Broker Check

Should You Buy that Warranty?

November 12, 2020

Just about each time you buy a product, from a cell phone to a new car, you are offered the opportunity to buy an extended warranty.  Is buying the extended warranty a good idea?  It might seem so in the moment.  After all, you have a brand-new item and you want to protect it, and keep it as long as possible.  Warranties offer peace of mind.

But, before you say yes to the extended warranty, there are a few questions you should first consider:

  • Did you pay for the item with a credit card? If you did, check with your credit card company. They may offer a free warranty on the product.
  • Is there a manufacturer’s warranty? If there is, do the terms of the manufacturer’s warranty overlap with the extended warranty?  Often, the extended warranty starts immediately.  So, you may be paying for coverage that is offered for free from the manufacturer.
  • Under the terms of the extended warranty, are you restricted to using certain companies for any needed repairs?
  • Do you plan to keep the product for the full life of the extended warranty?
  • Are there any repairs that are not covered by the extended warranty?

If you are unsure about purchasing the extended warranty, another option is to put the money you would spend on the warranty aside in a separate account.  You can then use this money at a later date for a repair, or replacement product. 

So, before you purchase your next product, consider the answers to the questions above. Do some research. Having some additional knowledge will make you a more informed consumer, and better equipped to decide if purchasing an extended warranty is the best decision for you.

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