Are you ready to buy that new gadget or piece of electronics you've been waiting for, like a flat-screen TV or the latest-greatest smartphone? If so, it's almost guaranteed the salesperson you'll talk to, or even the cashier, will offer you an extended warranty or a "protection" or "service" plan. Should you buy it?
Warranties: The Hook
If the salesperson or cashier is doing her job right, she'll tell you that an extended warranty covers repairs or problems that aren't covered by the manufacturer's warranty, or it extends your coverage for months, even years after the manufacturer's warranty expires.
You're about to plunk down some serious cash for something that seems fragile, or it has hundreds of moving parts or intricate components. So, it's a natural reaction to actually think about a warranty. And before you know it, you're asking the salesperson, Ho much is it?
The cost of the warranty depends on what you're buying, how much it costs, and the length of the warranty. Generally, warranties run between one and five years. A two-year warranty on a smartphone may be $50-100, while a one-year warranty on an MP3 player may be less than $10.
Peace of mind is pretty cheap, it seems.
Do You Need It?
If you don't take things at least one step farther, you may be wasting your money on a warranty. Before you agree to pay for one, take a minute to ask yourself a few questions and try to keep a few things in mind:
- The extended warranty probably doesn't cover anything more than the manufacturer's warranty, no matter what the salesperson tells you
- The manufacturer's warranty is free, usually lasts about one year, and covers most types of repairs
- The extended warranty (like the manufacturer's) usually won't cover accidental damage - you dropped it or your child threw it into the bathtub. Ask the salesperson if the store offers an accidental damage plan/policy
- Think about the chances your item will break during the warranty period. Stores and manufacturers know most products are reliable, well-made, and (more likely than not) will outlast the extended warranty period. Computers and lawn care equipment are good examples of items often needing repair in the 3-5 year window
- Compare costs. Does it really make sense to pay $5-$10 dollars for an item that costs $15-$20 brand new?
- Are you using a credit card to buy the item? If so, your credit card company may automatically double the manufacturer's warranty for free. Call and ask if you card does this before buying the warranty
- Call your insurance agent and ask if your homeowner's policy covers the item and to what extent - accidental damage, theft, damage caused by weather/natural disaster, etc.
- It may not last one, three, or five years. If your item can't be fixed and is replaced by the store under the warranty, your original warranty usually ends. The replacement item may come with a separate 90-day manufacturer's warranty, but the extended warranty you bought is gone
- If you buy an extended warranty and change your mind, you usually can get a refund. However, read the warranty contract carefully because you may only have a short period of time (like 30 days after the purchase).
Everyone likes peace of mind when it comes to making big purchases. No one wants to throw away money. If you don't think carefully about that extended warranty, though, you may be doing just that.
Questions for Your Attorney
- Does an extended warranty transfer with the item if I sell it to a friend?
- What happens if the store I bought my item and warranty from goes out of business?
- How many times can a company try to fix my item under an extended warranty before it has to replace it with a new one?