What's the general rule when buying extended warranties?

[mikeford]

It just depends on the item, price, and how the warranty works. Some warranties that "look" the same can in practice be good or suck.

General answer no, don't buy extended warranty, but do immediately put the device to use to see if its DOA or a short term fail.

Credit card "free" warranty extension often require registering the item as well as using that credit card to make the purchase.

Clearance item with warranty based on clearance price, but offering replacement, not just a refund on failure, can be worth it.

 

[Leyawiin]

For cars, always.

You must mean for used ones from a dealer with no factory warranty left. Don't know why anyone would buy an extended warranty on a new car these days. Mine came with a transferable 5/60 bumper-to-bumper and 10/100 power train. There's no need.

 

[Jumpem]

You must mean for used ones from a dealer with no factory warranty left. Don't know why anyone would buy an extended warranty on a new car these days. Mine came with a transferable 5/60 bumper-to-bumper and 10/100 power train. There's no need.

The cars I buy are 36k mile bumper-to-bumper, and 50k powertrain. I buy 100k mile extended bumper-to-bumper warranties and trade just before it expires.

I have a lease now, and it will be at about 54k miles when the lease is up. I am still debating on whether to buy a warranty to cover that gap from 36k miles to 54k miles.

 

[postmortemIA]

The cars I buy are 36k mile bumper-to-bumper, and 50k powertrain. I buy 100k mile extended bumper-to-bumper warranties and trade just before it expires.

I have a lease now, and it will be at about 54k miles when the lease is up. I am still debating on whether to buy a warranty to cover that gap from 36k miles to 54k miles.

and you waste your money either way. If you look at the cost of the extended warranty, see it as a bet (from ones insuring you) that on average cost of fixing that car in that time frame is going to be less than cost of the extended warranty.

 

[Jeff7]

General rule is whatever you base it on the person issuing it has already done the math and will come out ahead. Thus normally don't get one.
...

I never purchased the extended warranty on my vehicles. Never had any reason to quite frankly. Any major issues you're likely to encounter will most likely be within the original warranty period anyway.

I bought a new car. Within 6 months, the warranty sales mailers started. On the outside, they'd try to make themselves up to look like recall notices, claiming some critical time-sensitive information.

And inside, "WARNING: Your warranty may be near its expiration date!" Never mind that that was years away at the time.
Every few months from then on, mail ads kept showing up, pleading with me to buy the extended warranty.

I really doubt they'd be pushing it so hard if they didn't expect to come out way ahead on the deal.

Now, maybe if you could get the extended warranty for a large percentage off the sticker price, then it might venture into "now it's worthwhile" territory.

 

[Jumpem]

and you waste your money either way. If you look at the cost of the extended warranty, see it as a bet (from ones insuring you) that on average cost of fixing that car in that time frame is going to be less than cost of the extended warranty.

I'm comfortable with that. I would rather not have a surprise bill when an engine, transmission, AWD component, etc stop working. One of the reasons I drive new cars is the warranty. When the warranty is almost gone it is time for a new vehicle.

 

[Anarchist420]

considering how much goes bad these days and how much people abuse things, i wouldn't say they're always a terrible idea.

after all, the first playstation (or maybe even the neogeo CDZ) ended the tradition of reliable game consoles back in '95 and then the companies give you a refurbished one which is really just something that was repaired and has a high probability of breaking again.

 

[Leros]

I never buy the extended warranties. Stuff I buy almost never breaks. I would have certainly spent more money on warranties than replacing my broken stuff.

I can sort of see where extended warranties might make sense to somebody with poor money management. They finally saved up enough to buy that $1000 thing. They can afford the extra $100 for the warranty, but would be screwed if the thing broke and they had to replace it.

 

[Leros]

I had a summer job in a small factory where they did a lot of welding. They bought certain tools like grinders at Harbor Freight for super cheap and got the extended warranty. Every week, a good number of the tools would burn out and somebody would go get them all replaced. They would spend something like $17 on a grinder, get the $5 extended warranty, and then get it replaced 10 times.

 

[DrPizza]

I considered making a thread about this last night. We bought a new printer yesterday, and the employees actually came out and said to find a way to break at before the end of the warranty period, then get a brand new one. If I were their manager, they'd be fired. (And, no, no warranty.)

 

[Sho'Nuff]

I never buy extended warranties, except for refrigerators. Over the past 10 years or so I have purchased 5 refrigerators. All of them were over 2k. And all of them required major service within the 1-2 year mark (conveniently after the 1 year manufacturer's warranty expired). 3 had circuit boards blow (without the warranty it would have been almost more cost effective to replace the fridge), and 2 had the auto defrost system completely freeze up to the point where service had to be done.

They just do not make fridges like they used to.

But as far as TVs, cars, etc. I never buy them. Most of that stuff is built to last, as long as you buy reasonably good quality gear.

 

[Leros]

I never buy extended warranties, except for refrigerators. Over the past 10 years or so I have purchased 5 refrigerators. All of them were over 2k. And all of them required major service within the 1-2 year mark (conveniently after the 1 year manufacturer's warranty expired). 3 had circuit boards blow (without the warranty it would have been almost more cost effective to replace the fridge), and 2 had the auto defrost system completely freeze up to the point where service had to be done.

They just do not make fridges like they used to.

But as far as TVs, cars, etc. I never buy them. Most of that stuff is built to last, as long as you buy reasonably good quality gear.

You have a unique refrigerator situation.

 

[Imp]

I wish one of my TVs and monitors would die already. .. Some approaching 10 years mark.

My computer monitor, Dell 2407, is pushing 5 or 6 years now. It came with 3. Still kicking like it was brand new.

I don't bother. The way I see it, almost everything comes with at least a 1 year warranty, usually just 1. If it's tech, then in one year's time, the tech will have improved and the same or similar item would be cheaper. Otherwise, I'll pay for a repair.

The only pieces of shit that died just after a year were a dumb phone and an MP3 player. The former was $150, latter $100. I replaced the phone with a $50 POS that still works (I've upgraded) and the music player I didn't really want/use anymore.

Also, my wants/needs might change. I have a 40" LCD TV in my room that's about 4 years old now. It was just over $1000 when I got it. If it died right now, I'd replace it with a 1080p $350 32" LCD because I realized that I'd be happy with a 32" (720p 32" was $450 then) and want the mobility for when I move. An extended warranty probably would have been $100 for the extra year or two and still run out already.

 

[Hugo Drax]

There is a reason they sell them and push them on consumers.

 

[JEDIYoda]

My wife bought for me a real nice GPS with street view....and Bluetooth and all the feature....

3 days in I dropped it and cracked the screen!

I took it back to Best Buy and they said there is nothing we can do mabout this...you bought it and did not buy any sort of warranty protection.

So I took it back home and called the company.....within 5 minutes I had an RMA ## sent to me and they are replacing it....

Best Buy did not tell me that the GPS unit had a 14 day anything goes wrong they company will replace for free!!

My advice is don`t purchase ANY ADDITIONAL WARRANTY!!

 

[alkemyst]

General rule is whatever you base it on the person issuing it has already done the math and will come out ahead. Thus normally don't get one.

That math is based on first, most will forget (except like Costco which advertised it's lifetime policy all the time).

Secondly, most will lose the "proof of purchase".

Extended warranties is a complex topic for me.

I was handed another necklace for my fiancée tonight since her hair gets tangled in them and they end up breaking. The warranty cost me $2.99 originally. It's a simple silver chain that was included with the solid silver floating heart I bought her. That warranty just paid itself off beyond silver prices on that necklace.

 

[Freejack2]

I tend to buy warranties from Squaretrade on things that I think might break and I can't easily or cheaply repair myself.

One thing I did get lucky on is when I bought my car I wasn't going to get the extended warranty, finally they decided to half the price of the warranty and I was like ok. It paid off recently when the piston rings went. $3500 repair for only a $100 deductible.

 

[alkemyst]

I tend to buy warranties from Squaretrade on things that I think might break and I can't easily or cheaply repair myself.

One thing I did get lucky on is when I bought my car I wasn't going to get the extended warranty, finally they decided to half the price of the warranty and I was like ok. It paid off recently when the piston rings went. $3500 repair for only a $100 deductible.

How much was the warranty?

 

[tfinch2]

I've only purchased an extended warranty on two things in my life:

1.) My Nexus 7 because I knew I would beat the heck out of it and probably break it.
2.) A refurbished receiver that only had 90 day warranty.

In both cases they were cheap, around $20.

I may get Apple Care for my wife's iPad Air.

 

[david jing]

What has the

 

[smitbret]

They make money for the person selling it to you. What does that say? And it's not a little money, it's a LOT of money.

I used to be the guy in back the sold you the warranty on your new car while you were doing all of the paperwork. The profit for the dealership alone was 60% and keep in mind that the remaining 40% included the tidy profit for the originator of the warranty, the company that actualyl administered it.

That being said, I often found that the people that didn't buy warranties should have and the people that did buy them didn't need to. Usually it just came down to cost and the people that could afford it, did. Of course there were a few people that just don't buy warranties in principle and that's OK, most of those people could afford to just pay cash for the car in the first place.... and therein lies my principle for warranty purchases.

Can you afford to repair or replace this item if it breaks or fails? I won't buy a warranty on a cell phone because logic tells me that if a 3rd party company can make money on the warranty then someone else has already done the math and they fail far less often than they don't. I can also afford a few hundred bucks on the spur of the moment if I have to get a replacement.

However, if you have a shiny new Samsung GS4 and work at McDonald's, the warranty may not be such a bad idea. You may not like it, but $8 month means you don't get stuck with a $500 handful of plastic and glass and no way to communicate with anyone until you are able to bum an old flip phone from your ex-boyfriend that has it laying around from 2003.

That's why I do buy warranties for automobiles. I don't buy full coverage or low deductible policies because I can do minor repairs myself. What I can't afford is $3000 for a new engine or transmission. I usually end up with a Powertrain+ type warranty that includes most of the onboard computers and other major components with a deductible of $250 or higher.

I also bought a warranty on the Kindle Fire we picked up about a year and a half ago. It is used heavily by a 2 year old and 8 year old. We haven't used or needed it but I don't regret paying for it.

I also got the warranty on my phone because I am with T-Mobile and got it with the Jump program. I wasn't convinces whether I would like the phone and wanted the ability to get out of it if I didn't like it in a few months and the warranty just kind of came with it. I will probably cancel it very soon, though.

Everything is situational.

 

[smitbret]

I had a summer job in a small factory where they did a lot of welding. They bought certain tools like grinders at Harbor Freight for super cheap and got the extended warranty. Every week, a good number of the tools would burn out and somebody would go get them all replaced. They would spend something like $17 on a grinder, get the $5 extended warranty, and then get it replaced 10 times.

This. When they were pushing it on me I was shocked at the warranties those guys are putting out. I think they base it on the idea that most of the tools purchased there are 1 or 2 offers where they are bought for a specific project and then just stuffed into the shed for 3 or 4 year until they are needed for another project. By then, the customer has lost the receipt. I buy the tools knowing they are 1 time use tools so the warranty doesn't mean much. But I pictured exactly the situation above while they were explaining it to me. I literally pictured an assembly line with a row of a dozen guys all using red Chicago hand tools and some guy standing behind them whose job it was to wait till the tool failed and then he grabbed the old one and ran to HFT to get the replacement.

I don't think Harbor Freight's warranty is any statement of the quality of their tools.

 

[tmc]

i purchased extended warranty only two times:

1. lowes covers any 3 items (fridge, range, washer, etc) for $99 for 4 years (after the first year). this was very useful as two of my appliances had problems and they fixed it.

2. CircuitCity once had a 10 year warranty for $30 on speakers. Never had to use the warranty though.

 

[Puppies04]

Cost.
I just bought a tv that came with a 1 year warranty. I purchased a 3 year extended warranty that starts after the manufacturers warranty ends. It was $99 at Costco through SquareTrade.

How much was the TV? What does the small print on the extended warranty say?

 

[Jeff7]

They make money for the person selling it to you. What does that say? And it's not a little money, it's a LOT of money.

I used to be the guy in back the sold you the warranty on your new car while you were doing all of the paperwork. The profit for the dealership alone was 60% and keep in mind that the remaining 40% included the tidy profit for the originator of the warranty, the company that actually administered it.
...

Retail. I was a cashier at Kmart. There were incentives for selling extended warranties on things.
Management pushed hard for them, so they were presumably being well-compensated for selling them. Even little things like a $15 toaster would be flagged, and the register would prompt you to try offering a warranty. A $5 warranty on a $15 toaster.

So the warranty is also paying for management to receive their incentives, and the snippets of money thrown at the cashiers and floor salespeople to push them.



Maybe I'll give that a shot on my car - Subarus don't have much in the way of warranty. 3 years or 36,000 miles.
The extended warranty is around $500 for a few more years, and up to 100k miles.
I wonder how much they'll negotiate on price.
If they'll only sell at original price, it was too expensive. If they will sell at a lower price, I get a better deal, and they still go away with a comfortable profit margin.