When you buy computers, electronics or appliances, you will likely be asked if you’d like to get an extended warranty for it.
There are a few reasons why I don’t believe that extended warranties are worth the extra expense:
- Most products are unlikely to need repair during the extended warranty period. They will either have a manufacturing defect that can be replaced during the manufacturer warranty or may need repair due to age or wear and tear well after what the extended warranty will have covered.
- The cost of repairing the item may be similar, or even less, than the warranty itself.
- With advancements in technologies and constantly dropping prices in computers and electronics, it may be worth replacing the item if it’s 2 or 3 years since you’ve purchased it. For example, 2 years ago someone could buy a DVD player for $200 and an extended warranty for $50 extra. But if they skipped the warranty and now the DVD player isn’t working, they could simply buy a new one for $50 that included new features like up conversion and a USB port.
- Everything may not be covered under the extended warranty. Certain parts might be excluded or labour and shipping may have to be paid by you.
- Many gold and platinum credit cards will double the manufacturer’s warranty, up to a year, if you purchase the product with that card.
If you do decide to get an extended warranty, negotiate the price or try to get something included with your purchase. For example, when buying a TV with an extended warranty, you may be able to get your HDMI cables or a DVD player thrown in. Most companies have quite a bit of room to deal since they keep at least 50% of the price of the warranty.