Car Warranty
January 11, 2010 11:21 AM   Subscribe

I'm probably not going to buy the extended warranty for my 2-yr-old car. Am I wrong?

My car (well crossover or SUV, really):
- '08 Ford Escape (4 cyl & front wheel drive, if that helps)
- 2 yrs old
- approx 30K miles

Ford's warranty was 3-yr/36K miles. I'm only 6K miles from there, so now my dealer's offer me a warranty for another 6-yrs/75K miles.

The price is approx $1000. Is this worth it?

My gut reaction is to not buy extended warranties. However, I want to go with more than my gut.

I know nothing about car repair pricing these days so my math estimates probably will be useless, but here it goes...

Based on absolutely nothing besides pulling numbers out of the air, I estimate the standard repair covered by this warranty would cost $500. So it would take 3 such repairs over the next 75K miles of usage for this warranty to be worth it (and that's ignoring time value of money).

So my gut reaction + my math (again rooted in no knowledge of the car repair market) both tell me not to buy the warranty.

Any other info I'm missing that would sway me in the other direction?

P.S.: Let's assume this is your standard variety bumper-to-bumper warranty...when I asked what it covered, my dealer just kept repeating "pretty much everything".
posted by glenngulia to Travel & Transportation (13 answers total) 2 users marked this as a favorite
my dealer just kept repeating "pretty much everything"
Ugh, that is horribly uninformative. Ask them what it does not cover.
posted by soelo at 11:25 AM on January 11, 2010

I do not feel I've ever made back the money I've spent on 'extended warranty', I stopped purchasing them many cars ago.

Look at it like this, if the company selling the warranty thought that you were likely to have repairs more than the cost of the warranty, they wouldn't be selling it to you.

It is a lot like putting money in a slot machine... odds are the house is going to win.

Take the $1k, put it in an account, let it earn interest, use it for car repairs...
posted by HuronBob at 11:30 AM on January 11, 2010

No, you're right to be doubtful and careful. "bumper to bumper" warranties usually do NOT cover ANYTHING that is "subject to normal wear and tear." They usually do NOT cover anything in the drive train. We just bought a truck and were offered a similar warranty. The information slip about it sounded good on the front but on the back had paragraphs of 4-point type detailing how much it didn't cover.

As soelo said....scrutinize and demand details. It's very likely not worth it.
posted by carlh at 11:31 AM on January 11, 2010

see if you can get it for less than 1K. my last car purchase they tried to sell me the 8yr 75K mile warranty for 3500, I had done my research and asked for (and got) a 7 year 100K warranty for 1050 (after about 10 minutes of haggling, during which point I refused anything higher than the $1050, which for my car and purposes is totally worth it - lots of electronic doodads and random expensive things that might break, all of which are covered. if you're not sure you want it, no harm done in bargaining down to 600 or 750, at which point it might be worth it, depending on what it covers.
posted by citystalk at 11:46 AM on January 11, 2010

I bought a 2002 Ford Focus used from CarMax in 2003 or thereabouts, and decided to buy the extended warranty they offered at the time. It was a true extended warranty; the only thing it didn't cover was parts that are routinely worn out and replaced, like brake pads and tires and stuff.

I didn't have a whole lot go wrong with my car (I still have it and am just shy of 100k miles, although the warranty ran out a couple years ago), but I feel that I did come out ahead with the warranty--I had to have a few different sessions of work done on the cooling system at one point when I started leaking antifreeze, and had one or two wheel bearings replaced on their dime.

I definitely had more than $1000 of stuff repaired over the life of the warranty, though. If I could get that same warranty again, I'd do it... Sadly, a lot of the warranties out there now seem a little shady. If the best answer they can give you is "pretty much everything," then that's a big red flag and no sale.
posted by Jinkeez at 11:49 AM on January 11, 2010

"Look at it like this, if the company selling the warranty thought that you were likely to have repairs more than the cost of the warranty, they wouldn't be selling it to you."

Be careful with this thinking - it assumes (I would guess incorrectly) that you can get the same price deal from a mechanic or dealership as what it costs Ford for the same work from their people.

I have an extended warrantee (different car company) that I'm very happy with. I also like the piece of mind it gives - if anything goes wrong with the vehicle, it's not my problem. But as noted, check the fineprint, make sure the exceptions aren't too exceptional, or there's no point.
posted by -harlequin- at 12:07 PM on January 11, 2010

Agreed with others that an extended warranty might help you, but odds are it will not, and with the way the dealer is poorly representing the product I'm sure it is overpriced and/or relatively useless. If you want to take it, get paperwork on it before you decide, then offer substantially less for it (half the price, say) and see what happens. Haggling is fun.

Your best bet is likely to select a car for purchase that (based on consumer reports scores and an independent mechanic's assessment) is unlikely to need major repairs, then bank that $1,000 for repairs that might become necessary. I just peeked at consumer reports (I have a subscription) and the '08 Escape 4cyl is average or above on every listed item except "Squeaks and Rattles". It's noted for problems in "Transmission -- Minor" as well, but only on the 6cyl engine. So you seem to have picked a good prospect in theory.

Keep in mind you do have 6K miles to find out if the transmission slips or the engine has trouble starting and such, so at least you're protected in the short term against the day-to-day issues that might not be revealed in a test drive. Wear items like brakes won't be covered anyway, so if I were you I'd take it to your mechanic and pay $50 to have him inspect the fluids, check the brakes, look for exhaust leaks and signs of major damage repair -- for my money, that's money better spent than 20X that amount just in case those issues turn out to exist.
posted by davejay at 12:16 PM on January 11, 2010

There is no cotton-pickin' way I'd spend a red cent on an extended warranty. If you're concerned about major problems down the line, have your car checked out by a trustworthy mechanic (not the dealer) before the manufacturer's warranty ends. If the mechanic finds anything major, take it back to the dealer to get it fixed before the regular warranty runs out.
posted by SteveInMaine at 12:18 PM on January 11, 2010

Just a couple of things:

1- Is it a manufacturer's warranty or is it from the dealership? If it's from the dealership they cannot legally call it a warranty. It's a service contract. If it's a manufacturer's warranty it would be worth getting it but it doesn't hurt to haggle on the price.

2- If it's a manufacturer's warranty, remember that you don't have to get it from *that* particular dealership. You can go to another dealership and buy it from there. Just call one up and inquire about it and find out how much they would sell it to you for.
posted by eatcake at 12:44 PM on January 11, 2010

30K - 90K is the sweet spot for car ownership. The early defects have all been fixed, and you aren't into old car issues yet. I have never made my money back on an extended warranty. As long as you are diligent about oil changes, flushing the transmission and coolant, and all the other routine maintenance, the odds are in your favor that nothing horrible will happen to the car. If you are worried about having the cash take the $1000 you would spend on the warranty and set it aside on a savings account for car emergencies.
posted by COD at 1:48 PM on January 11, 2010

You know that episode of The Simpsons where Homer gets a crayon removed from his brain and becomes a lot smarter, but then after realizing that he was happier as an idiot he has Moe reinsert the crayon? Well, during that scene, Moe's slowly shoving the crayon deeper into Homer's brain, relying on Homer's comments as an indicator of just how stupid he's becoming.

At one point, Homer says, "Extended warranty? How can I lose?!"

It has served me well in life to recall that scene every time someone tries to sell me an extended warranty.
posted by infinitywaltz at 2:58 PM on January 11, 2010 [2 favorites]

Extended warranties are not worth the paper they're written on.
posted by SLC Mom at 6:05 PM on January 11, 2010

I came in here to mention the same Simpsons scene as infinitywaltz. The extended warranty is strictly for suckers.
posted by EarBucket at 8:50 AM on January 12, 2010

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