GREAT warranty

BenedictGomez · Oct 1, 2016

archer36 said:
I always felt that the BS 100K extended warranties they sell are not worth it. I don't know what you paid for yours but if you are keeping your vehicle more than 10 years then it may be worth it.

I love subjects like this. I think for the vast majority of people, odds are strong you're going to lose money on that warranty deal. For either the reason you stated (you must be confident you're going to keep the truck a really long time), or for the fact that most people dont properly take into account the lost opportunity cost of money when they evaluate how "good" of "bad" a deal is.

For instance, lets say you didnt buy a $1000 warranty on January 1st, 2010. The value of that $1000 invested in a simple S&P 500 index fund would be worth $1,924 today.

The other thing people tend to forget to do from a financial perspective, is factor in the "real" cost of money due to inflation and increased/decreased in currency value, and the USD has been DESTROYED the over the last decade. For instance, the actual cost of my hypothetical "$1,000 warranty in 2010", is $1,400 in 2016 dollars (yes, that's how bad the dollar has been crushed). So if you keep the truck a long time, and are going to have a few thousand dollars in repairs covered by the warranty, perhaps you'll come out ahead, but if not, or if you sell the vehicle, or it's in a bad accident, etc.... it's likely a money-losing deal. My 2¢.

hammer4reel · Oct 1, 2016

jrsyjstxdrmy said:
so the first time you don't get the truck inspected after 6k miles your warrenty is void? I'd be screwed. I barely have time for a oil change let alone going to a dealer for inspections every few months

60k

hammer4reel · Oct 1, 2016

BenedictGomez said:
I love subjects like this. I think for the vast majority of people, odds are strong you're going to lose money on that warranty deal. For either the reason you stated (you must be confident you're going to keep the truck a really long time), or for the fact that most people dont properly take into account the lost opportunity cost of money when they evaluate how "good" of "bad" a deal is.

For instance, lets say you didnt buy a $1000 warranty on January 1st, 2010. The value of that $1000 invested in a simple S&P 500 index fund would be worth $1,924 today.

The other thing people tend to forget to do from a financial perspective, is factor in the "real" cost of money due to inflation and increased/decreased in currency value, and the USD has been DESTROYED the over the last decade. For instance, the actual cost of my hypothetical "$1,000 warranty in 2010", is $1,400 in 2016 dollars (yes, that's how bad the dollar has been crushed). So if you keep the truck a long time, and are going to have a few thousand dollars in repairs covered by the warranty, perhaps you'll come out ahead, but if not, or if you sell the vehicle, or it's in a bad accident, etc.... it's likely a money-losing deal. My 2¢.

you really cant do math can you ??
NO simple fund is doubling your money currently in 6 years . thats a dream.
One major repair on a vehicle, such as a transmission , motor etc is WAY beyond 1600 bucks.
mater of fact almost any repair today on a truck is 500-100o bucks easy. so just 2 repairs during the life of the truck is more than likley break even.
I plan on driving this truck another 200K, so more than likley the warranty will pay for itself over again many times

BenedictGomez · Oct 1, 2016

hammer4reel said:
you really cant do math can you ??
NO simple fund is doubling your money currently in 6 years . thats a dream.

The math is correct. The numbers I used weren't guesses, they were precise, based on actual S&P500 market data taken from January 1, 2010 through yesterday. That $1000 investment is almost $2000 today, thanks to the Federal Reserve artificially bolstering US equities markets by intentionally keeping US interest rates intentionally low.

I did make one mistake though, but not the one you mentioned; the $1,400 above is a typo and should be $1,200. You'd have to go back to 2002 for $1,000 to be "worth" $1,400 today.

hammer4reel said:
One major repair on a vehicle, such as a transmission , motor etc is WAY beyond 1600 bucks.
mater of fact almost any repair today on a truck is 500-100o bucks easy. so just 2 repairs during the life of the truck is more than likley break even.

I said above that you can come out ahead if you keep the vehicle a long time, the vehicle isnt in a big accident over that decade or so, and you do wind up with some costly repairs. I'm pretty sure you're agreeing with this?

But this wont work for everyone, which is where it seems we disagree. For instance, I've had my vehicle 15 years, and have had only a few repairs. If I had paid $1,000 for a warranty back then, I'd definitely be behind. Just saying it wont work for everyone.

GREAT warranty

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hammer4reel

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