Winning and Losing at the Extended Warranty Game

[Ernest T]

I have a checkered history with extended warranties. At first, I never purchased them, then I got burned by a 1988 BMW 325i which spent many days at the BMW dealer. I probably spent $5000 for repairs over the 5 years I owned that car.

Next I bought a 1992 Oldsmobile 88 Royale and bought an extended warranty through Geico for $500. I never used it before it expired.

My next new car was a 1997 F150 and I passed on the warranty and didn’t have a major repair until well after a warranty would have expired.

Next up was a 2000 Mitsubishi Eclipse and I purchased a warranty for that one because it had a spotty reliability rating. I came out slightly ahead with about $1000 in repairs vs the $900 cost of the warranty.

I passed on the warranty on my next five new vehicles and would have lost money on an extended warranty on all five. We bought a 2003 Dodge Ram, 2010 Ram Dually, 2014 Jeep Trailhawk, 2015 Corvette and a 2017 F150. By this time the cost of a warranty had skyrocketed, it was over $3000 if I had purchased it for the Corvette.

The two Ram trucks were diesels and never had a repair outside the factory warranty. We traded or sold them well past 100,000 miles.

We still have the Cherokee and F150. I’ve spent less than $400 on repairs over the 11 years we’ve owned the Cherokee. It currently has 102,000 miles on it. We spent $1500 for a new intake manifold for the 150, but that was past 100,000 miles so probably after an extended warranty would have expired.

The Corvette had no repairs outside the factory warranty while we owned it, but it moved on with lower than normal mileage on it.

My head tells me to forgo the extended warranty and stick the cost of the warranty into an account just for the Bronco, but tales of $12K transmission replacements give me pause.

I’d be interested in knowing what percentage of Bronco owners purchase extended warranties and how many lost money on the purchase, but that data likely isn’t available.

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[DWG]

You need to add an additional option: Purchased Ford ESP through online Ford dealer. I have purchased the Premium Care Ford ESP on my last few new cars. I keep my cars past the 3 year and I doubt most people have the discipline to put money away on their own. More recently I can say that I have not lost money on the purchase especially since they were purchased online at a discount price. My 2019 Edge just had the torque converter and EGR cooler replaced under the extended warranty for an estimated cost of $5,000. My 24 Bronco Sport has already had the electric brake booster replaced at 5,000 miles under warranty at a cost to Fords of $2,000. I doubt I will lose money over the long term on the extended warranty. Additionally if you purchase the Ford warranty (can't speak for third party) and sell the car before the warranty expires you may be entitled to a prorated refund of the original cost of the warranty. I do not think that you can look back and compare your experiences with older cars. Today's cars have much more electronics in them that can go wrong and many of the parts used today have much more plastic in them so I believe expensive issues are more likely to come up.

 

[Jake25]

I've never opted for EW on anything & never will

 

[RSH]

Buying an extended warranty is almost the same as having automobile insurance, it needs to be a reputable company that wont leave you hanging and you hope that you won't have to use it, but if needed it's there.

 

[Jake25]

Buying an extended warranty is almost the same as automobile insurance.

Not really

 

[Escape2Bronco]

Not really

No, actually, it is exactly that. It’s insurance. More than likely you’ve paid more for your car insurance than you have gotten back. That’s the point. Insurance companies are not in business to loose money. Now, that being said, if you happen to rear end someone, your happy to have insurance for both you and the person you hit. Same as if your tranny fails at 40k miles, your happy to have the extended warrenty.

Being able to buy the Ford ESP for slightly over cost from a few dealers has made it a better gamble. If you don’t need it, you are not out that much. But given the track record of cars lately……

I’ve never bought it before and only once would of it paid off. Time will tell. I used to put 10-15k miles on a year. Now I’m lucky to put 5k on. I’m over my 36 months and just turned 20k. But just like house insurance and car insurance, I have it and hope I don’t need to use it.

 

[rms34208]

Unfortunately those of us that live in Florida do not have a choice to shop for online extended warranties..It is fairly straightforward,if you plan on trading or selling at year three expect in todays market to lose 35 to 50% of original cost.If you have just one repair event at $200 per hour labor and perhaps a several week wait for parts and an opening for a service appointment Then an extended warranty will pay for itself.. Several things to inquire about when purchasing an extended warranty. Does it use new or remanufactured parts, does the warranty include diagnostics and what is the deductible.
With labor and parts costs being very expensive it makes sence if you plan on keeping it.

 

[Escape2Bronco]

Unfortunately those of us that live in Florida do not have a choice to shop for online extended warranties..It is fairly straightforward,if you plan on trading or selling at year three expect in todays market to lose 35 to 50% of original cost.If you have just one repair event at $200 per hour labor and perhaps a several week wait for parts and an opening for a service appointment Then an extended warranty will pay for itself.. Several things to inquire about when purchasing an extended warranty. Does it use new or remanufactured parts, does the warranty include diagnostics and what is the deductible.
With labor and parts costs being very expensive it makes sence if you plan on keeping it.

I think most people have found ways around that ..

 

[Jmuns]

Unfortunately those of us that live in Florida do not have a choice to shop for online extended warranties..

You always have choices.

 

[topspin34]

$12,000 transmission replacement? That's insane!

 

[PugDad]

I've never opted for EW on anything & never will

If you need to buy an extended warranty, or feel the need, then maybe you should be buying a more reliable vehicle.

 

[Ernest T]

$12,000 transmission replacement? That's insane!

Well, it was only $11,000

(2) 2021 bronco sport badlands transmission and rear diff unit | 2021+ Ford Bronco Sport Forum - Broncosportforum.com

 

[Cursed Bronco]

With the increasing cost of labor and parts, at this point it is foolish to not buy one on a new vehicle. It is a strong hedge against inflation by locking in your price in today's dollars are costs will increase throughout your ownership time. A minor issue on these vehicles (and others alike) easily encroaches on $1,000. I paid about $2,500 for mine and it has paid off already, in less than half of the quoted mileage of the warranty. If you are someone who cycles through vehicles, then it doesn't make sense because the factory warranty is sufficient.

 

[rugedraw]

Unfortunately those of us that live in Florida do not have a choice to shop for online extended warranties.

Granger Ford will sell you a Ford ESP for $50 above cost. At one point, they were even offering 0% financing for the warranties (not sure if they still are doing that). All I did was provide a Georgia address to them to avoid the Florida clause. It is 100% legit and honored by Ford; shows in Ford's system. When the CPO warranty for our BS is coming up, I will be buying another warranty from them.

https://grangerfordextendedwarranty.com/

 

[sajohnson]

I have a checkered history with extended warranties. At first, I never purchased them, then I got burned by a 1988 BMW 325i which spent many days at the BMW dealer. I probably spent $5000 for repairs over the 5 years I owned that car.

Next I bought a 1992 Oldsmobile 88 Royale and bought an extended warranty through Geico for $500. I never used it before it expired.

My next new car was a 1997 F150 and I passed on the warranty and didn’t have a major repair until well after a warranty would have expired.

Next up was a 2000 Mitsubishi Eclipse and I purchased a warranty for that one because it had a spotty reliability rating. I came out slightly ahead with about $1000 in repairs vs the $900 cost of the warranty.

I passed on the warranty on my next five new vehicles and would have lost money on an extended warranty on all five. We bought a 2003 Dodge Ram, 2010 Ram Dually, 2014 Jeep Trailhawk, 2015 Corvette and a 2017 F150. By this time the cost of a warranty had skyrocketed, it was over $3000 if I had purchased it for the Corvette.

The two Ram trucks were diesels and never had a repair outside the factory warranty. We traded or sold them well past 100,000 miles.

We still have the Cherokee and F150. I’ve spent less than $400 on repairs over the 11 years we’ve owned the Cherokee. It currently has 102,000 miles on it. We spent $1500 for a new intake manifold for the 150, but that was past 100,000 miles so probably after an extended warranty would have expired.

The Corvette had no repairs outside the factory warranty while we owned it, but it moved on with lower than normal mileage on it.

My head tells me to forgo the extended warranty and stick the cost of the warranty into an account just for the Bronco, but tales of $12K transmission replacements give me pause.

I’d be interested in knowing what percentage of Bronco owners purchase extended warranties and how many lost money on the purchase, but that data likely isn’t available.

I'd say your post answers your question. You've owned a LOT of vehicles and you only would have benefitted from an extended warranty on the BMW.

Go with your head. Be self-insured.

Actually, my advice would be the same regardless of your experience. There are others who would have benefitted from an extended warranty on several vehicles. Anecdotal experiences are irrelevant. The facts are:

* Like all insurance, extended warranties are gambling, betting against the house.

* It doesn't matter if newer cars are more complex; less reliable; parts & labor are expensive, etc., etc. The underwriter has all of that data. They know the average repair cost per vehicle and charge some multiple of that.

* It's not as if we have some knowledge that they are not aware of -- with rare exceptions like a BS owner who regularly tows at full GCWR, in the mountains and/or off-road, in the summer. Right at the edge of allowable use.

* There are always "winners" and " losers." The winners are much more likely to tell anyone who will listen about how smart they were to get an extended warranty. 'Lucky' is more accurate. Meanwhile, we rarely hear from the losers, so the impression is that extended warranties almost always pay off -- when in fact, the opposite is true.

* Being self-insured makes the most sense, which is why many corporations and organizations are self-insured. Needless to say, most of us have no choice but to pay for homeowner's, health, and auto insurance.

* That said, there are a couple good reasons to buy an extended warranty:
1) Piece of mind -- regardless of ability to pay, knowing potential repair expenses are limited to the cost of the warranty, plus any deductibles, plus the forgone interest on the money spent.
2) Financial -- if money is tight and the only way to cover a large repair bill is with a warranty.

The bottom line is that most people who buy extended warranties will lose money.

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