Quote:
Originally Posted by tw
Anybody risking backruptcy because a car fails really should address a fiscal problem first.
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Interesting that you wrote that.
You would think this would be true, but it's not. At least not in reality. Economists recently have been studying the idea of scarcity and how it causes desperate people to make poor decisions. (I'm NOT talking about footfootfoot here.) The idea is that if you don't know where the money for your next meal is coming from, the last thing in the world you are going to do is to come up with a plan to improve your economic future. You're not going to enroll in a class or something so you can make more money next year if you are busy worrying about how to feed yourself tonight. Poor people are stuck in a feedback loop of bad choices because they can't get get ahead long enough to to plan for the future.
If you are buying a used car, chances are you aren't in a financial position to get a new one. You probably also aren't in a position to pay a huge repair bill if something major goes wrong. A supplemental warranty is a known expense each month that can be budgeted. Yes, it's probably going to lose you money in the long run. These insurance companies aren't dumb. But it's a known fixed expense that will allow you to buy a car without having a big nest egg in case the thing craps out on you.