Drawbacks of Extended Warranty

Extended warranty has been vigorously marketed by different electronic appliance shops. A brand new appliance would usually have one year warranty but you have an option to extend it to three or five years. In paper, the offer really looks good because you are appliance have been insured to work for at least three or five years.

You might even have a new television if your television breaks down after two or three years of use.  Ask any financial adviser regarding extended warranty and most of them will say that this type of warranty is really a bad idea. It is just another scheme of businesses to earn more from their consumers.

. Glorified Insurance

Extended warranty is basically a glorified insurance for your appliance. The store or the manufacturers offer this type of warranty but the insurance is from a third party provider. The only difference is that you pay in lump sum instead of paying in installment basis for your appliance’s insurance. That means when something goes wrong with your appliance during the extended warranty period, you will not be entertained by the store where you bought the appliance but will refer you instead to a third party insurance provider.

That arrangement is not bad, actually. However, you were never informed that the warranty will come from another company. The terms and conditions of the provider are usually not cleared out. Usually, warranty will never cover damage due to wear and tear. Most appliances today break down just by wear and tear and it is possible that within five years, you will have a problem with your appliance due to wear and tear. Unfortunately, the company that provides the warranty does not provide coverage for wear and tear.

. More Expensive then Mere Repairs

After three years or five years of heavily using an appliance, you will sure reach its performance threshold and eventually break it down. Let’s just say that company’s that provide warranty do include wear and tear as part of their service. The extended warranty however will cost you more that simple repairs. If your problem is due to wear and tear chances are the problem is just based on mere wires and if most, the power supply. That will not really cost you much including house visit by an electrician.

You can also choose the repairman which means you can get someone you can trust with your appliances. On the other hand, your warranty will let the company select which electrician will take care of your appliance. Even if it is free, the money you paid back then is still bigger than what you have to spend right now. The timeframe of repair would also be longer since others might be lining up to have free repair of their appliances. In the end, the inconvenience as well as time frame for repairs is just not worth it.

. Ultimately Never Use

Appliance stores ultimately earns from extended warranties because appliances within the time frame of warranty will never need any repair. Another reason why you cannot use the warranty is that you will forget you have one. Most consumers who opt to have an extended warranty will usually get excited about this fact first but after a few months, they will just forget about this fact. The small warranty card – the most important document for warranty will also be lost within the clutter of documents because it was thought that it will no longer be used.

If you are offered with an extended warranty, respectfully decline. If you know how to take care of your appliances, you would never need any extended warranty. The price of these warranties is also not worth the service you will get.