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Is it Worth Getting an Extended Warranty?

Image courtesy of Shey
Image courtesy of Shey

An extended warranty is often offered when you buy a new item usually an electrical item. What these do is extend the manufacturer’s warranty so that if it breaks down due to a manufacturing fault, you can make a claim. It is a form of insurance. Many people take these out without even thinking about whether they are worth getting because they can be pretty cheap but just because they are cheap, does not mean that you should be getting them.

It is worth looking into things in more detail before you automatically buy one and also before you decline one.  The first thing to check is how long the manufacturer’s warranty lasts for on the product, this varies a lot with some being just a few months and others up to ten years. Think about the price of the product and compare that with the insurance price as well.

If you have only paid a small amount of money for the product then you could probably afford to replace it easily if it broke down, it therefore may not be worth the warranty. If you paid more for it, you may still want to replace it if it broken as you may want a more up to date version. Consider how often you update your items anyway and you may be thinking about replacing it around the time the manufacturer’s warranty runs out. Consider how much you pay for the extended warranty and whether you might be better off saving that money in an account and then you can use it should you need to replace the item.

It is also very important to look at the terms of the warranty as well. It may be that it will only pay out in very extreme circumstances and that means that you may find that it will be difficult for you to make a claim on it anyway. Often it will not cover accidental damage or wear and tear but only faults caused at manufacturing, which would be unlikely to appear so long anyway, but would be more common to show up during the term of the manufacturer’s warranty.

There can also be a problem with taking these out of the company goes out of business. Buy a product and use their extended warranty, if the company you buy the warranty form goes out of business then you will not be able to use it.

Often the hardest bit about turning down the warranty is saying no to the salesman. It is worth noting that many shops will make more money out of these than the actual goods that they are selling and so they really will try to push them onto you. Make sure that you go into the shop ready and prepared to refuse one. You do not have to be rude, just firm and polite. If you feel that you will not be able to do this then take someone with you who will be able to help you.

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Rachel Henderson is a professional freelance writer from the UK. She writes on many subjects but specialises in personal finance. As well as contributing to various blogs and websites she has her own website tracking her own money making process http://www.turnonepoundintoonemillion.com and sells her books through http://www.bowbridgepublishing.com.

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