Here’s Why You Should Not Purchase Extended Warranties
Turns out, they may not save you money.
Driving a car or using an expensive product like a computer or home appliance that’s still under the manufacturer’s warranty is reassuring.
You can be relatively confident that if anything goes wrong, you won’t be on the hook to pay to fix it. So it seems like it would make sense to spend the extra money on an extended warranty to give yourself continued protection. But, according to Consumer Reports, it turns out you may actually save more money skipping the warranty and getting the repairs done yourself.
The reason for this, explains Consumer Reports, is that extended warranties often contain contractual fine print that can deny coverage for almost any reason. Things like accidental damage may not be covered, and failure by the owner to perform routine maintenance may nullify coverage.
Consumer Reports did a review of home service contracts and found that parts not covered under a refrigerator service contract included ice makers, beverage dispensers, door seals and gaskets, hinges, lighting and handles—many items that commonly need repairs.
A car service contract they reviewed came up similarly short, leaving out many parts of the vehicle.
And even if the part is covered, there are still a number of things you must prove before getting coverage under many policies–including proving your item wasn’t broken when you signed up for the warranty, that the issue isn’t the result of a manufacturer defect and that the damage actually affects the performance of the item and isn’t just cosmetic.
Extended warranties can also come with initial costs and deductibles, and may even charge a fee each time you make a claim.
Because of these issues, extended warranties have become a major source of complaints to the Better Business Bureau, according to Consumer Reports.
Bottom line: Consumer Reports says you’re better off purchasing the most reliable products from the start and keeping them properly maintained. Then skip the extra cost of extended warranties and instead put money aside to cover any repairs yourself in the (hopefully unlikely) event that they’re necessary.
And if you never spend the money, you’re off to a great start saving toward the purchase of a new car, computer or appliance down the road!