From cars to pricy electronics, expensive purchases often come with the option to buy added protection through an extended warranty. But is this extra protection worth the extra cost, or is it a waste of money? While an extended warranty may end up paying off, more often than not, you may just want to skip it. The following are some disadvantages to consider before shelling out the cash for an extended warranty:
The manufacturer’s warranty is usually sufficient
Just about anything you buy, especially an expensive product, will come with a basic manufacturer’s warranty. These warranties will protect your purchase for a designated period of time—usually one year. If there was a defect during design, production, or distribution, this will usually happen before the basic manufacturer’s warranty expires. Significant issues tend to occur later on, and long after warranties (extended included) have run out.
They usually aren’t cost-effective
Depending on what you’re buying, the cost of the extended warranty can be quite high, and you probably won’t recoup that extra cost. For instance, pretend you’re buying a brand new car and the price for an extended one-year warranty is $1,500. How likely is it that you’ll actually need $1,500 worth of repairs within such a short time of buying a brand new car, and repairs that are not covered by the standard warranty?
Many credit cards offer extended warranties
Credit cards can offer many benefits, including perks and rewards. But many credit card programs will also offer extended warranties for customers, just by using their credit card for their purchase, and at no extra cost. If you have a credit card that offers this perk and you use it for your purchase, you may be able to get the same level of added protection, and without purchasing the extended warranty through the retailer.
You’ll probably never use it
Only a small percentage of consumers actually end up needing their extended warranty. Although it’s impossible to anticipate, odds are, you’re better off just saving the money you’d use for an extended warranty and using it to pay for any necessary repairs out-of-pocket.
They may not be effective
Many consumers are under the impression that extended warranties will protect their purchase for anything that goes wrong at all, but this isn’t the case. Extended warranties won’t cover everything, so it’s important to carefully look through the terms and conditions before agreeing to purchase one. Terms do vary, but for the most part, they can be rather limiting.
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Nothing above is meant to provide financial, tax, or legal advice. You should meet with appropriate professionals for such services.