How to Know When to Say No to Extended Warranties

Member

By kskaggs
User-Submitted Article

Article Rating: (46 Ratings)

Money Down the Drain

So many times I have splurged and bought a car, an electronic, or an appliance and then went to pay and was talked into buying an extended warranty. I wish I had all of the money back that I have wasted on extended warranties, but unfortunately that is not going to happen. When it comes to most consumer electronics and major appliances, buying the extended warranty is "money down the drain," according to consumer research. When you are buying a new auto, an appliances or electronics, more than likely you will be pressured into buying a service contract or "extended warranty" as part of your purchase. You will be told that the warranty covers repairs not covered by the manufacturers warranty, or will extend coverage after the manufacturer's warranty expires. So are extended warranties a good buy? Companies selling them insist that they are, claiming they save consumers hundreds, even thousands of dollars in costly repairs. But consumers filing complaints with Consumer Affairs tell a different story. Here are some very good reasons why you should not buy extended warranties. And only one reason why you night want to buy one. Sometimes it is cheaper to replace an item or just pay for the repair.

Difficulty: Easy

Instructions

Things You'll Need:

Internet
Knowledge
The ability to know when warranties are a good idea
The ability to say "NO"

Step 1

Costly

Extended warranties usually cost more than they are worth. It is often cheaper to replace the product than it is to pay for the extended warranty. After you do the math, the warranty adds up to be more than it would to have something repaired or to replace it.
Step 2

Unreliable Repairs

The work offered from the warranty may be unreliable. The first thing to understand about buying an extended warranty is that, should something go wrong, the company holding the warranty, not the consumer, will determine who does the repair. More often than not, the companies will use subcontractors that you wouldn't have selected on a bet. The contractors chosen usually are contractors that can be used cheaply, meaning they often do bad work which ends in total frustration for you.
Step 3

No Coverage

Your warranty may not cover what you think it does. It's particularly infuriating to consumers when they purchase an extended warranty, only to be told it doesn't cover their repair when they try to use it
Step 4

Going Out Of Business

Your warranty underwriter may go out of business. When considering the purchase of an extended warranty, an important question is just who is guaranteeing this product? Is it the merchant who is selling the product or someone else? Will the company guaranteeing the warranty be around if you ever file a claim?
Step 5

Overlapping Warranties

The extended warranty may overlap the manufacturer's warranty. The whole idea behind an extended warranty is that it will "extend" coverage after the manufacturers' warranty expires. So, before considering any extended service plan, you should always review the manufacturer's warranty to determine what it covers and how long it lasts. Many people have bought a 2 year warranty only to find out it started at the same time the manufacturer's one year warranty started. So they were paying for 2 years and in actuality only getting one.
Step 6

Peace of Mind

There are many things to consider when you're offered an "extended warranty" or "service contract" with your purchase. Consumers might do well to consider the advice of their fellow consumers, who're learned from bitter experience that purchasing an extended warranty does not always provide the peace of mind and financial protection they assumed it would.
Step 7

Cheaper to Repair

There is data proving that electronics and appliances seldom break within the extended warranty window. And when electronics and appliances do break, the repairs, on average, cost about the same as an extended warranty.
Step 8

Repair Rate Study

The following information was taken from a compilation of electronics and appliances that were under warranty. The study was done for 4 years and this is the percentage rate of repairs for these warranty items. In this study Laptop Computers needed the most repair & TV Sets needed the least repairs.

Laptop computers 43%
Refrigerators: (side-by-side, with ice maker and dispenser) 37%
Rider mowers: 32%
Lawn tractors: 31%
Desktop computers: 31%
Washing machine: (front-loading) 29%
Self-propelled mower: 28%
Vacuum cleaner: (canister) 23%
Washing machine: (top-loading) 22%
Dishwasher: 21%
Refrigerator: (top- and bottom-freezer, w/ ice maker) 20%
Gas range: 20%
Wall oven: (electric) 19%
Push mower: (gas) 18%
Cook top: (gas) 17%
Microwave oven: (over-the-range) 17%
Clothes dryer: 15%
Camcorder: (digital 13%
Vacuum cleaner: (upright) 13%
Refrigerator: (top- and bottom-freezer, no ice maker) 12%
Range: (electric) 11%
Cook top: (electric) 11%
Digital camera: 10%
TV: (30- to 36-inch picture tube) 8%
TV: (25- to 27-inch picture tube) 6%
Step 9

Just Say No

My final thoughts I have derived at from doing extensive research are that consumers should just buy extended warranties on products that have a high percentage of breaking down. TVs are the number one product that consumers buy the most extended warranties for, but if you look at the data, TVs are the least likely electronic to break down while under warranty. Laptops have the highest percentage repair rate, but you should decide if repairs will be cheaper than extended warranties. Bottom line is that you should not let salesmen pressure you into buying warranties. Just say no!