Extended Auto Warranties (Service Plans)

[Dave 205]

The brain trust here brings a lot of experience.....:smt038

Well, I bought an extended auto warranty (really a service plan per the contract). The plan is "The Mechanic" administrated by Automotive Warranty Services, Inc. out of Chicago. The conglomerate that cares, I'm quite certain. :grin:

This was from a Ford Dealer selling a titled as new 5,700 mile 2012 demonstrator F150.

It was a nasty hard sell experience. The price started at $2,800 and ended up at $1,647 (Can you see the value in that? - the finance manger's favorite line.) :smt021 He promised a 30 day right to cancel, but the contract actually says 60 days. Thank God.

My Rep was also a dumb liar.

Anyhoooo, I'm not a believer in "extended warranties" in general. But, some aspects of this seem okay. I've seen some of you comment positively on your boat service plans. This company I have is clearly a third party service contract, but apparently from a large concern that has served many dealers. But, the stench created by the lying SOB rep tainted the deal. A lot.

I've found a Ford backed "ESP" Extended Service Plan that, adjusted for my low annual mileage, is an equal or better value. About $35.00 more. I've always had good experience with Auto Manufacturer warranties, so maybe a factory service plan is a good thing.

The apples and oranges:

"The Mechanic is very comprehensive, $100 deductible, $1647 for 7 years and 75K.

*Ford ESP is very comprehensive, $100 deductible, $1682 for 7 years and 60k. But, it fits my predicted driving habits well.

And, frankly, I'm not uncomfortable self insuring.

The web has many tales of woe, mainly from people that were b*tchy about out of warranty problems, complaining about non-warranted used cars, cars out of warranty, etc. But, I'm also aware of some Third Party Plans that have gone bankrupt, and have been highly unethical.

So, what say you about either this specific Third Party service contract (warranty), or your experience in general? This F150 is a well equipped Lariat with plenty of cool electronics and a really nice Sony stereo to cause some trouble. The repair roulette wheel is always an interesting place.

Thanks!

 

[Art]

I share your pessimism. I have had third-party warranties, and general they covered what they said. The biggest problem I had, Is that they only paid approximately $88 per hour for shop labor which of course is much lower than the dealer rate. I would be inclined to go with Ford ESP or self-insure. $1700 for 7 years looks like pretty cheap insurance.

Good luck, Art

 

[moparlvr4406]

from 30 years in the car business...
the Ford ESP is an excellent plan..never have any issues with claims
Aftermarket warranties on the other hand have some drawbacks
1 finding someone besides the selling dealer to honor them(even though they say you can take it anywhere)
2 waiting for an adjuster to come look at your vehicle and take pics of broken stuff before they will approve the repairs sometimes
3 exclusions...exclusions...exclusions.
4 Most times the coverage is a bit sketchy as to "causal parts"
5 the term "internally lubricated parts"...makes the contract all but worthless in all but the most major failures..and then YOU still pay for a considerable amount.

ps...my shop doesn't accept the "mechanic" plans as the are VERY slow to pay if they do at all. usually, like with any insurance company, they will find some insignificant descrepancy on paper to give them an excuse not to pay the claim.

 

[tdschafer]

I never had the Ford ESP plan but, I did have extended warranties on my last two new purchases. One was a Toyota Sienna AWD and the other was a Mitsubishi Montero Sport. The funny thing is, both extended warranties were backed by Toyota! I was also suspect , especially at the Mitsubishi dealer since it wasn't a Mitsubishi warranty. They were both bumper to bumper plans and actually met all the obligations that I expected through the life of the warranty, which I believe carried me through 6 & 7 years.



Sent from my iPhone using Tapatalk

 

[fwebster]

I won't buy an extended warranty unless it is owned/backed by the auto manufacturer and I will not buy one unless I buy it at the time of sale when I have some leverage with the dealer. To be honest, my last 2 extended service plans have been on Lexus certified pre-owned vehicles and were sort of part of the purchase because Lexus writes up the factory warranty by 3 years and to 100k miles on their certified used cars. Were they worth it? Don't know, but to get as nice a used car as I wanted, it was worth paying for the warranty to get a cream-puff that wasn't going to need a few hundred $ spent on tires, brakes, battery, etc to make a used car trustworthy.

You probably hit the nail on the head with the aftermarket warranty......you were pushed that way by your selling dealer because he had more profit in it than in selling the Ford plan. There is little doubt that Ford will stand behind their warranty.......but there are any number of ways to be dissappointed with the aftermarket one. Cancel while you can ........I think you can add the Ford coverage anytime during the original warranty period.

 

[moparlvr4406]

any factory sponsored warranty is always the best bet
that being said...
most finance managers run quickly past these offerings to the aftermarket warranties
due to higher profit margins, cheaper price with more negotiation room, and high spiffs for the manager himself.
Remember just because a dealership sold it doesn't mean the manufacturer offered it.

regardless of cost ant OE manufacturer warranty will be your best investment OR money well wasted :wink:

 

[northern]

I have bought many cars and truck and have never got any extra warantee. I look upon not getting one as a high deductable on colision. IE if you buy 10 units over your life and pay 1,700 each for the extended warantee that is 17,000 total. How many people spend 17,000 on fixing one car or even 17,000 on fixing thing that would have been covered under the extended warantee on all teir cars? To date we have only had 1 engine rebuilt on a car that was driven by our nanny (standard transmission she was 18 and this was the first car she ever drove). All cars and trucks lived to ripe old age of 100 to 150K miles defore they were sold. Under the standard warantee we got new transmission on one car.

 

[moparlvr4406]

I have bought many cars and truck and have never got any extra warantee. I look upon not getting one as a high deductable on colision. IE if you buy 10 units over your life and pay 1,700 each for the extended warantee that is 17,000 total. How many people spend 17,000 on fixing one car or even 17,000 on fixing thing that would have been covered under the extended warantee on all teir cars? To date we have only had 1 engine rebuilt on a car that was driven by our nanny (standard transmission she was 18 and this was the first car she ever drove). All cars and trucks lived to ripe old age of 100 to 150K miles defore they were sold. Under the standard warantee we got new transmission on one car.

lol...I buy 1,000 buck cars...at 100k miles...put about 800 bucks into them and drive them till 250k
then get my money back out of them
my rule is never replace the tires more than twice. :lol:
except my truck that I bought new in 2002 and still have and use
my work driving is about 40k miles per year and I cant justify a new car that will near 300k miles on it when paid for and be out of the standard warranty 9 months into the payments.

 

[Gofirstclass]

Let me add my $.02 worth here. For about 10 years I was the "F&I Guy" at a car and RV dealer and I was the one who sold those third party warranties to many customers. Do I buy them? Never. Do I believe in them? Nope.

They are a HUGE money maker for the dealership. We made $1000 PER CONTRACT profit on each of those we sold. Most of those third party contracts are not worth much. It's kinda like sex....we all know the basics but the difference between good sex and poor sex is in the fine details of how it's done. Pretty much the same thing with those contracts. Moparlvr pointed out some of the problems, but here's how things work when something breaks....

-Your car gets towed to a repair shop.
-They call the third party and explain what's wrong.
-The third party wants the disassembly work done before their inspector gets there to look at it.
-In many cases you are on the hook for the disassembly costs if the inspector decides he isn't going to authorize the work.
-It's usually a couple of days before the inspector gets there, so your repairs are delayed by that amount of timel
-So there you are with your car disassembled and the third party isn't going to pay for the repairs. The devil's in the details and there are many details in the contract that let them out of paying for stuff.
-Even if the third party pays for the repairs, there likely will be things they don't pay for so you're on the hook for those expenses also.

In my 10 years in the biz I've seen times when the people who bought the contracts were extremely happy they had it, and I've also seen people who wished they hadn't. The number of people in the second group was much larger than those in the first group.

The curious thing is that the vast majority of those third party contracts expire and have never had a claim filed against it or if there was a claim it was much smaller than the premium the customer paid when they bought it.

By way of a piece of advice...if you lose sleep at night worrying about paying several thousand bucks for a repair....buy it and hope you never have to use it. That would be the best case scenario.

 

[Dave 205]

Thanks for the many comments.

Frank, one of my possible choices at a different dealer was a Ford Certified 2010 with 14k on the odo. The 3/36 bumper-to-bumper had just expired, but it still had factory 5/60 power train, and the Certified added 12/12 comprehensive coverage. Impressive for a 3 year old garage queen. It was a little town dealer I'd have to make a drive to, but that is where the deals tend to be in my market. But, I agree that a factory certified car can have advantages. I also confirmed that Ford will sell me ESP during anytime during the 3/36, and will do so after an inspection if I wait until after the 3/36 is expired.

GFC, scary stuff. Exactly why I don't like trusting people with my money now for a promise in the future.

Jim, your experiences are valuable, thank you. I'm kind of the reverse of you, I can buy a new car and it gets an easy life from me, lots of garage time, good maintenance, and usually very few problem. After 10 years and 75k to 100k, they look a little rough on the edges from active family use, but they'd probably make you an excellent work car. My old cars are 8 and 11 years and going strong.

The 7 years of coverage with these contracts is kind of a fallacy. I have 3/36 from the factory, and the extended coverage gives me 4 years of comprehensive after that. I have 5/60 factory powertrain, so the coverage on power train is really only two years.

So, the bet becomes do I spend at least $1,700 in those 4 year and 2 year windows. My experience over the past decade has been that I've spent about that. The scariest moment has been the funky CVT transmission Ford put in my Freestyle wagon. That was a short lived venture for Ford at the time, and they have since gone with the 6 speed that most cars on that platform have had. That orphan transmission is about $7000 if it goes, but it has outlasted any warranty I'd have been able to get.

Wow, near new used cars are expensive! I was able to drive a few deals down in price, but with my persistence, the cars eventually sold to someone else, likely a higher price. I came across a couple of 2012 leftover deals, one on an Expedition, the other this truck I bought, and they were just unbeatable.

I think the conclusion is, get out of this aftermarket deal (wish me luck!), and pursue Ford ESP down the road if it makes sense for my actual use and reliability experience with the car.

 

[tdschafer]

Dave,

That sounds like a sound plan! Good Luck!

Todd

 

[GJarrett]

I'll add my experience with third party extended warranty companies. I was once asst financial controller for a division of a Fortune 500 company. It looked at buying out one of the major extended warranty companies. My task was to do a due diligence and study that company and the extended warranty business as a whole.

I forget the exact number, but my analysis showed they made a HUGE profit. The average payout for every dollar sold in warranties was something like 11 cents.... they kept the other 89 cents. I've never bought one of those things since then... they are a huge gamble and you have much better odds in Vegas.

 

[Dave 205]

I thought I'd give you an update - mostly because it was one weird experience.

I cancelled the warranty per the 60 day full refund clause in the agreement. My initial e-mails and phone calls to the finance manager went unheeded. I took a weird shot, called the dealership (one location in a 28 dealer chain), and asked for the customer service manager - thinking I was out of my mind.

To my complete shock, the receptionist put me through to the "Customer Experience Manager". The lady was very accommodating, said she was part of a Ford created position in dealerships designated to make things right. She seemed new, and had to fight an uphill battle with the front line guys, but eventually she e-mailed me a cancellation form. Holy cow, an electronic and paper documentation trail! The next problem was getting my tax statement updated, so I could register my car and not pay sales taxes on the cancelled warranty - about $123 bucks.

The finance manager told her that I'd have to pay it, and apply to the state for a refund. She told me that in e-mail.

I replied that the state would not just take my word for it, so either I would need extra documentation, or most convenient, corrected paperwork. I added that someone in legal and compliance, corporate finance, or accounting would know the exact procedures.

A few days later, she called me and said she would drop the updated paperwork at my house. I thanked her, and picked it up myself.

My refund goes directly to Ford Credit - we'll see how well that goes. I took a really lousy loan with them to get the rebate. I have to wait 4 payments to pay off the crazy 6% rate, but I'll still come out ahead.

It seems the dealer wants to dearly protect its results in a survey Ford will send me at some point - they said so in almost so many words. Overall, the experience was at times very unpleasant at the point of sale, and getting a contractual refund was a 2 week project, so it wasn't exactly Costco convenient.

Not sure what I'll put in the survey.