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Old 07-22-2022, 06:08 AM   #41
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Sorry to beat this dead horse, but I think it's helpful to look at warranties the same way the insurance companies (and fraudsters) do.

Average them across all your purchases.

Over your lifetime, how many major auto repairs (e.g.; transmission rebuilds) will you need? Certainly not on EVERY vehicle you buy. Insuring all those vehicles which don't need major repairs would be a waste of money.

Expand that to every piece of technology you buy; vehicles, appliances, electronics, all of it. How many will need expensive repairs?

Just through your normal purchasing, you're doing exactly what the insurance company does - spreading out the risk.

Assume you never buy extended warranties on any appliance. If you buy one lemon appliance and have to throw it away as a total loss, you still come out ahead. You saved money by not buying the warranty on all those other appliances you've bought which never needed repair.

Extended warranties and service plans are just like the lottery: A tax on people who can't understand statistics.
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Old 07-22-2022, 12:58 PM   #42
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Originally Posted by CaptTom View Post
Sorry to beat this dead horse, but I think it's helpful to look at warranties the same way the insurance companies (and fraudsters) do.

Average them across all your purchases.

Over your lifetime, how many major auto repairs (e.g.; transmission rebuilds) will you need? Certainly not on EVERY vehicle you buy. Insuring all those vehicles which don't need major repairs would be a waste of money.

Expand that to every piece of technology you buy; vehicles, appliances, electronics, all of it. How many will need expensive repairs?

Just through your normal purchasing, you're doing exactly what the insurance company does - spreading out the risk.

Assume you never buy extended warranties on any appliance. If you buy one lemon appliance and have to throw it away as a total loss, you still come out ahead. You saved money by not buying the warranty on all those other appliances you've bought which never needed repair.

Extended warranties and service plans are just like the lottery: A tax on people who can't understand statistics.
Excellent post and the best way to analyze it. I have NEVER bought an extended repair policy (they are not warranties, folks) and over 50 + years of driving and 30 + vehicles (trucks, cars, motorcycles, vans) have only had one transmission wear out and my repair cost at that time was about $2500.

All other work on the vehicles was limited to normal maintenance. Maybe I lost a wheel bearing somewhere and I can't remember it.

And I have never bought any similar appliance service contracts.

Maybe I am lucky?

Please remember that when you buy a new vehicle, it comes with the factory warranty. In general, if the fancy electronics make it past the first 48 hours, the probability of a failure after that is nill.
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Old 07-24-2022, 12:49 PM   #43
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Originally Posted by CaptTom View Post
Sorry to beat this dead horse, but I think it's helpful to look at warranties the same way the insurance companies (and fraudsters) do.

Average them across all your purchases.

Over your lifetime, how many major auto repairs (e.g.; transmission rebuilds) will you need? Certainly not on EVERY vehicle you buy. Insuring all those vehicles which don't need major repairs would be a waste of money.

Expand that to every piece of technology you buy; vehicles, appliances, electronics, all of it. How many will need expensive repairs?

Just through your normal purchasing, you're doing exactly what the insurance company does - spreading out the risk.

Assume you never buy extended warranties on any appliance. If you buy one lemon appliance and have to throw it away as a total loss, you still come out ahead. You saved money by not buying the warranty on all those other appliances you've bought which never needed repair.

Extended warranties and service plans are just like the lottery: A tax on people who can't understand statistics.


Great way to look at this, with one addition. Extended warranties may be a good option for those who can’t afford to self-insure for a catastrophic loss. Most of the people on this forum can easily afford to pay for an expensive repairs if required.
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Old 07-24-2022, 02:07 PM   #44
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Extended warranties are in large measure merely a prepayment for a major non-warranty repair. Sure, we can all come up with a horror story of some potential needed repair for a transmission or something else costing $5000. But more likely is a needed repair costing $1000 or $1500. Rather than spend $3500 for extended warranty from an after-market company, take the $3500 and put it in a segregated bank account. Most likely in 4 years it'll still be there. And if the unusual major repair is needed, at least you already have $3500 socked away for it.
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Old 07-24-2022, 02:32 PM   #45
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Drive trains in modern ICE cars are usually warranted for 60,000 - 100,000 miles. That's where the highest repair cost would be in the event of a CATASTROPHIC failure (Ex, $4,000 transmission repair). And I'll bet the probability of that kind of event happening with a routinely serviced modern vehicle is very low.

If that's the case, why pay for an "extended warranty" (repair insurance policy) until passing the factory's warrantied miles?
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Old 07-24-2022, 04:23 PM   #46
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Extended warranties are in large measure merely a prepayment for a major non-warranty repair. Sure, we can all come up with a horror story of some potential needed repair for a transmission or something else costing $5000. But more likely is a needed repair costing $1000 or $1500. Rather than spend $3500 for extended warranty from an after-market company, take the $3500 and put it in a segregated bank account. Most likely in 4 years it'll still be there. And if the unusual major repair is needed, at least you already have $3500 socked away for it.
Here is why.

Quote:
Last November, 32% of Americans said they were ill-equipped to cover a $400 emergency expense. But this year, that number has risen to 49%, according to a YouGov survey for the Economic Security Project conducted online between May 20-23, 2022.
https://www.fool.com/the-ascent/pers...2-in-november/
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Old 07-24-2022, 04:29 PM   #47
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Yup, very true -- and very, very sad!!!


BUT: I'd be stunned if that 49% number that applies to the "general population" were any more than maybe 1% for the audience of THIS board. So, it is not that these warranties are bad for everyone. It is just that they are bad (or pointless) for pretty much everyone who reads these posts.
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Old 07-24-2022, 05:13 PM   #48
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Here is why.
Quote:
Last November, 32% of Americans said they were ill-equipped to cover a $400 emergency expense. But this year, that number has risen to 49%, according to a YouGov survey for the Economic Security Project conducted online between May 20-23, 2022.
So what makes people think they can afford the "extended warranty" plan that the sales person springs on them after a purchase?
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Old 07-24-2022, 05:24 PM   #49
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They can finance the extended warranty as well as the purchase.

What I noticed at work was people were willing to pay higher monthly premiums for health care insurance in favor of a lower total out-of-pocket...seems few want to risk having to come up with thousands of dollars in a lump sum.
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Old 07-24-2022, 05:27 PM   #50
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So what makes people think they can afford the "extended warranty" plan that the sales person springs on them after a purchase?
do they roll it into the monthly payment?
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Old 07-24-2022, 05:27 PM   #51
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Last November, 32% of Americans said they were ill-equipped to cover a $400 emergency expense. But this year, that number has risen to 49%, according to a YouGov survey for the Economic Security Project conducted online between May 20-23, 2022.
These people are not buying new car or slightly used cars that offer extended warranties. They are buying old clunkers or not selling their old cars. And if they need repairs, they fix them themselves or the cheapest way. These people have credit cards and can vote (maybe).
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Old 07-24-2022, 05:30 PM   #52
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So what makes people think they can afford the "extended warranty" plan that the sales person springs on them after a purchase?
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They can finance the extended warranty as well as the purchase.
It’s all about the monthly payment. I know if you don’t have the money in the bank, you don’t have much choice but I wonder how many people in that situation appreciate how badly they’re getting taken advantage of. Many should be looking for good used cars that they can pay off sooner. Though the interest rates on a used car would be more so one would have to pay attention.
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Old 07-24-2022, 07:26 PM   #53
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If they can afford the higher payment they can put that extra money in the bank, instead.

I'm not trying to be cold hearted. It's sad that people just don't know how to act in their own financial (or political) best interests. It's sad how many people are willing to take advantage of them. I wish there were something I could do to help. I know people like that, and it's horrible what they do to themselves and their loved ones. That's why I keep posting here; if I get through to just one person, I've made their life a little better.
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Old 07-24-2022, 11:56 PM   #54
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If they can afford the higher payment they can put that extra money in the bank, instead.

I'm not trying to be cold hearted. It's sad that people just don't know how to act in their own financial (or political) best interests. It's sad how many people are willing to take advantage of them. I wish there were something I could do to help. I know people like that, and it's horrible what they do to themselves and their loved ones. That's why I keep posting here; if I get through to just one person, I've made their life a little better.

Well kind of insulting to say people are too dumb to know what they are buying and that you can make their live better...OTOH you can just send people cash that would be helpful to anyone.
A...not all warranties are the same and/or cost the same.



B if you buy a new car and after the original warranty is gone buy an add on from the manufacturer. If you plan to keep that car until the extended you buy is used up. If you drive lower miles so you have basically pre--- bought the repair costs for as long as you own the car.. we bought an after market warranty from a dealer and they were 100% honest, the price was fair and we were more then satisfied with it.



C you have bought just a little less stress and hedge against rising parts and cost of labor. If that's what I decide to do that , that's my decision.



Have you ever bought a car with additional options, guess what the markup on options is huge...fancy wheels, upgraded sound yada yada.. I think that stuff is all dumb, but if you want it go for it. I'm not going to insult you by trashing the choices you made.


Our new Ford has more electronic safety features on it then you can count.I can only imagine what repairs on those item might cost.



mystang I'm curious about the last time you had 1000 car repair bill.. I'll wait. We farm and in the last 3 years repair costs for everything have just exploded.



And no I don't buy extended on toaters, tv's or washing machines. I also don't equate money and political interests, so I don't have a clue you meant by that comment. Anyway I don't see that all this piling random people that buy these products is "warranted" ..since we don't know what car they own, what product they bought, or how much money they have.
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Old 07-25-2022, 12:50 PM   #55
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Our new Ford has more electronic safety features on it then you can count.I can only imagine what repairs on those item might cost.
Believe it or not, but the electronic systems on newer cars are the least likely to have a problem. Electronics these days usually suffer from "infant mortality', meaning if they survive the first few months, they will live a very long normal life without premature failure.

What fails with greater frequency are rotating parts like the A/C compressor, alternator, wheel bearings, transmission internals, etc.
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Old 07-25-2022, 01:57 PM   #56
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Believe it or not, but the electronic systems on newer cars are the least likely to have a problem. Electronics these days usually suffer from "infant mortality', meaning if they survive the first few months, they will live a very long normal life without premature failure.

What fails with greater frequency are rotating parts like the A/C compressor, alternator, wheel bearings, transmission internals, etc.
While I’m a believer in the “infant mortality” concept, I can’t agree in total that the electronics are of no concern. For one, unlike something like a computer, the environmental conditions in a vehicle come into play. More frustrating is the programming. I’ve had a few “gremlins” over the years that were a pain to resolve. These are complex machines and things going wrong are part of the equation. Whether the problems require an extended warranty is for one to decide on their own.

Personally, I bought the extended warranty on my truck. Couple reasons/rationale are that I get a GM discount which brings the cost on a GM issued extended warranty down considerably. Second, I want to have the dealer do the work, but I don’t want to pay dealer rates. Third, I like the vehicle under warranty as long as I expect to own it. Last, unfortunately, it’s a GM . . . .(need I say more?)

As for ownership, I’ve been one to drive new cars. When working, I got a new car every two years. In retirement, I expect something closer to 5 or 6 years. At some point, I may hold a car longer but for now, I like newer vehicles.
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Old 07-25-2022, 02:32 PM   #57
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Yes Jerry I'm not going to argue about electronics but I can say with certainly that any electronic issue with our machinery is a real PITA..the actual fix might not be a big deal but finding the cause of an intermittent electronic failure is a literal nightmare, an expensive nightmare.
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Old 07-26-2022, 05:02 PM   #58
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I bought a used truck once, that had an extended warranty, that miraculously, was able to be transferred to me. However, the fine print in the warranty said that you had to have proof of all required maintenance as recommended by the manufacturer, for a claim to be considered. I don't do much of that stuff, and therefore, the warranty would be worthless to me, should I have needed it. It was a Mazda B2000 pickup, and the only problem I ever had with it was gunk that got into the fuel tank from a bad gas station.
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Old 07-26-2022, 05:13 PM   #59
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Your car doesn’t have a CVT transmission. Your MINI, an F57, is a third generation that has a proven BMW 4 cylinder engine. I currently own two.. A bad engine mount is common for this series and isn’t expensive to replace.

I wouldn’t buy the warranty, but if you do, but the MiNi branded one. There are many MINI only shops that you can take your car to for service. I’d also not be afraid of the dealer for oil changes as they are competitively priced.

Lastly, find a mini club in your area. Tons of fun and the peeps are very friendly. There’s a whole community behind you. Message me if you’d like more info or have questions.
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Old 07-26-2022, 05:19 PM   #60
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Maybe, maybe not...I'm not talking about random cold calls from people pitching vague warranties. I'm talking about buying a reputable warranty from a reputable dealer. These are not the same thing. Generally speaking you always hope to lose money when you buy insurance...one might argue if you can get a negotiated price one that goes out 5 to 7 years you are somewhat protecting yourself against inflating labor and parts costs. Just saying...
Even buying a 'reputable warranty from a reputable dealer,' the company selling warranties has to take in more money than they pay out (including overhead); otherwise they would go bankrupt. That means, on average, most people will pay more for the warranty than they receive in benefit. When I bought a 3-year-old used truck in 2014, I bought the extended warranty, just because I was thinking that maybe the AC would quit when summer rolled around. 8 years later, I haven't had a single problem with that truck, and the AC still blows cold. I basically threw the money I spent on the extended warranty away, as the company that provided it was betting would happen.
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