Extended warranty for 7.3 lariat - worth it?

[Benny]

Will be a low mileage truck.  Would be looking at the 8 yr plan.  Flood ford - $2250 with 100 deductible.

Edited December 21, 2021 by Benny

[TinManVT]

25 minutes ago, Benny said:

Will be a low mileage truck.  Would be looking at the 8 yr plan.  Flood ford - $2250 with 100 deductible.

Wondering the same thing for the 6.7

[KKosi]

I've never been a fan of any extended warranty on any major purchase. If it it buys you peace of mind and can afford it, buy it.

[doyall]

Just like any insurance ... not worth it until you need it.

[ArtieT]

13 hours ago, Benny said:

Will be a low mileage truck.  Would be looking at the 8 yr plan.  Flood ford - $2250 with 100 deductible.

If the warranty covers computers, chips etc. - one malfunction and you recouped your 2250 cost.

[akirby]

4 hours ago, doyall said:

Just like any insurance ... not worth it until you need it.

Its almost always cheaper in the long run to self insure.  That’s how insurance and warranty companies make money.  If you can afford to pay for a big repair then don’t buy it and I would argue of you can pay $2k for the warranty by itself you can pay for a repair.  If not then finance the warranty with the vehicle.

[doyall]

It's not necessarily the big repair cost payment that plans provide.  If you get the "right" ESP, a loaner truck will be provided for even low-cost repairs that take a lot of time to complete.  One week to ten days of paying for a Super Duty rental truck, if you really need one, can be expensive as well.  A big repair cost and big rental cost ... cha-ching.

[akirby]

3 hours ago, doyall said:

It's not necessarily the big repair cost payment that plans provide.  If you get the "right" ESP, a loaner truck will be provided for even low-cost repairs that take a lot of time to complete.  One week to ten days of paying for a Super Duty rental truck, if you really need one, can be expensive as well.  A big repair cost and big rental cost ... cha-ching.

Good point.  Forgot about rental coverage since I don’t need it.

[Toe Truck]

I have an F350 SRW Lariat on order.  I've decided to get the ESP figuring even 2 minor repairs would pay for the cost of the plan, much less a mid-to major repair.  The loaner would also be a valuable benefit.  I've purchased 2 ESPs on new vehicles in the past, and more than got my money's worth out of both of them.  I am leery of a lot of protection plans on consumer goods, and rarely consider them.  But when you can get double the mfg warranty for about 3% of the purchase price, it looks like a safe bet.  Repairs definitely aren't getting cheaper, and service times seem to be taking longer.

[akirby]

1 hour ago, Toe Truck said:

it looks like a safe bet. 

If it was a safe bet then Ford would be losing money and if they were losing money they wouldn’t be selling them at those prices.

 

The odds are in Ford’s favor just like Vegas.  You might have worse than average luck and save money but it’s a gamble and the odds are not in your favor.  If you like to gamble go for it.

[Toe Truck]

I understand that Ford wouldn't offer a product that will not be profitable, so statistically Ford has calculated that the ESP will cost more to the average consumer than the benefits paid to that consumer.  I look at the ESP's like an insurance policy in that I can pay a fixed price now to protect myself against an unknown future liability which could cost much more than the fixed price I pay for the ESP.  For me, I like the peace of mind this provides, at least for the term of the ESP. 

 

On my last new truck, I paid $1,700 for an ESP.  The ESP paid for 2 major repairs which cost a total of about $12,600.00 (It also paid for a few minor claims).  That experience probably guides what I will do when my F350 gets here.  And, I figure since I am "up" over $10k on my prior ESP purchase, I am playing with house money on this one.

[ArtieT]

7 hours ago, Toe Truck said:

I understand that Ford wouldn't offer a product that will not be profitable, so statistically Ford has calculated that the ESP will cost more to the average consumer than the benefits paid to that consumer.  I look at the ESP's like an insurance policy in that I can pay a fixed price now to protect myself against an unknown future liability which could cost much more than the fixed price I pay for the ESP.  For me, I like the peace of mind this provides, at least for the term of the ESP. 

 

On my last new truck, I paid $1,700 for an ESP.  The ESP paid for 2 major repairs which cost a total of about $12,600.00 (It also paid for a few minor claims).  That experience probably guides what I will do when my F350 gets here.  And, I figure since I am "up" over $10k on my prior ESP purchase, I am playing with house money on this one.

This is exactly why I get the ESP on any “new” vehicles. If I can’t get the parts and fix it myself, like I can on my tractors, I don’t have the time nor inclination to try. Drop it off at the dealers and tell them let me know when it’s ready. 

[ArtieT]

And as far as the ESP being profitable for ford - anyone who offers a service, plumber, carpenter, farmer, auto repair shop, insurance company should make a profit for providing that service. Why shouldn’t they??

[akirby]

8 hours ago, Toe Truck said:

I understand that Ford wouldn't offer a product that will not be profitable, so statistically Ford has calculated that the ESP will cost more to the average consumer than the benefits paid to that consumer.  I look at the ESP's like an insurance policy in that I can pay a fixed price now to protect myself against an unknown future liability which could cost much more than the fixed price I pay for the ESP.  For me, I like the peace of mind this provides, at least for the term of the ESP. 

 

On my last new truck, I paid $1,700 for an ESP.  The ESP paid for 2 major repairs which cost a total of about $12,600.00 (It also paid for a few minor claims).  That experience probably guides what I will do when my F350 gets here.  And, I figure since I am "up" over $10k on my prior ESP purchase, I am playing with house money on this one.

That’s exactly right - it’s just an insurance policy.  But financial advisers will tell you to only buy insurance on things you can’t afford to replace out of pocket like houses and entire vehicles.  You would t buy a $10 warranty on a $50 item because if it dies you can easily buy a new one.  The same principle applies here IF your goal is to save money over the long run.  Self insure as much as possible,    If your goal is just peace of mind and you don’t mind paying for it then that’s fine.  For me personally peace of mind is saving money long term.  To each his own as long as you understand the situation.

[akirby]

56 minutes ago, ArtieT said:

And as far as the ESP being profitable for ford - anyone who offers a service, plumber, carpenter, farmer, auto repair shop, insurance company should make a profit for providing that service. Why shouldn’t they??

 Of course they should make a profit.  The point is if they are making a profit then the odds are that over time you will spend more on warranties than you save.  On average and over a long timeframe not one or two vehicles. Depends on whether your goals are long term savings or risk aversion.

[ArtieT]

39 minutes ago, akirby said:

 Of course they should make a profit.  The point is if they are making a profit then the odds are that over time you will spend more on warranties than you save.  On average and over a long timeframe not one or two vehicles. Depends on whether your goals are long term savings or risk aversion.

“Goal driven”. Exactly??. Everyone’s goals are different. For me it’s risk aversion and time saving?

[Robin Hood]

23 hours ago, akirby said:

Good point.  Forgot about rental coverage since I don’t need it.

 

The base rental coverage is a dollar amount, not a specific vehicle. I don't think it is even enough to get a rental now days. If you want a higher dollar amount allowance and same day rental you have to pay more.

Edited December 23, 2021 by Robin Hood

[Staycee]

Sometimes you can negotiate the warranty price if that is your sticking point - some dealers will, some won't, but worth a shot!  

[Robin Hood]

18 minutes ago, Staycee said:

Sometimes you can negotiate the warranty price if that is your sticking point - some dealers will, some won't, but worth a shot!  

 

Search on-line to get the best price. My dealer wouldn't touch the offer I got on-line. He said it was below his cost?‍♂️. Not sure I believe that, but he also said he needed to make $500 minimum to sell one. I bought two trucks from him at X-Prcing and offered to buy both warranties from him.

Edited December 23, 2021 by Robin Hood

[Staycee]

53 minutes ago, Robin Hood said:

 

Search on-line to get the best price. My dealer wouldn't touch the offer I got on-line. He said it was below his cost?‍♂️. Not sure I believe that, but he also said he needed to make $500 minimum to sell one. I bought two trucks from him at X-Prcing and offered to buy both warranties from him.

Yeah, doubtful that it's below his cost!  Once when buying a SUV (different brand), we didn't negotiate price, but years.  Paid for 6, but got 7.

[Robin Hood]

13 hours ago, Staycee said:

Yeah, doubtful that it's below his cost!  Once when buying a SUV (different brand), we didn't negotiate price, but years.  Paid for 6, but got 7.

 

Maybe his cost included his commission?

[Huzzar]

The insurers are using something called “the law of large numbers” to calculate selling price of their extended warranties. If they sold one policy to one vehicle owner, it would be blind luck who came out ahead. When they sell hundreds of thousands of policies, the insurer has very good data on how much they will pay out in total so can set the premium to cover costs, payouts and a profit. So yes, they always “win”, even if they take a beating on a single lemon.

Most individual vehicle purchasers don’t ever get away from blind luck because they are never going to buy enough vehicles.

I bought the extended warranty on my diesel truck for peace of mind. If I bought the gas model I’d put the premium into a CD or mutual fund and take the gamble. I buy new and run them into the ground before buying again. If I bought new every two or three years, I'd never buy an extended warranty.

There’s no right or wrong answer, whatever you prefer to do is correct.

 

[bbf2530]

Hi gang. The other thing to keep in mind in this discussion debate is that yes, of course the auto manufacturer makes money on the sale of an ESP. However, there is a cost differential in this equation which seems to be overlooked.

 

If I do not purchase an ESP and have a problem, especially a large one, I pay retail for the parts (or close to it) and retail for the labor. Ford on the other hand only pays their parts cost, which is a fraction of what I would have to pay retail, and a greatly reduced rate for the labor to the Dealership. So Ford pays far less for an ESP Plan engine replacement, new transmission, AC system repair, SYNC system repairs/replacements etc. etc. than I would need to pay out of my pocket if I do not have an ESP.

 

So when discussing/debating the entire cost factor of an ESP, that huge repair cost differential between what it costs Ford to perform a repair, and what we would have had to pay out of my pocket for parts and labor, has been overlooked and needs to be taken into account.

 

Quick example. Let's say when I purchase my new car, I purchase an ESP for $2,000 . Ford makes ~$2,000 up front. I later have ESP Plan warranty claims totaling $3,000 (if I had to pay myself). Ford's actual costs for that $3,000 in repairs is more likely ~$1,000. So I made out well purchasing the ESP Plan (saving $1,000), and Ford still made $1,000.

 

Bottom line is Ford can make a profit on the the sale of the ESP, and I can still get my moneys worth (and possibly more) in savings on possible future repairs. 

 

Yes, of course if I never have a claim, I would have been better off not purchasing the ESP Plan  at all, and "self insuring" (keeping it myself). However, like any insurance, it is a matter of odds and willingness to sustain a loss.  

 

The moral of the story (in my opinion), is for each person to do what is best for their own situation. And if you decide to purcahse an ESP, shop around online and at your local Dealerships, because the Plan prices being charged differ greatly from one seller to another. My local Lincoln and Ford Dealers would not even come close to the prices I was able to find online. And even the online prices had a large price differential, with some saving me several hundred dollars over another (as I have discussed in numerous previous threads on ESP sellers).

 

And certainly yes...If we are only keeping a Ford vehicle for 3 years before selling, or a Lincoln for 4, and our mileage will be below the New Vehicle Warranty limit, don't waste money on a ESP.

 

Good luck with whatever everyone decides to do. And Happy Holidays, Merry Christmas and a Happy New Year to all! ??

Edited December 23, 2021 by bbf2530

[akirby]

I highly doubt there is a 200% markup on parts and labor but that is a fair point to a certain degree.

 

My only issue is people who don’t understand that it’s a gamble or who don’t understand the economics.  They’ll pay $2200 for the warranty then make a $500 claim and say “boy am I glad I had that warranty!” when they could have kept that $2200 in their pocket and still had $1700 left.

[bbf2530]

On 12/23/2021 at 12:55 PM, akirby said:

I highly doubt there is a 200% markup on parts and labor but that is a fair point to a certain degree.

 

My only issue is people who don’t understand that it’s a gamble or who don’t understand the economics.  They’ll pay $2200 for the warranty then make a $500 claim and say “boy am I glad I had that warranty!” when they could have kept that $2200 in their pocket and still had $1700 left.

 

Hi Allen. Yes, I completely understand your issue and the points you are trying to get across. As always. And I was only pointing out a part of the economics that everyone had overlooked up until now. And I covered the gamble and economic parts.

 

And just as your point is a fair point, my point is a fair point (not just "to a certain degree"). ?

So don't minimize my points...that is the job of my lovely wife. ?

 

And yes, the markup on parts between Ford, then the Dealership/seller, then us as the consumer is quite substantial.

 

The markup on what we as the customer pay the Dealership for labor is less than for parts, but still can approach double what Ford pays the Dealership for warranty work. Especially when Ford will limit the allowable/billable hours for warranty work, even if it takes the tech longer than the allowable/billable hours, while we as the retail customer will have to pay the full hourly rate and the full number of allowable/billable hours it took the tech to do the job. Sometimes including lunch and smoke breaks. ?

 

Happy Holidays, Merry Christmas and a safe and Happy New Year my friend! ??

Edited December 28, 2021 by bbf2530
Corrected a misquote.