New Mazda-branded extended service plan - Mazda Extended Confidence

[MikeM.]

I had to use it several times on the 06' Mazda5 and when my ownership was over, I paid $990 for the warranty, and the amount of repairs that were covered because of the extended warranty was $1750. So I was +$760 in this instance.

Not so fast! You pay for the warranty upfront using non-deflated dollars (or worse, borrowing the money and paying interest on it every year until the loan is paid off).

It's not possible to determine how much you actually saved without making some assumptions on how well that money would have performed had you invested it (for example in index funds so it was readily available) and also at what point in time the various repairs were necessary.

I will point out that $990 invested with 4% annual returns turns into over $1300.00 in only 7 years. If you were lucky enough to get 8.5% annual return, after 7 years it would be worth more than the $1750 your repairs cost.

I agree, in this specific instance you saved money but not $760.00! The time value of money should be taken into account if you want a realistic assessment of the value received.

 

[Chris_Top_Her]

Or you can treat yourself to some nice aftermarket wheels, tighten of the handling, or whatever you have preference for. For me, it's handling. If we get a 2.5 sky turbo for the speed3 or cx-9, then it will be figuring how to make it work on mine lol.

 

[mazdadude]

Not so fast! You pay for the warranty upfront using non-deflated dollars (or worse, borrowing the money and paying interest on it every year until the loan is paid off).

It's not possible to determine how much you actually saved without making some assumptions on how well that money would have performed had you invested it (for example in index funds so it was readily available) and also at what point in time the various repairs were necessary.

I will point out that $990 invested with 4% annual returns turns into over $1300.00 in only 7 years. If you were lucky enough to get 8.5% annual return, after 7 years it would be worth more than the $1750 your repairs cost.

I agree, in this specific instance you saved money but not $760.00! The time value of money should be taken into account if you want a realistic assessment of the value received.

I agree with you 100%.