Recently when we had to replace a major appliance that went kaput, we shopped around and got the best deal for our needs. As soon as we made a decision, the sales clerk asked the question that we knew he would. Did we want the extended warranty?
Whether it is a major appliance or a bit of electronics that you are buying, chances are pretty good that you will be asked whether or not you should purchase an extended warranty. There is a good reason you are offered one. Most of the time, that is where sales people and stores make the real money, not on the actual appliance or electronic item.
But should you take advantage of an extended warranty?
The general rule of thumb is no–skip the extended warranty. Of course there are exceptions. The extended warranty is like insurance that may or may not pay off. Some of the factors to consider is how much that extended warranty will cost, what the standard warranty covers, what the extended warranty covers covers, and how likely is it that you will need it.
Usually, most standard warranties on electronics, for example, cover an entire year. Most electronics and major appliances don’t need repair for years unless there is something faulty in the manufacturing. If there is something faulty, well, that standard warranty will probably cover it.
This is especially true with electronics. Most of the time you will be replacing an electronic device, such as a computer or phone because of upgrades in technology well before the device would need to be repaired. Plus, even if you do find yourself wanting a repair in the second or third year, the cost to replace the item may be even less than the repair cost.
Some credit card companies automatically extend the warranty on your purchases, so you may already be covered.
An easy way to figure out if the extended warranty is worth it is to break the cost down over the course of the warranty. Thus, is you are paying $250 for an extra 2 years, determine if the almost $11 a month is worth the peace of mind.
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