First I got this from Scott:
First, I will say you are very pretty. Second, I love your site, it has a lot of good stuff on it. My question is about extended warranties. I know that usually, this is not a good deal and a waste of money. However, I have a 50 inch big screen projection TV that I bought 10 months ago without the extended warranty because that is usually a waste. Now I am getting offers of one last chance to extend the warranty. I spent about $2500 on it. The warranty is for the next 3 years for $500. Worth it? I don’t know. They claim a service call to replace a bulb is a few hundred. But lots of claims aren’t true! 🙂 What are your thoughts? Thanks!
Then I got this from Kristine:
You’ve got such good advice, I’m wondering what your opinion is on extended warranties and service plans. EVERYTHING seems to come with an offer for these now! Even my sofa, well, actually, the stain protector on my sofa – I got a call from them a week after we got it offering an “extended” warranty from the normal 1yr to 3yrs. Is that worth it?? And is it more worth it for some items, like the new dishwasher we just got that has electronics that are more expensive to replace? What about computers? I’m partial to Dell’s plan, as we’ve put it to use several times. But I don’t know… what’s your take? Thanks for all your great advice and deals!
So, I don’t know, I could be wrong, but I’m thinking y’all might want to have a discussion about extended warranties.
The short answer, of course, is put down the credit card and back slowly away from the extended warranty. Every product on the market seems to come with the option of an extended warranty, nowadays, and 99% of them are a complete waste of money. In a world where price-matching has become cutthroat, many companies make the bulk of their money on extended warranties rather than on the sale of the item itself.
And if the extended warranty was going to end up being cost-beneficial for you, well then they wouldn’t be profiting off of it, now would they?
So. My standard answer? No. No no no no no and a thousand times NO, do not buy an extended warranty.
But then I thought, hey, maybe I need to think about this some more, and make sure I’m making sense. But then I had a couple of cookies and the urge to do some actual research passed.
Haha! I kid. I had three cookies, but I also did my research. So let’s talk specifics.
First of all, check out the pointers in this article from PC World. Although they’re talking specifically about computers and home electronics, most items on the list apply to just about any high-end purchase. Most notable take-away tips from their suggestions include checking to see if your credit card does automatic warranty extension, shopping around for the best warranty deal if you do decide to get one, and breaking down potential repair costs versus the cost of the plan.
Here’s another good read by them: Extended Warranties Aren’t Worth It.
Let’s break it down by category.
Cars: No. Do not buy an extended warranty for your car. Do your research beforehand, buy a car with a proven track record of quality, and change your oil regularly and whisper sweet nothings into the dashboard occasionally.
Big TVs: Scott’s question was specifically about his projection television, and my instinct was to say no. Then I turned to CNET—my trusted source for product review info—and found this collection of user opinions. They seem about evenly split on the issue. Look; you have to break it down. What’s the average life expectancy of one of those bulbs? How many hours of TV do you typically watch in a week? I suspect you’re better off taking the money you would’ve spent on the warranty and sticking it in the “TV emergency repair fund,” but maybe you watch 20 hours of television a day and I’m totally wrong. Do the math.
Appliances: No. Again, do your homework. Buy reliable. Stick some money aside in a repair fund, if you can, instead.
Furniture: … seriously? A warranty for your furniture? There are some plans out there, as Kristine mentioned, that want to warranty your stainproofing. I have 2 little kids and it has never once crossed my mind to buy such a plan. The chances of a catastrophic staining (lord, that sounds much dirtier than I thought it would) are so slim. You’re better off shouting “You kids get off the good furniture!” and buying a bottle of OxyClean. Although I will mention, here, that it’s a good idea to pay for Scotchguarding (that often costs extra) if staining is a concern.
Desktop computers: Here is where I’m going to start some arguments. I say no to extended warranties for desktops. But I also say no to generic computers, because this is an item where you can’t afford to go with a less reliable machine. Again; do your research, buy with a credit card that doubles the warranty, if you can, and say a prayer. Assuming the company offers a 1-year warranty and your credit card extends that to 2 years, you’re now looking at the cost of the extended warranty in your pocket when a problem occurs 2 or more years later. And at that point? Technology is advancing and coming down in price so quickly, what you would’ve spent on the warranty will probably be enough to replace your system by then. Save your money.
Laptop computers: Here’s the exception to the rule. Buy a service plan with your laptop. Why? Two reasons. First, laptops are more expensive to begin with and the prices aren’t dropping nearly as fast as they are on desktops. Replacement cost will be much more substantial than it would be with comparable desktop. Second, here’s a very pricey item that’s going to be being carried and moved around and opened and closed and who knows what else. The potential for damage is great, and the cost of repair is often daunting. I know that both Dell and Apple (not sure about others) have fuss-free service where they send you a box and you just pop your machine in the mail and it comes back to you a few days later all fixed up. Totally worth it.
Here are a few more general things to consider when looking at a plan:
- How do repairs work? Does someone come to you, do you have to take your item somewhere? If so, how close by is the repair location? Do you have to mail it in? If so, who pays shipping?
- How much is peace of mind worth to you? Did you have a similar item before that had multiple problems? Is it worth it to you just to know you’re covered?
- Is everything covered? Or only certain things?
Bottom line: Most of the time, an extended warranty isn’t going to be your most cost-effective move. In the cases where it does make sense, you still need to go over that contract carefully and be sure that you understand what you’re getting. In the case of a big purchase where you don’t go for the service contract, set aside some earmarked repair money if at all possible. If you don’t end up using it, more power to you.
I hope that helps, Scott and Kristine!