Are Extended Warranties a Waste of Money?

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You have undoubtedly been offered an extended warranty if you have ever bought anything of value. For example, a new car, home appliances, and electronics are usually subject to extended warranties. But are they a waste of money?

At first glance, they appear helpful and cover you in case something breaks. But there are many instances where you don’t need them.

On the Fence for Cars

While you have legally required insurance, and you may even sign up for roadside assistance, an extended warranty might also be tempting. With an extended warranty for your car, you might feel you have covered all eventualities.

But there are usually specific caveats and small print when it comes to care packages. Reviews of CarShield, for example, cite the options available are remarkably good. Yet, customer service is abysmal, with many complaints to the Better Business Bureau. For the most part, your insurance provider offers much of the same.

Add-On Sales

You may not be aware that many sales assistants earn a commission for selling extended warranties, as does the establishment for which they work. These are basically offered as add-on sales that you don’t really need. You are almost always covered by a manufacturer guarantee, which is extended when you register your product.

And in light of the Curry’s PC World scandal, always ensure you check your receipt before you leave the store. It isn’t uncommon for some retailers to charge you for an extended warranty without asking first.

Electronics Don’t Really Need Them

Even products from the most reputable brands are prone to breaking. Bosch coffee machines, Apple iPhones and LG TVs are prime examples. So, you may take out the extended warranty offered by a retailer. But in most cases, an extended warranty on electrical items is not needed.

Rather than pay a monthly fee, just in case something happens, it is often cheaper to have an item repaired or replaced by a manufacturer. And most manufacturers offer generous warranties of their own, completely free, in accordance with consumer laws.

Insurance is Usually Enough

If you are somewhat responsible, you should have insurance for your home and its contents. Insurance provides cover against fire, theft, flood, and accidental breakage. You will be charged for each additional item, but the cost will pale compared to an extended warranty.

Because of this, it’s sometimes better to simply add an item to your insurance list rather than take out an expensive warranty with another company. However, sometimes carrier insurance might be worth taking out for more costly and specialized items like a new top-range smartphone.

It’s Best Just to Save

A recent survey conducted in the United States found that 25% of Americans have no savings at all. There are many reasons for this, and some people simply cannot afford to. But if you can save, then you definitely should. Especially when it comes to replacing items. Warranties might work if you are short of cash, but in the long run, you waste money.

For example, paying $10 per month over six years exceeds the cost of a brand new washing machine. You will better serve yourself by saving your money and using it for emergencies when you need to. 

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