When you go to the store to purchase most any car, appliance, or electronic item, the sales clerk will typically ask if you’d like to purchase an extended warranty on the item. You are then left to weigh the pros and cons of spending the additional cash on a warranty you may or may not use. It’s always best to research not only the item you are purchasing, but the warranty that is offered by the manufacturer, the store, and the extended warranty BEFORE you are standing in the checkout line needing to make a quick decision. Educated decisions net a return that is more beneficial than spur of the moment instincts. Also, the salesperson is likely getting a bonus or commission on the extended warranty, so they are usually going to advise you to get it. We’ve had a year of a multitude of things breaking. We are ready to see 2011 go, but it has given us a ton of insight into warranty usage.
There are some things to take into consideration to help you make the best decision for your situation:
Is this something that you use and need on a daily or regular basis?
Example: We purchased the extended warranty on our washer and dryer when we replaced them 2 years ago. Our previous machines had lasted 14 years with only one service call, but the new HE machines are more electronic oriented. Neither of us knows how to work on or repair a machine, and it’s not something Nick is willing to attempt. We rely heavily on them, as there is only ONE laundromat in our small town. It costs $1 per load to wash (1/2 the load size of our HE machine) and $0.50 per 8 minutes to dry, and their dryers don’t work well. We have allergies so outdoor line drying isn’t an option. The 5 year warranty was $100. Definitely worth it for us. Just last month our washer went out and we had to place a service call. We had to wait 2 weeks for our appointment and I had to trek to the laundromat twice. I spent $60 the first time washing/trying to dry because I didn’t want the clothes to mildew while waiting to dry at home. When I ran out of quarters, I brought it all home and stayed up until 3 am drying. The 2nd trip I took less laundry and went earlier in the day. I still spent $20 washing, but brought it all to dry. That was $80 in 2 weeks of laundromat use. The warranty has paid for itself in our opinion.
Can you afford to repair or replace the item if it breaks and you don’t have a warranty?
If my $20 toaster breaks, I don’t need a $5 warranty to get it fixed, I can buy a new one. However, also this past year Nick’s Honda broke down. My car is old, out of warranty, but paid for. So, when it broke we were using the Honda exclusively until we had the money to fix the Nissan. Then the Honda broke. The transmission went out on me in the CVS drive thru. The manager pushed me into a parking spot. I waited a bit, turned the car off, then back on and it ran at 5 mph to my house (1 mile away) and stalled again in the driveway and wouldn’t restart. Thank the LORD for getting me home! We got it in the garage and called our mechanic. He got it running enough to make it to the transmission shop and we had a huge ordeal between the original dealer (should’ve been under warranty but I’ll blog about that another time) and ended up having to trade the car in instead of sinking money into a car with tons of issues. When negotiating the new car deal, of course the finance manager was pushing tons of extras. He wanted to sell us GAP insurance for $800. I explained that I had financing experience and that was WAY too much to pay, so we declined, along with his $4000 extended warranty. By the time we finished the paperwork, he had agreed to $300 GAP insurance with full deductible coverage up to $1000 AND $1500 extended warranty. Always negotiate. After the year we’ve had of breakdowns and repairs we knew we wanted and needed the coverage, but we were NOT going to get ripped off paying for it.
What does the warranty cover?
My parents purchased a TV for my middle son as a gift last year that has a DVD player attached. The extended warranty from Target was $20 but covered anything that happened within 2 years. One month later, the youngest had inserted a lego into the DVD player and the whole unit was broken. Called Target, got a new TV. Still have the same warranty for the next accident that we are certain will happen. We also used the warranty on our refrigerator 4 times. The ice maker has gone out, the entire cooling unit has gone out and all the food ruined (and replaced!) and the ice dispenser broke twice. The cost of the food replacement was more than we paid for the warranty.
Even after the best research, you can still find yourself shocked at how a warranty works. Also as part of our flood, our furniture was ruined and had to be replaced. We bought an entire set from a popular furniture store in our area. The love-seat broke 3 weeks later. We did buy the warranty on it because of the price and coverage offered, but this was covered under manufacturer due to the time line and serviced by the store. It took TWO weeks for them to send an assessor, FIVE MONTHS for them to get the parts in, and another week for them to repair it (they came and picked it up and re-delivered it after I threw a fit that I WAS NOT hiring a service to bring it to them!!!) Needless to say, we won’t be purchasing ANY MORE furniture from Bob Mills!
These are really good if you don’t know how to fix them, or if you NEED it for work from home, etc. Most come with some type of warranty coverage, and it can be extended. We’ve even had one that was 4 months out of warranty and when it broke, they offered to extend coverage at a cost less than the parts backdated to the expiration date, and we accepted. Two days later the parts and a tech arrived and the PC was good as new for less than $50 (the part was $300!). ALWAYS call and ask if the warranty can be extended if you need it after expiration.
There are other items that we’ve purchased and declined the warranty on. We just got a new dishwasher on sale after the old one was destroyed in the flood. The warranty cost on it was more than half the cost of the unit which came with a 2 year warranty. We decided to save that money and if something happens we’ll either pay out of pocket to fix it or buy a new one, since it isn’t an appliance that we NEED (but oh how I do love it and rely on it!).
Things to remember to check for when you buy an extended warranty:
- Read the fine print of any warranty you are considering to make sure you KNOW IN WRITING what IS and IS NOT covered.
- If it is for a large appliance, etc. make sure they will come TO YOUR HOME to service the unit and not require you to bring it to a repair shop.
- Know when the warranty BEGINS (usually the date of purchase NOT when the manufacturer warranty expires) AND when it ENDS.
- Know how much repairs or service calls, and an idea of parts cost and make sure the warranty will be saving you money if you need to use it.
- If the product breaks, is it something you NEED to have replaced in a timely manner, or can you live with out it.
- Understand that warranty fees are NON-REFUNDABLE. Yes, I have heard of people angry that they couldn’t get a refund on warranties they did not use or feel that they had gotten their money’s worth. It’s just like insurance: there if you NEED it, otherwise you’ve paid for peace of mind (which may be worth the cost in and of itself in some cases).