Extended warranties are available on nearly everything today, from kitchen appliances and electronics to cars. The reality is that these are not really warranties. They are insurance policies that you pay for all at once, as a result, extended warranties are rarely a good deal. There are six reasons to avoid extended warranty service.
- Manufacturers Already Provide a Warranty
One of the main reasons to avoid extended warranties is because manufacturers already provide a warranty. This warranty can last for a year or more. If you pay for the item with a credit card, then the card might actually double or extend the length of a manufacturer warranty. It will be at least a year until the extended warranty even begins covering your purchase. Extended warranties are not worth the extra cost.
- You Are Not Likely To Use the Warranty
The extended warranty will cover your purchase for a few years. Your appliances and electronics have the highest chance of breaking within the first year of ownership while the manufacturer warranty is still in effect. They have a very small chance of a problem in the two to three years afterward. Most appliances and electronics will require repairs five to ten years after the initial purchase date. This means that you are not likely to ever use the warranty.
- Extended Warranties Do Not Cover Everything
Extended warranties have a wide range of exceptions and exclusions that can make a policy worthless. Most extended warranties do not cover damage due to normal wear and tear or accidents. Some policies will not cover damage that is expensive to repair. An extended warranty might not cover damage that stems from an original defect with the product that was not detected until much later.
- Extended Warranties Do Not Make Financial Sense
Extended warranties often cost a significant percentage of the purchase price of an item or vehicle. Extended warranties simply do not make financial sense. The item will depreciate in value over the years. Electronics will become much less expensive in three years. You might have only one minor problem with a car. It makes more financial sense to save the money from a warranty and pay for replacements or repairs as they are needed.
- There Could Be Hidden Fees
Extended warranties always come with fine print. Some fine print can contain hidden fees you would never expect. You might be required to pay for replacement parts or a portion of the labor. The warranty might charge you a fee if more than one repair is needed. You might have to pay shipping costs on electronics sent to a repair service. These hidden fees can negate any benefits the extended warranty might have provided.
- The Repairs Could Be Unacceptable
You do not get to pick who performs the repairs when an extended warranty is used. The company that issued the warranty or the company backing the warranty does. Your item might end up going to a discount repair service full of unqualified technicians. The repairs could further damage your item or cause new problems. It could take a dozen repairs to fix something.
