Know your product before
deciding to invest in an extended product warranty
Extended warranties are
available on virtually all products: appliances, TVs, electronics and cars.
However, it’s best to understand the product lifetime and pricing before buying
an extended warranty.
Extended warranties are available on a variety of consumer
products. They can be bought for cars, kitchen appliances, televisions, and
electronic devices. Generally, appliances come with manufacturer guarantees,
usually lasting one or two years. An extended warranty generally covers repairs
that are not covered by the manufacturer guarantee. It usually lasts longer, as
well.
There have been studies to show that generally, only 20
percent of the money spent on the guarantee is used to finance claims made.
Also, many appliance retail stores, such as Best Buy, rely heavily on profit
made from extended warranties, making about 45 percent income from selling
extended warranties.
People tend to buy warranties in order to feel secure in
their purchase. When buying from a retail store, salespeople are encouraged to
sell these warranties. They generally tell the customer all the things that may
go wrong with the product that are not covered by the manufacturer’s guarantee.
In essence, extended warranties are a very expensive form of insurance.
Laptop computers and plasma screen TVs were listed as two
appliances for which an extended guarantee is worth investing in. These two
products are generally more expensive to repair and they breakdown more often
than other products.
Before agreeing to buy an extended warranty on any product,
it’s important to know the probability of breakdown, and the chances of actually
using the guarantee. It’s also important to note the length of the guarantee –
how long is a lifetime defined as in the contract? Other things to look into are
the number of repairs paid for and how they are done: do you have to send the
product back and pay shipping and handling fees?
It doesn’t make sense to buy an extended guarantee for
smaller products that use technology that is quickly advancing. The most
prominent example is a camera. It is cheaper to repair a camera than buy an
extended guarantee. Moreover, when the guarantee is needed to be used, it’s
possible to buy an equivalent product for a lesser price.
Appliance shopping is time consuming in itself, especially
for appliances that are costly. It’s important not to fall into the trap of the
extended guarantee when it’s not needed. Although a sense of security is
important, the same repairs or replacements can be made for a price cheaper than
the guarantee. Thus researching before buying a guarantee is a great way to
guarantee you’ve chosen out for the better option.
