purchase from California Ford Dealers. The dealerships here must have a great lobbyist.
I bought a Ford ESP warranty when purchasing my new CA Route 1 from Walnut Creek Ford (California) in September 2022:
Really, they're all form of insurances. they just cover different things. But in essence, it can be broken down to shared risk. In all cases, you're paying a "small amount of money" with the understanding that if something happens, the insurance will pay out. Extended warranties are the same.That is why I have car insurance. I am protecting my "investment" in case of an accident. That is apples to apples unlike the warranty comparison.
I do however drop full coverage to liability only when the car is valued at $5,000 or less.
Once again, if one keeps the money in a separate account (instead of giving it to the warranty company) for the repairs past the factory warranty, you in effect are saving money and you are able to protect your family via inheritance like you suggest with the life insurance. And btw, chances are the repairs won't fit into the their definition of what is warranted.
The term "Extended warranties" should be changed to "extended payments". In the end, it will cost more on average.
And refundable.
If we are talking "pure investment", the MME was not a good purchase if you still own it investment wise. One would have been much better off to place the "extra" money into almost anything else. A car has fixed costs. You need to pay for insurance, tax etc. Many people think that if they borrow against the car that it is "free" money to invest into something else? What happens if that "investment" goes sideways? You now have a loan on an item that is tanking. Even if it is a low interest loan, you still have debt and you are now seeing other items that you need to purchase with a higher interest rate and you have nothing to borrow against for future loans. In other words, you are treading water and starting to sink.
In any case it is better to have money handy for any purpose (including paying off the debt) then have them "frozen" into the car. In the first case at least you have options. Also if you invest any money you are always taking risks. But nobody talks about investing, Put it on CD - you'll still get more then the interest and no risksIf we are talking "pure investment", the MME was not a good purchase if you still own it investment wise. One would have been much better off to place the "extra" money into almost anything else. A car has fixed costs. You need to pay for insurance, tax etc. Many people think that if they borrow against the car that it is "free" money to invest into something else? What happens if that "investment" goes sideways? You now have a loan on an item that is tanking. Even if it is a low interest loan, you still have debt and you are now seeing other items that you need to purchase with a higher interest rate and you have nothing to borrow against for future loans. In other words, you are treading water and starting to sink.
Now while it is easy to look back and "arm chair quarterback" what one should have done, the MME wasn't a good investment. If I am going to borrow money, I want to protect my investment and have equity on hand if things go sideways. I have known way too many people from the late 70's and early 80's that had the same philosophy. Borrow to the hilt and take the extra money and invest. Many of those people lost everything. Now I realize that the last couple of years were anomalies, but I can't forget my friends parents that went broke because of that mentality.
I will only purchase what I can afford (when speaking of cars) and borrow and invest in things that more than likely, will increase in value (not cars). Cars are on the bottom of that list.
First off, the money isn't "frozen". The money is in a vehicle that can be sold at any time. Actually, it is more fluid than a CD. If you withdraw from a CD early, you will pay a penalty. I would also venture to say that many that purchased an MME, didn't have a pile of money to divest anyway. That is just and educated guess though. My accountant (without saying names) always says that more people than not are upside down than not. In other words, they will just be stuck paying interest rates the rest of their life with little to show outside of that.
I though we were discussing the case when the buyer has enough cash.
Sometimes you can. At the time when I was purchasing the car the inflation rate was so high that it was quite obvious that the fed will start fighting it with full forceAt the time I purchased my MME, the interest rate to borrow was more than the interest rate than I would have received in a CD or bank account. Also, every time you borrow money, it goes against your credit rating and future loans can carry a higher interest rate. This is how Banks make money. They give out loans that yield more interest than they pay via CD's etc. The only time you are ahead, is if you can time it out well. A crystal ball would come in handy. If I would have known that CD's would be worth much more now, I would have been better off. I didn't know that and it could have easily gone the other way.
If one could predict the future you would always be better off to buy stock or other investments that you know would appreciate. I can't tell the future btw.
That is a different story. You are just playing on a different lever.....
If the purchaser has the cash to put down, I still stand by the odds of saving more by paying cash as opposed to borrowing the money. Once again, the Banks are in effect using your money to lend to others. If Banks made it a habit of getting less in interest than they pay out, they would not be in business very long.
I've got it at the moment when inflation was high but before the ford price increase. As for flipping it - I just don't know how it works. You still loose a lot on taxes and registration fees and I just enjoyed the car.If the purchaser has the cash to put down, I still stand by the odds of saving more by paying cash as opposed to borrowing the money. Once again, the Banks are in effect using your money to lend to others. If Banks made it a habit of getting less in interest than they pay out, they would not be in business very long.
And yes, inflation was/is high and the Fed were going to raise the interest rates. I guess if you knew that, then why in the heck did you purchase a car when the prices were high and not sell it right before they tanked? You would have been much further ahead to borrow money against a house with low interest (assuming you have equity) and take the cash out and sit on it for a while and place it in a short term CD and then take that money and purchase an MME for thousands less. You could have taken the entire equity out of your house with a low interest rate and made a pile of cash with a CD yielding around 5.5% now. You could then deduct the interest on your home for tax purposes.
I guess if I were Nostradamus like you, I could be much better off.
I am not suggesting doing what I posted in my most previous post but rather pointing out that if one could predict the future, one would do things much differently.
