From: bqueiser@magnus.acs.ohio-state.edu (Brian J Queiser)
Subject: Re: Extended Warranty (3rd party recommendations)
Organization: The Ohio State University
Date: Thu, 19 Nov 1992 14:32:03 GMT

philg@martigny.ai.mit.edu writes:

>>>I am just about to take delivery on a new Ford (Taurus SHO).  Can anyone
>>>recommend or provide a list of 3rd party extended warranty providers.
>>>My goal would be to have as good (or better) coverage than Ford's program,
>>>at lower cost.

>>Don't get a 3rd party warranty.  In most states the implied warranty
>>don't get an extended warranty ever, they are a ripoff *always*.
>>put the money in the bank and use it to cover repairs after the 3 year wait
>>is up!

>Put the money in the bank!  My Ford requires several thousand dollars
>worth of repairs each year, including piles of new brake and engine
>control parts.  Maybe this advice makes sense for a Toyota, but I
>wouldn't buy another Ford without an extended warranty.
>If you don't buy the extended warranty, you are entering a lottery.
>You might win the few hundred dollars that the warranty costs, but you
>might lose thousands.

Phil's been royally screwed by his FLM dealer and the Ford home office
concerning his Merkur, but his advice is not biased.  However, I think there
are a few other points to consider.  For one, a new Ford comes with a
3 year/36K mile bumper-to-bumper warranty, no?  I'm not sure what, if any,
the deductible is; it could be as much as $100.  When you buy an extended
warranty, like a 6 year/60K mile plan, this coverage is NOT USUALLY
an EXTENSION to the manufacturer's warranty, even if the warranty is
sold by the MANUFACTURER.  On a new car that costs, say, $20,000 like
the SHO, this warranty might cost say $600-800 (based on prices I've seen).
Ultimately this means you get 3 more years or 24K more miles of coverage
for $600-800.  Read on to see if it's worth it.

When I bought my Sable used, it was 3.5 years old and had 59,000 miles.
The dealer offered an extended warranty for 3/36 for $1100.  I said no.
They asked me again.  I said no.  They asked again.  I said, okay, but
I'll pay only $800.  They said $900.  I bought it.  My deductible is
$50 and the warranty covers EVERYTHING except wear and tear (like brakes,
belts, hoses).  I have recently broken even on this warranty.  The rundown
of the repairs:

     65,000 miles:  Small water leak from one head.  Condition existed
                    when I bought the car, but was real slight.  Dealer
                    r/r head bolts, gaskets on BOTH BANKS; changed oil
                    water.  Their cost:  $550, I paid $50.

     80,000 miles:  Tie-rod end loose.  Dealer r/r tie-rod end.  Their
                    cost:  $175.  I pay $50.

     87,000 miles:  Pwr steering high pressure hose leaking at pump.
                    Turns out pump is cracked slightly at interface.
                    Dealer r/r pump and high pressure hose.  Their
                    cost:  unknown (I'll guess $450).  I pay $50.

I've also had two recalls since I've owned it:  brake rotors and the
catalyst.  I paid nothing in both instances.  Other repairs/costs
I've paid myself:

     75,000 miles:  Dealer does the rotor recall.  I buy new pads
                    for $35 (okay, I paid too much) they put them
                    on for free.

     77,500 miles:  I have rear drums and linings replaced.  Total
                    cost:  $200.

     80,000 miles:  Dealer does tie-rod.  I pay $35 for a 4-wheel
                    alignment (good deal).


So, I've paid $150 in deductibles in addition to the original $900 I
paid for the coverage.  That's a total of $1050.  The repairs would've
cost me $1175.  I win by $125.  I've had $270 in repairs that I've had
to pay myself.

IMPORTANT:  Sorry this is long, but I'm getting to the point.  I *really*
beleive that an extended warranty is a good deal for a used car.  It
cost $50 just to get a mechanic to lift the hood these days.  The odds that
something, perhaps even something major like a blown engine, is going
to go wrong with a USED car over 50K miles are pretty damn good, IMHO.
But with a NEW car, it's not such a good gamble, but the warranty prices
are lower.  Another point to consider:  I've had my car serviced at a
different dealer for each warranty repair (student on the move), one in
Lafayette, IN, one in Sandusky, OH (where the car was bought), and one
in Columbus, OH.  Each time, they did the repairs in a heartbeat.  For
the power steering pump, I literally drove in one day at 10am and the car
was ready at 2pm.  The other times I left it while I was at work/school
for the day.  They have NEVER given me a hassle about the coverage or
have NEVER tried to sell me something I didn't need.  I paid $50 and I
left.  Now, are these dealers just nice guys?  I think, in part, they
are, but there's something else going on.  The fact that I bring in
my car with a repair that is likely going to be covered by my ESP is
like money in the bank for them.  They don't even have to be worried about
me being pissed about paying for a new power steering pump or whatever.
They get their money from Ford and everybody is happy.  I DEFININTELY
think that the warranty gets you better treatment, especially if you
always take your car to the place you bought it.  That's another reason
why it is extremely important to find a good dealer.  I think Phil's
problems with his Merkur could have been much reduced if his dealer
would've dealt with Ford for him, some dealers will do that (can you
say "clout").  I don't know, maybe I'm just lucky.

Bottom line:  Find a good car.  Find a good dealer.  Buy an ESP
if it's a used car and the price is right.  Consider an ESP for a new car,
buy it if the price is right.  The right prices for ESPs?  I'd say
under $1000 for a good used car with average mileage and under $600 for
a new car priced from $15,000 to $20,000.  I think it is cheap insurance.

Regards,

Brian

bqueiser@magnus.acs.ohio-state.edu
------------------------------------------------------------------------
I am the engineer, I can choose K.
------------------------------------------------------------------------
Department of Engineering Mechanics
Ohio State University
Columbus, OH
Newsgroups: rec.autos