Should you purchase that extended warranty?
TYLER, TEXAS (KETK) — Whatever you buy these days, there are always extras being offered and in a lot of cases, one of them is a so-called extended warranty, but should you take the bait, KETK's Roger Gray reports.
Whether you are buying a new car like this lovely Cadillac XTS, or a piece of electronic equipment, there is one question you will be asked, and every sales person wants an answer.
Do you want an extended warranty? And as frustrating as it may be, the answer is, it depends.
First of all, a definition of terms. It’s not really a warranty. It’s essentially a service contract…an insurance policy. And when it comes to appliances or electronics, the answer seems to be…forget it.
Be honest, if your microwave oven should happen to conk out, will you really call a repairman? And does anyone actually repair a toaster? Or even an I-phone?
“It’s just that things have gotten so darned cheap lately, you don’t repair an appliance when it breaks anymore, like a DVD player,” says Rich Smith of Daily Finance. “It costs 40-bucks. You don’t go out and pay somebody $50 an hour to fix it, you go to Walmart and buy a new one. It’s a disposable economy.”
The other issue is dependability. This is our living room TV, which we have had for 10 years. I really should get rid of it for a new flat screen, but it has never given us a lick of trouble. I just can’t justify it. These warranties are also tremendously profitable for the big electronics retailers.
And if you use your credit cards, there may be a longer warranty that automatically kicks in. Most cards offer an extension of the factory warranty if you use the card for the purchase.
Now how about automobiles? Now, it gets a little more nuanced. Part of the reason is, the regular car warranty is now so good.
Most every manufacturer covers the car from bumper, to bumper, but we all know that what can really cost you is when things go wrong here. Ironically, this is the part with the best factory warranty.
All you have to do is check the Monroney sticker.Named for the Congressman who got the law passed, the Monroney or, window sticker, is full of information on the car, including the warranty coverage.
“The key word on here…limited,” says Monty Hall of Hall Buick-GMC. “And a lot of times, a reason that people will take a look at a vehicle service contract, is that they really want to make sure there is no possible chance that some other element or some other part of the vehicle is not covered by the limited warranty. They’d like to have some protection on that as well. It’s just basically, people are looking for some peace of mind. You’re going to spend x-amount of money typically on a car. You don’t need to spend extra. If you drive 20,000 miles a year, in two years you’re out of warranty, the bumper to bumper. You still have powertrain warranty on a GM vehicle fro 5 years or 100,000 miles, which covers engine, transmission, main components. But there are so many expensive other things in the vehicle like a navigation system screen or something like that that you’d like to have coverage for, so that if you drive those extra miles, you’d like to have that extra coverag for those few years. So that’s where that’s going to come into play.”
But if you lease, or simply drive the normal miles per year, the standard warranty should be fine. “And while they can provide peace of mind for some customers, providing a certain level of protection, they come with a lot of small print and caveats.”
And if you opt for the extended warranty, make it a factory one. Some of those independent companies are out of business, or have been flagged for bad service.
And as the Today Show found, with good reason. “In the small print are the restrictions,” says Jeff Bartlett of Consumer Reports. “And as Murphy’s Law would have it, they may apply to the exact problem that you experience. Or, they may limit where you can have the work performed.”
Extended car warranties are cheap now, for good reason. New cars are more dependable than ever.
So, weigh the pros and cons, and take your pick.