Ford Protect Warranty.... Thoughts? Experience's?

[redbucky2022]

AARP has some good read's from time to time. A youtube car enthusiast put his Carmax extended warranty to the test. It was a top tier "bumper to bumper" extended warranty to the tune of $3k at the time (few years back). He had a Range Rover he bought used from Carmax and picked it apart. The warranty paid for itself the first month, after one year of ownership it saved him over $20k in repairs. He did exploit the warranty a little bit but they said "bumper to bumper" and he took it to heart

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[coopny]

AARP (I'm not a member, but I do read stuff on its website occasionally) published an interesting piece on extended warranties.

https://www.aarp.org/money/budgeting-saving/info-2023/extended-warranties-guide.html

AARPs advice is good, but one thing to bear in mind is the acquisition cost for Ford Protect...

I bought March of 2023 10 years/100K miles Ford Protect ESP. Granger Ford charged me $50 markup above dealer invoice. At that time that was $2,935 +$50 markup = $2,985.

If I just went to a dealer to buy that at list, I would have spent twice that (just under $6000). I found this out when my activity posted to FordPass rewards and listed that amount (now with the change to milestone rewards it just shows +25 points).

So Granger offers us a good deal and makes an incremental profit instead of doubling their acquisition cost to make a 50% profit margin.

Of course, Ford is offering the warranty to make money too, but their margin is likely much, much lower than the 50-70% quoted for extended warranties as a general practice in the AARP article.

 

[rocks]

AARPs advice is good, but one thing to bear in mind is the acquisition cost for Ford Protect...

I bought March of 2023 10 years/100K miles Ford Protect ESP. Granger Ford charged me $50 markup above dealer invoice. At that time that was $2,935 +$50 markup = $2,985.

If I just went to a dealer to buy that at list, I would have spent twice that (just under $6000). I found this out when my activity posted to FordPass rewards and listed that amount (now with the change to milestone rewards it just shows +25 points).

So Granger offers us a good deal and makes an incremental profit instead of doubling their acquisition cost to make a 50% profit margin.

Of course, Ford is offering the warranty to make money too, but their margin is likely much, much lower than the 50-70% quoted for extended warranties as a general practice in the AARP article.

Exactly! I wouldn't pay anything close to what a dealer wants for a warranty. Most warranty buyers don't even know you can buy a discounted warranty online for a Ford, Honda, Jeep etc.

 

[rocks]

n’t ?

Nice catch! Yes, wouldn't. I'll edit. thanks.

 

[Dude]

Nice catch! Yes, wouldn't. I'll edit. thanks.

Me either. I rarely buy extended warranty’s but when I do it’s a discounted Ford factory warranty lol.. even Ford’s CEO and various reports acknowledge Ford’s the “leader” ? in quality

 

[rocks]

Me either. I rarely buy extended warranty’s but when I do it’s a discounted Ford factory warranty lol.. even Ford’s CEO and various reports acknowledge Ford’s the “leader” ? in quality

I'd only buy a discounted warranty or no warranty. I'd buy one for my wife's HR-V close to the end of basic warranty. I know of 3-4 places online to buy a discounted Honda warranty. Honda warranties are not very expensive at all. These numbers on the wife's '23 HR-V EX-L. With her mileage a 7/80 for $720.

D34	3	45,000	$350.00
D46	4	60,000	$480.00
D56	5	60,000	$500.00
D58	5	80,000	$635.00
D50	5	100,000	$745.00
D68	6	80,000	$670.00
D60	6	100,000	$800.00
D62	6	120,000	$910.00
D78	7	80,000	$720.00
D70	7	100,000	$900.00
D72	7	120,000	$1,035.00
D80	8	100,000	$1,010.00
D82	8	120,000	$1,155.00

 

[sajohnson]

I'm not sure I would classify it as a "bad deal." Extended warranties are simply insurance. Your car may never break, therefore the money you pay in goes to repair someone else's car. Some people pay for auto insurance their entire lives and never make a claim. Did they get a bad deal?

I hesitated over the term "bad deal", but decided not to define it further. What I meant/mean is from a strictly financial perspective, ALL insurance is a 'bad deal' -- in that, on average, in order for the ins company to remain in business, customers MUST pay more in premiums than the company will pay out. There's no way around that.

On average, all insurance is a 'poor investment'. Some forms of ins are worse than others. That's why many companies and large organizations are self-insured.

As I said above, of course there are "winners" -- just as some people win the lottery -- but there are many, many more 'losers'.

I really think it's a matter of personal choice (when it comes to ex warranties, not auto insurance). If you have the skill and know-how, extended-warranty costs seem high. If you don't, then it can certainly be a good deal, even if you never have to use it. As anyone who reads this forum on the regular knows, peace of mind is a HUGE part of a positive ownership experience.

Absolutely, it's a matter of personal choice. I even listed two (2) reasons why -- while recognizing that it's a poor investment -- people might choose to get an extended warranty. One of them you mentioned -- peace of mind (regardless of personal financial situation). The other was a situation where the person may simply not have the funds for a major repair -- even if they begin an "emergency fund".

I did not even consider mechanical and troubleshooting ability, because as a practical matter, even a tech (like myself) is not going to be willing and/or able to do many repairs. In the past, it was possible to do more but these days, beyond basics like suspension and brakes, there's a limit to what the owner can DIY. I have a decent code reader, but many codes are proprietary. Bottom line, yes, being able to do basic maint & repairs makes an extended warranty slightly less valuable -- but my comments have been with the average owner in mind.

My intent is not to insult anyone -- I acknowledged that there are a couple understandable reasons to buy a warranty. I only want to point out that they are not a good deal financially. If they were -- if the average buyer saved more than they paid -- the company would go out of business.

When possible, it is best to be self-insured.

 

[sajohnson]

To be clear, the cost of a warranty is almost meaningless without knowing the average repair expense per vehicle (risk).

What matters is, what is the customer likely to get in return? IOW, say a warranty company is willing to sell a policy for a Toyota for $1,700. That seems good compared to the discounted price of $3,000 for the Ford warranty. But it turns out that the average repair cost over the term of the warranty is just $500. THAT's what the customer needs to look at.

A $5,000 warranty would be a good deal if the average repair cost is $8,000 (of course the ins company would quickly go bankrupt...).

In order for a warranty to make financial sense, it would have to be run by a benevolent company that was content making a modest profit -- say 10%. At least that way, on average, buyers would get most of their money back. There would still be the same percentage that never use their warranty, but they would not lose so much money.

 

[sajohnson]

AARP (I'm not a member, but I do read stuff on its website occasionally) published an interesting piece on extended warranties.

https://www.aarp.org/money/budgeting-saving/info-2023/extended-warranties-guide.html

Excellent article.

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