Home audio & video: Extended Warranty.........are they worth it????
Vehicle Extended Warranties...a few warnings
by fullauto - 12/6/07 9:26 AM In reply to: Extended Warranty.........are they worth it???? by jraggieThey are a big money maker for the dealers and a warning for some who are considering purchasing one. There are some companies who will offer an extended warranty, sell several thousand policies, and then just go out of business. Take the money and run. Start over under another name. My friend bought one of these warranties and when the factory warranty had expired and he went to use the extended warranty he had paid for he learned they no longer existed. I usually would not purchase a extended warranty however my credit union offered and stood behind one particular company. That was in 1995 when I had ordered my Chevy truck. Through the credit union buying power, the extended warranty was a bit over $600 and extended the warranty time to 6 years or 100,000 miles when Chevy's warranty was 3 year/36,000 miles for the bumper to bumper/powertrain.
I was inundated with offers for an extended warranty shortly after the 8 weeks I waited for Chevy to build the truck I ordered. I couldn't believe some of the outragous prices some companies were charging (some were literally 3 times as much for the same coverage) and some were twice as much for an inferior policy. Shortly after the Chevy warranty ran out my A/C compressor shaft bearing crapped out on me. I was at a stoplight and just about 1.5 miles from a Chevy dealership when I heard the A/C bearings starting to give out. I babied the truck to the dealer since I didn't want the compressor shaft to seize up and then have to wait for a tow, even though the extended warranty covered towing and I had AAA Plus membership and could get a 100 mile tow for free, I didn't want to wait in the Florida heat having my German Shepherd Dog with me. The extended warranty covered 100% of the A/C repair (dealer charged over $600) and I was provided with a free rental truck while my truck was being repaired. Next repair needed was the altenator pooping. Exteneded warranty paid 100% for a new altenator (somewhere around $150+ or -) and another rental truck. Next went the EGR valve and the warranty company tried to deny responsibility for that repair. I called my credit union who sold me the policy and they put pressure on the warranty company and the warranty company ended up shelling out for the EGR valve and another rental. If they didn't my credit union told me they would cover the charge and refund the total price I paid for the Extended Warranty to keep me happy. What a great credit union! It is the University of Colorado Federal Credit Union. All in all I only paid $600 for such an extensive warranty and they shelled out well over $1,000 for my repairs so I came out like a bandit. I will say that the GM extended warranty is a good warranty , however costs more so the dealer selling it can make a considerable amount of profit on it. My words of widsom is to find your own money when buying a new vehicle and get the best intrest rate possible, keep any trade in a completely seperate transaction (dealers love to stick a vehicle sale with trade in's and financing since they can confuse the buyer and make quite a bit more money off the sale) or keep your used vehicle and sell it yourself. I was a salesman's worst nightmare. I knew the dealer was going to receive a 3% holdback from GM so they were going to make over $800 to just do the ordering on the computer. Most dealers I went to I only got to speak to a salesman who gave me every excuse in the book on why they would not sell a truck for just the holdback. I knew the salsman's motive for saying so since there was esentially no profit for him to make on just the holdback. Well, I feel I work too darn hard for my money to just let somebody just talk and make even $1,000 off of me. If I have to work for 1 week to make that money why would I allow a salesman make that amount of money by B.S.ing me for an hour. Ain't going to happen and it never did! I found a dealer who was happy with the holdback. I knew the exact factory invoice price by heart for every option so no dealer could generate an invoice and show me different. The only charge I knew I had to pay for was the shipping charge. No getting around that one. Ultimately, Extended Warranties can be good or a waste. One has to do their homework first and not buy on impulse or by what a store salesman has to say. CompUSA was and is the worst when computer newbies buy a printer. The cashier actually tried to tell me that "I had to buy" the extended warranty. I told him to take a hike. I'll only pay for what I want, however I have seen too many people pay CompUSA the stupid $40 or so for what I see as a useless warranty. Someone should institute a class action lawsuit against them for pressuring people into paying for their printer extended warranty.
It's worked for us on big items
by dlyn67 - 12/6/07 9:31 AM In reply to: Extended Warranty.........are they worth it???? by jraggieOur first PC we bought one for the entire system (monitor, computer, scanner, printer). Had 2 power sources replaced, the monitor and the scanner. Was way worth it since we didn't have money to fix it or buy a new one.
Another item was back in the day when DVD players were new and expenseive and the warranty didn't cost very much. It died a year later and we received an entire new one since the model had been discontinued and we still use the replacement machine 8 years later.
Never had to use the ones on the washer/dryer set though.
RE: Extended Warranty.........are they worth it????
by yakdude - 12/6/07 9:33 AM In reply to: Extended Warranty.........are they worth it???? by jraggieIt depends on the item, as many have said.
I've spent as much as $1000 for an "extended warranty" on a car purchase. While I did use the benefits, I did not have a need for the warranty, luckily. It's a bet that the item will fail during the time, just that simple. If it doesn't, then you donated the money, if it does, then it's worth it.
On electronics? I almost never get it, unless it's a large ticket item and/or the amount is less than 15% of the total cost. Some of these retailers price it near 30% and up of the original cost, well, that's not a warranty, it's a gift, for the retailer.
Last electronics I bought was a new stereo system for my car. The stereo was $189, with goodies (XM Sat) and installation harnesses, tax, it came to about $355. The Extended warranty was only $25 and it covered it (including removal/re-install, and any parts) for 5 years. Ok, $5/year to replace a $190 item. That's reasonable, so I got it. I've owned this car for 6 years now and it has had no issues, I fully expect it to continue this way. Sure, it's an extra $25, but if it fails when my car is 10 years old, they will be dealing with it, not me.
They can be worth it!
by Nejij - 12/6/07 9:37 AM In reply to: Extended Warranty.........are they worth it???? by jraggieI work in appliances for a big-box retailer that sells service plans. I would advise you to consider the cost of what you are buying in relationship to the price of a plan and how much wear and tear you expect the item to get.
Our service plans include more coverage than the manufacturer warranty. Manufacturers usually only cover defects and (often) still charge for having a technician come out to fix it. The average cost for a repair is about $300. To cover a laundry pair (for example) it's only $200. If you were buying a $600 pair, it may not be worth it to you. If you are buying a higher-end pair, it definitely would be worth the cost. In addition, ask how long/what the manufacturer covers an item; we have some like LG and Samsung that cover their product's major parts for 7 and 5 years. A service plan ADDS 3 or 5 years to that, giving coverage for the approximate life of their products.
The most important thing to do, is make sure you have a clear understanding of what will be covered and (I agree strongly with another reply) make sure it is provided by a third party insurance agency, so you're not stuck with a useless plan if the store itself goes out of business. In the case of my store, the service is also rapid; I have heard complaints about the slow response on the part of manufacturers from customers who did not buy service plans, so sparing yourself a headache may also be a consideration. The average person in our community doesn't have a stack of money to outright replace their $1500 fridge when it goes on the fritz. If you have no qualms about suddenly buying a high ticket item, maybe it's not for you.
Do I buy them? Yes on big ticket items and things I expect to get frequent use. Have I seen customers benefit from them? Yes! In my department, having that much needed appliance repaired quickly and at no unexpected cost has saved the day for more than one person.
A real-life story about one of my friends:
He bought a projection TV last year from an online retailer. 8 months into having it, the bulb went out. He had estimated the life of the bulb to be about 2 years. The bulb was not covered by the manufacturer. He had no recourse without a service plan and had to buy the bulb, which cost almost half of what he paid for the projection TV. Had he bought it in my store, with the service plan, that first bulb would have been covered.
No matter what, it is a gamble indeed. So I guess I'd say walk in prepared to consider the pros and cons and choose wisely.
Extended Warranties
by wizard517 - 12/6/07 9:52 AM In reply to: Extended Warranty.........are they worth it???? by jraggieI have two very close friends who own car dealerships, one in California and one in Massachusetts. Both say without hesitation that the sale of extended warranties are a huge part of their revenues. So what does this have to do with audio & video extended warranties? Plenty, because the same applies there as well! As has been said many times, extended warranties are nothing more than an insurance policy and, or course, a huge profit center for retailers. Not that there is anything wrong with someone making a profit, but be careful to understand just what you are buying, and what you are really getting.
First of all, new products come with a factory warranty. In addition, I don't know about anyone else, but I tend to research my purchases before I make them, so I am already starting off with something that is supposed to be a quality product in the first place. So what does an extended warranty get me? The convenience of being able to take the product back to the retailer for a replacement, and not having to deal with the factory. That's a lot of money to pay for convenience, especially given the very low odds of a quality product ever really needing repair or replacement in the first place.
Granted, an extended warranty can also extend the factory warranty, but when it comes to electronics, if you haven't had a problem within the first year, the chances of you having a problem in the future are extremely low (computers not included).
There is also the fact that the major credit card companies (at least VISA and Mastercard; not sure about the others) require a retailer to stand behind the products they sell, and that can mean forcing them to accept a return for a defective product. Many people do not know this, but I have used it a couple of times when I was told (and in one case, even signed a document acknowledging it) that there was no way I would get a refund on a major purchase. A couple of letters to the retailer, with copies to the credit card company, and presto, REFUND! Of course, you have to use an appropriate credit card to get this benefit, and be willing to write the letters, but for me, its a lot cheaper than the extended warranty.
But I am not saying "don't get the extended warranty". I am just offering an opinion. For me, purchasing an extended warranty is like gambling; you are spending money, but to get the payoff, your nice new plasma TV needs to break so you can cash in on that expensive extended warranty you bought. Sounds like lunacy to me. Yes, extended warranties can offer peace of mind as well, and for some, that is worth the price. But given the quality of electronic products on the market today, coupled with the factory warranties, credit card protection, and our ability to get information before buying, it is just not a gamble that I want to make.
When someone asks me if I want to purchase the extend warranty, my response is that if I have to purchase an additional warranty, I shouldn't be buying that product in the first place. It says the manufacturer either is not good at honoring his factory warranty, or the product it not really all that good. In the electronics world, that usually ends the conversation. In the car world, a statement like that just motivates them to sell harder. And while this is not about cars, maybe there is something here to consider.
The only real difference is that when you purchase a car, you can't complete the purchase without first being run through a person who does nothing all day but sell extended warranties, and they are usually very good at it! In the audio video world, we are still being pitched by a salesperson who usually barely knows the product you are buying, let along anything about selling an extended warranty. Hopefully this won't change, but be careful. If the audio video world catches on, we may not be able to take our new DVD player out of the store until we have been through the extended warranty gauntlet.
And in case you are wondering, yes, I HAVE had products that had problems. But I can tell you that the cost and effort to take care of those problems does not even come close to the hundreds (or thousands) of dollars I would have spent on extended warranties.
But if an extended warranty gives you some peace of mind, by all means buy one. But if you think you are really getting something more for your money, you would be better off going to Las Vegas. At least it would be more fun, and your chances of winning would be better.
Pure Profit
by lookitsal - 12/6/07 9:53 AM In reply to: Extended Warranty.........are they worth it???? by jraggieExtended warranties are only worth it if paying that kind of money buys you piece of mind and that's up to the individual to decide.
Business-wise, companies try to sell it as a customer-service deal for your protection but the reality is that extended warranties generate a ton of profit hence the strong push to sell Extended Warranties.
Business Week ran an article in 2004 saying how profits from warranties accounted for all of Circuit City's operating income and almost half of Best Buy's:
http://www.businessweek.com/magazine/content/04_51/b3913110_mz020.htm
In the end, it's a product like anything else. Do your homework on the product's brand and reliability, listen to what the salesperson has to say with a grain of salt, read the fine print, and decide for yourself if it's worth the money.
Just like insurance, it depends on the situation and risk
by fritzman2 - 12/6/07 9:56 AM In reply to: Extended Warranty.........are they worth it???? by jraggieMy dishwasher has used it twice. Who knew a Kitchen-Aid would break. Well it did and it was fixed. My computers just get a 1 year warrantee. Their worth is limited beyond that (economically). They usually run well past the usability of the systems OS or peripherals.
Digital cameras are where I have lost my shirt. They are high dollar, break, and I never get the extended warranty because it costs way to much; up-to 1/3 of the price of the product. So think about what it costs to replace within the lifetime of the product. Is it cheaper to replace (or close to it), then skip the extra cost.
More and More
by tjryan - 12/6/07 10:08 AM In reply to: Extended Warranty.........are they worth it???? by jraggieWithin the past 3 years I have had Dishwasher, Washing Machine, Stovetop, Hot Water Heater, sink dispolsal and Computer failures; a bad run of luck to be sure. The cost to get a serviceman out to simply evaluate your situation carries a $60 - $90 pricetag, then you get into the repair costs. Without getting into the side discussion of the eroding reliablility of applicances, I have to say that maintenance contracts on large items are now a must.
Every repair guy who comes into the house (and there have been a steady parade of them lately), has told me that with the embedded electronics, the propensity for failure, and the cost of these components, it should now be routine to insure against it.
... and don't get me started about the degradation of customer service, the callous attitudes of manufacturers, and the business model that allows for an acceptable number of brand defections if the savings in reduced service and reliablity offset it.
That ain't your grandpa's washing machine!
Extended Warranty
by F W Griffith - 12/6/07 10:08 AM In reply to: Extended Warranty.........are they worth it???? by jraggieExtended warranties on cars make sense to me. Especially on american cars. I have had extended warranties on my Cadillacs and have always made out. Similarly on Subarus.
On smaller items like cameras and cell phones, it depends on who has them. My wife and daughter managed to dump their cellphones in the toilet not once but 3 times plus other times like getting thrown into a swimming pool at parties. On the camera the one time I didnt buy the extended policy on a digital camera ($300) my daughter dropped it and it was toast. The replacement camera was similarly damaged within 6 months and the Best Buy policy covered it with a new camera.
Extended warranty do's and don'ts
by scrushmaster - 12/6/07 10:11 AM In reply to: Extended Warranty.........are they worth it???? by jraggieI figure myself as an authority on this subject, being that I am a RMA specialist for an electronics manufacture and come accross this issue daily. The fact is that some extended warranties are good and some are bad.
Case in example:
Warranties on projectors lamps are usually around 90 days and the lamps cost around 300-400$ depending on the model. Well Sears sells a pretty cheap extended warranty for 3 years and does not specify that the projector and lamp are under different warranty periods, so you get this warranty and burn your lamps out like crazy for 3 years and save tons of money.
Another case(the one to watch for):
I see this one frequently, a extended warranty where you pay an additional fee to extend you manufactures warranty to 3 years, but then you find out the manufacture warranty is for 3 years and you just wasted your money on nothing.
Most extended warranty programs made alot of money so you do have to assume they are taking you on the whole, but as in example one their are many loop holes and mistakes that are overlooked by these extended warranty companies and that is why you should always look into it, but in most cases you will not get what you pay for, or go through an extreme hassle trying to get warranty coverage through the extended warranty coverage.
I did and it payed
by impippo49 - 12/6/07 10:21 AM In reply to: Extended Warranty.........are they worth it???? by jraggieI bought the extended warranty on a Panasonic PT50LC13 HD TV back in December of 2000 for about $250. Since my wife and I work totally different schedules we put a lot of hours on our set. The lamp went out after the first year of warranty and would have cost $225 (for the lamp with out service call) so that lamp would have cost me and extra $25 if that were all. It has went through two more since then, all under the first extended contract. That makes three lamps in the almost four years since I bought the TV. I also received a technician's visit with each lamp and on the last visit it needed a power supply as well. Yes I know it probably has a bad design but, I can hardly afford to buy new set right now. I plan to add the next two years to the contract. Mostly I don't buy them but this time I did and seems to like I won this battle.
Depends....
by ztlcmom - 12/6/07 10:21 AM In reply to: Extended Warranty.........are they worth it???? by jraggieExtended warranties may or may not be worth it..
READ THE FINE PRINT...I got talked into a 4 year warranty for my sons new computer because "he is a kid and will probably drop it", which was part of the sales persons pitch. Well, he did drop it in the last month of the warranty and Compusa would not honor it...Their first comment was "it has obvoiusly been dropped"..I explained that this was the reason I folded on the decision to purchase it in the first place and stated what the sales person had said. Their comment was that the particular sales person probably no longer worked there and it was an obvious problem with the plastic part of the computer, which the real fine print lays no claim to fixing...Hello--the whole computer is plastic...
I've had warranties with appliances that came in handy, however most appliances have at least a 1 year warranty anyway...
I usually don't buy them unless it states in bold print that it covers anything..which very few do...You are buying an insurance policy for an item which the insurance company is playing the odds that they won't have to dish out any money on...Unless it is real clear that the problem is in fact covered, you will have to jump through all kinds of hoops to get the item fixed at the expense of the insurance company.
buying a peace of mind. . .
by bajanut - 12/6/07 10:22 AM In reply to: Extended Warranty.........are they worth it???? by jraggieI'd agree that extended warranties are most of the time worthless, but is peace of mind specially when you have been saving and saving to buy that shinning new HDTV that you have been putting your eye on, comparing to this one and that one and the other one, over and over at BB or CC or Costco, If you are the kind of person also, that do not want or like to gamble, because you can't afford to loose then get it, you'll feel better and safer, now, don't have to get it from the retailers, although it may be easier to collect if needed, (although there are horror stories out there about extended warranties from BB and CC,) google TV Extended Warranties and you find a bunch of places that sell them for way cheaper. Anyhow, a little story:
My mother in law bought an extended warranty from $ear$ to cover her washer and fridge, so she was paying a monthly payment of about $20, well after 8 years the fridge broke down and yeah she called the store and they brought her a temp fridge while hers was repaired, paid for her food where prompt to respond etc... so she was very happy and fell so lucky that she was paying for the insurance because it would have been an arm and a leg to repair it, until I had to open my mouth and burst her bubble, I did it not maliciously just popped in my mind, if you multiply $20 times 12 times 8 years = $1920 !! you could've bought a NEW fridge and washer !!! needles to say she wasn't too happy afterwards and didn't talk to me the rest of the evening and the following few days. . . . and I think I am off her will for being a smart a$$. . .
Almost always, no.
by jimigoodmojo - 12/6/07 10:24 AM In reply to: Extended Warranty.........are they worth it???? by jraggieThe reason they are trying so hard to sell you an extended warranty is that, on average, they are making money. This means that, on average, you are losing money buying one. The only way I would consider buying a warranty is if the product is something I could not live without, something I would have to replace, I can afford the warranty and I could not afford to have to pay full price for it again.
I think it's smart to buy it on high ticket items
by ESUNintel - 12/6/07 11:04 AM In reply to: Almost always, no. by jimigoodmojoI'm sure there are many out there that can afford to simply buy a new TV, a new washer/dryer, or whatever the case might be; however, let's say something happens 1-3 years after you buy the item (usually the manufacturer warranty is already void), why spend thousands of dollars buying another one, when you could have purchased the warranty at a fraction of the cost. It could be an investment, because I rather spend $399 on an LCD warranty rather than $2000 on a new one; however, I may never use that warranty and the TV may outlive it, in which case I may think I have thrown my money away, but I really didn't cause if something had happened, I would have been covered. On appliances, it makes no sense to me not buying a warranty (specially a Sears warranty), because they actually go out there every year to service the appliance, and appliances do need yearly care, which I rather have a pro do than myself. I can understand not buying the warranty on cameras, camcorders, MP3 players, etc... Because I don't want to keep those things for ages, and I would just buy a new one if something happens, but that brings up another type of warranty, an in-store replacement plan, sold by Sears on little electronics and CompUSA. With a Replacement plan (which normally costs under $30 depending on the item), I would be covered for anything that happens to the item within 2 years, and I don't deal with Sony, Garmin or whoever the manufacturer is, I deal straight with my local retail store, where not many questions are asked and the item is quickly replaced. In other words, I would never buy a warranty on a camera, but I may consider an in store replacement plan if offered. On big screens and appliances I really want o have that extra protection, because if something were to happen I don't want to feel like a dummy and throw away thousands when I could have simply spent hundreds on a warranty.
| Forum legend: | |
 |
Locked thread |
 |
Moderator |
 |
CNET staff |
 |
Samsung staff |
 |
Norton Authorized Support team |
 |
AVG staff |
 |
Windows Outreach team |
 |
Dell staff |
 |
Intel staff |
