Extended warranty on car purchase?

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  • CHCRandy

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    Feb 16, 2013
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    My daughter bought a 2016 Equinox with 30K miles on it last week and purchased a 100,000 mile, bumper to bumper extended warranty for $3600 from the Ford dealer! Well, long story short...that vehicle had a mechanical issue and she took it to dealer to find out tranny had issues and she is now soured on it and the dealer is offering her a different comparable vehicle of her choice. She is now thinking about a 2016 Ford Escape Titanium with 20,000 miles for same price. It has 1 yr/16,000 mile factory bumper to bumper left...for $995 she can get it certified which will extend warranty additional year or for $3600 she can get 100,000 bumper to bumper. I mentioned maybe checking with aftermarket company on warranty.

    I personally never buy any warranties.....but she is pretty adamant that she wants an extended warranty. Any of you have any suggestions or advice? I told her if her luck is like mine, if she buys warranty she will never need it and if she doesn't buy warranty the car will blow up 1 day after factory warranty. Just looking for wiser input....... thanks.
     

    BehindBlueI's

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    Oct 3, 2012
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    I've mentioned this before, but after the military I worked IT and it was for a extended warranty company. Here's what you're paying for when you buy a warranty:

    1) Average cost of expected repairs (per actuarial charts)
    2) Admin cost + profit for underwriter
    3) Admin cost + profit for warranty company
    4) Admin cost + profit for retail/point of sale

    Retail roughly doubles the cost the warranty administrator charges. I was not privy to how much markup we had over the underwriter.

    So, even if you don't count the ways warranty companies weasel out of claims, you're betting strongly against the house as if you self-insure (don't buy the warranty) you're only on the hook for #1. I'd put the $3600 in an emergency fund and call it a day.

    If I were going to buy a warranty, I'd only buy from the OEM or from a large insurance company. If your warranty holder goes bankrupt, your warranty dies with it. The only warranty I've bought since I worked there was for my Ram, and it's a true life time warranty with no mileage restrictions that is good as long as I own the truck and the cost of the repair doesn't exceed the value of the vehicle. Even that's a likely losing bet, but since I intend to keep it for 10y+ and I got it at slightly above wholesale price (no retail level profit) I went ahead and did it.
     

    d.kaufman

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    My advice on extended warranties is read it thoroughly and adehere to the terms. I work in a shop and some extended warranties are better than others. Some will pay out no problem others will jerk you around sending adjusters and looking for any reason to deny the claim. I had one company that denied a transmission claim because the lady couldnt produce ENGINE oil change reciepts. Make sure you save reciepts for all maintenance and if you do maintenance yourself save the reciepts showing you purchased oil, filters, coolant, etc.

    I would also suggest searching the company of whose providing the warranty as well. Like i said some are great to work with, others not so much.
    Good luck
     

    Ziggidy

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    I buy them, but from a dealer. The finance department tries to rape you with charges but if you go to Ford, Chrysler.....online and you can search for a policy that is their own, you can get a substantial discount.

    My last Chrysler T&C (still under warrantee) was about $900 cheaper than what the dealer was asking. It is a Chrysler warrantee purchased from a Chrysler dealer in another state - it's honored at any Chrysler dealer.

    I would never get a warrantee from a private company - Just my 2 cents
     

    femurphy77

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    Can't comment right or wrong but a co-worker purchased a jeep new and got a very long warranty with it. Save for the body, paint, tires and fluids just about everything else on that vehicle has been replaced at least once under that warranty. 3rd engine, 2nd trans, 2nd rearend; the list goes on and on. They finally bought him out and put him in a different new one with only the standard warranty. I told him that was a mistake as it would appear from his first one that they are lemons.
     

    luger fan

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    Mar 8, 2018
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    Ford Extended Warranty is the BEST IN THE BUSINESS. For 30 years I managed Chevy, Ford, and Toyota service dept.
     

    GLOCKMAN23C

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    Most extended warranties are decent. If the ac goes out it'll cover all but a deductible, usually $100. They can be a pain using cheaper parts though. They will also cover a given repair so many times, dealer's/part's/tech's fault.
     

    yeti rider

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    Dec 17, 2011
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    I just purchased a Ford truck a few months ago and bought a Ford ESP warranty online for half of what the local Ford dealer was asking. It is a genuine Ford bumper to bumper warranty up to 100,000 miles. I should also say I'm not big on buying extended warranties, but repairing newer vehicles gets expensive in a hurry. I'd rather pay for the warranty and not need it.
     
    Last edited:

    1911ly

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    My wife was suckered in to buying a extended warranty when she bought her new Mustang. She was under the impression that any ford dealer would work on it when it got past the factory warranty. Wrong. At that time there wasn't anyone with in a couple hundred miles that would do the extend warranty work.

    As mentioned up thread, read the fine print. At least find out who is going to be able to do the work.
     

    Route 45

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    Dec 5, 2015
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    We have at least 15 Escapes at work, all on lease.
    I would not own one unless it was under some sort of warranty.

    What's wrong with them?

    I have a new 2017 Escape Titanium. 13,000 miles, so far, so good. 2.0 Ecoboost, AWD. Really like the little thing. Peppy and fun to drive. The Ford Sync3/Sony infotainment system is the best in the business, IMO.
     

    M67

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    Jan 15, 2011
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    Yes. Get the extended warranty. Crap happens and modern vehicles are expensive to work on

    But don't go from A Ford to another ford. Messed up once and have the chance to dodge a second bullet. Get something better
     

    Route 45

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    Yes. Get the extended warranty. Crap happens and modern vehicles are expensive to work on

    But don't go from A Ford to another ford. Messed up once and have the chance to dodge a second bullet. Get something better

    An Equinox is not a Ford.
     

    CHCRandy

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    I appreciate you guys giving me some advice. I ended up going to fordprotect and got OEM bumper to bumper quote from Ford, good to 100,000 miles for $2100, $1500 cheaper than same thing at Ford dealer. They are still trying to screw her around a little, but we have no leverage in the deal. She can keep the 2015 Equinox with 33K miles or trade up to the 2016 Ford Escape Titanium with 16K for same cost. The only drawback is with this trade they make you pay $1900 for CPO on the Escape since it was already CPO and they can't refund sales tax of about $1200 she paid on Equinox.

    The good news is I found out you can cancel an extended warranty at any time. So if they **** her off, she may just keep the Equinox and then cancel the $3600 Extended warranty and the $700 tire warranty....and if she cancels in next few days it will knock sales manager out of bonuses, where if she waits until after 30 days he still gets bonus. She will not get refunded that amount but it will be removed from balance of loan. If she keeps the Escape she will use the warranty refunds as down payment, resulting in sales tax needing to be paid again on that $4300.

    I am convinced sales tax on used car sales is a racket. Hard to tell how many $1,000's of taxes get paid on some vehicles. You figure a 50,000 vehicle tax is $3500, and in a year the next buyer will pay another $2500. By the time an expensive car has changed hands 3-4 times it has had $10,000 paid in sales tax!
     

    luger fan

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    My wife was suckered in to buying a extended warranty when she bought her new Mustang. She was under the impression that any ford dealer would work on it when it got past the factory warranty. Wrong. At that time there wasn't anyone with in a couple hundred miles that would do the extend warranty work.

    As mentioned up thread, read the fine print. At least find out who is going to be able to do the work.


    She needs to call Ford Customer service. The Ford ESP, Extended Service Protection, is valid in any State, and Canada. Sounds like she went in with the wrong attitude.
     

    Ziggidy

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    I am not car dealer, my mind does work as such.

    How can they charge you additional sales tax if in fact it is an even trade (offered by dealer). In my mind, the bottom line price would be -0- since it's even trade; swap out; NOT a new purchase?

    It don't seem right. You buy a product from any store and return it - you get full price including tax refunded to you. If you bring something back and just swap it out for a equally priced item, you never have to pay another tax.

    Sounds like a scam......
     

    BehindBlueI's

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    I am not car dealer, my mind does work as such.

    How can they charge you additional sales tax if in fact it is an even trade (offered by dealer). In my mind, the bottom line price would be -0- since it's even trade; swap out; NOT a new purchase?

    It don't seem right. You buy a product from any store and return it - you get full price including tax refunded to you. If you bring something back and just swap it out for a equally priced item, you never have to pay another tax.

    Sounds like a scam......

    That's how it works in Indiana.

    If I'm buying a $20k vehicle and trade in a $15k vehicle, I only pay sales tax on $5k.

    *Only* the difference is taxed.
     
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