As it turns out, most extended warranties aren’t worth the paper they’re printed on. Here’s why
When you buy most expensive items these days — from cars to appliances to computers — you’re almost always offered the option of purchasing an extended warranty, a service contract, or something similar to go along with it. That usually seems like a pretty good idea at the time, in a just-in-case kind of way.
But is it really? Let’s take a closer look at the concept.
First of All, Why Bother?
That’s a good question, actually. Even when money’s tight, most of us are smart enough to shop around until we find the best bang for our buck, especially when purchasing a big-ticket item like an automobile. We tend to go with brands we know we can trust, rather than taking chances on the unproven.
So do you really need a warranty or service contract on a brand new item made by a decent manufacturer? Well, how likely is it that your new Maytag washing machine is going to give up the ghost anytime soon? Despite popular misconceptions, most manufactured goods are more reliable than ever before.
And even if your washer does blow up, can’t you take it back and get it replaced?
Generally, you can. Not only will most retailers honor their commitments (since they want to stay in business), but the manufacturer should replace the thing if it fails anytime in the first year. So why pay hundreds of dollars more for an extended warranty?
Here’s how I see it. Let’s say you refuse the extended warranty. You save some significant cash, and even if your washer dies on your 366th day of ownership, by then you’ve gotten a few hundred bucks’ worth of use out of it (just think of all those Laundromat quarters you’ve saved).
It might be nice to get a new one on the warranty, but even if you have to pay full price, you’re not so bad off. And consider this: what if the washer lasts five years with no problems? Then you’ve wasted money on that warranty, haven’t you?
Taking a chance?
That’s not to say that an extended warranty is always a waste. Sometimes they do pay for themselves.
This is especially true if you have reason to believe that your new purchase is likely to fail anytime soon — say, for environmental reasons, or because you’re just a clumsy ox. If that happens, you’ll be patting yourself on the back for having made a good choice. Otherwise, not.
Look. If you pick an item that’s well-made and dependable in the first place, you really don’t need to hedge your bets.
We’ll take another look at extended warranties in Part II of this article, so stay tuned!