Myth Busting Extended Warranties
This topic has been flogged to death by W5 and 20/20 and many other media enterprises claiming to be advocates for consumers. Don’t believe what you see in these specials if you think they are being aired for any reason other than to increase viewer ship and ratings you are mistaken, they are one sided broadcasts that are telling you only what you want to hear and that is “DON’T BUY THE EXTENDED WARRANTY”. Then you run into the store thinking you are armed with information you got on the internet or saw in a broadcast. If you have seen this then the staff at the store have seen it and already have a counter statement for it. I have written for my sales teams counters to all of these articles and broadcasts that came out from 2000-2007 so it’s not really ammunition. Consumer reports has some good information regarding the purchase of extended warranties on specific products. I will also give you some guidelines later in this post to help you make a more educated choice on the warranty purchase. My sales teams and I had many laughs over some of the articles we read and broadcasts we watched detailing the BAD in Warranty purchase. My personal favorite is
“THE INTERNET TOLD ME THAT ITS BAD TO BUY EXTENEDED WARRANTIES”.
Well my answer to that is simple
“YES THE INTERNET ALSO TOLD ME THAT THERE ARE HOT NAKED LADIES IN MY AREA WAITING TO MEET ME!…THE INTERNET LIED!”
I intend on sharing information on warranties and give recomendations to you the options and the choice is always yours in the end. What I am telling you here is based of my many years experience in sales and is designed as a guide to help you in making your decisions. It is not comprehensive nor malicious in any way, I will however be brutally honest when replying to comments and or questions regarding warranties and specific experiences if you choose to ask.
The Myths (both from shady sales people and from malicious reporting)
Extended Warranties are all profit. This is not completely true, the majority of extended warranty programs are not owned by the actual company that you are buying from. These warranties are covered by a larger company that deals with insurance and warranties only. The money is like insurance it all goes into a pool and that pool is drawn from when you require service on the product.
Buy the longest term it’s the best investment
Many companies offer long term warranties on products that don’t really need it. Some places bank on the fact that you will forget or replace the product before the warranty is used or expires. This is very prevalent on items that have a short lifecycle such as computers or media players etc. A product that get constant changes in its features each year is not worth spending the money for extended warranty on.
Most products break right after the manufacturers warranty expires
Yes there are a lot of disposable products that just generally become obsolete in less than a year anyway. These are the products that you should never buy extended warranty on unless it is a OCE – Over the Counter Exchange warranty. The point of repairing these products is pointless and a waste of your time. Products in this category are things like , Mp3 Players, Cell Phones, DVD Players, Computer Accessories, Any personal hygiene products etc .
More on this myth, many although this myth maybe true for some products but not major products. Things like televisions, stereos, speakers, furniture etc if you stick to a quality product are generally build very well and last a good number of years. The only time I would recommend to purchase the extended warranty on these products is if you cant foresee yourself affording to replace or repair the item during the term of the warranty. In this case I always recommend to buy the longest term you can afford.
If you truly believe in the purchase of an extended warranty then by all means you are purchasing yourself peace of mind kind of like life insurance. If you don’t see the value in it then DON’T let the sales person change your mind on this. You have all the control here and it is your choice, I have a drawer full of expired extended warranty on products that never needed repair. I also have had some products that had wonderful OCE warranties that kept going defective and I got replacements with the updated features. So here is my recommendations and lists based on my experience. This is not the bible so if you take the advice on not buying a warranty on a product because I said not to and the product is a lemon don’t blame me remember this paragraph it is YOUR CHOICE I am just giving you my opinion.
DO NOT BUY ON
Computers if you replace them frequently
MP3 Players (unless it is an OCE warranty)
Cell Phones (unless its OCE then purchase Warranty for the length of your contract only)
DO BUY ON
Any product that you are financing longer than the term of the warranty
Automobiles that are not leased – yes I am recommending extended warranties on automobiles if you are financing for long term or plan on keeping the vehicle for a long period of time.
Anything that offers an OCE warranty on it
Computers If you don’t plan on upgrading regularly
Well that’s it for now. Please leave a comment if you have questions or want more information.