I'm writing an article/paper on Extended Warranties... need input!

1. Their cost
Some warranties really give no choices for the consumer because some stores out there usually "market" this like "if you get the warranty you won't run into any problems". The regular Joe who doesn't have a clue will surely bite. As for me, most of the warranties out there are too darn expensive.

2. Are they worth it
For me, NO, since I'm a tech head and know pretty much what I'm doing. For the regular Joe, well, he's got this notion that he's paying good money for the extra service.

3. What you really get
I used to work with a major computer company (which I'm not mentioning) and for the regular person, they probably would think that its extra value for them. For me personally, it's just another way to make a quick buck. If that thing breaks, you fall in line with everyone else who has issues with it, warranty or none, you deal with the same problem and its a pain. You'll have to wait for a month or so before they replace the thing.

4. Is the store telling you everything
Nope. They'll tell you all the good bits but won't even bother with the "fine print".

5. Why are they suggested in the first place
For me I think they're suggested to just make the customer know that the company is putting extra value into the product by giving you extended warranty. But, its just another way to get more money from the customer anyways.

6. Are any particular companies better than others?
Nope. They're all the same. Well, not really all of them but most of them.

7. Are any stores/retailers any better to get them from than others?
Nope. Check what I said above on number 6. ^^

This makes for some interesting reading and might help with your assignment (this is UK based so will differ from country to country)

Extended warranties: know your rights

Shops get your rights wrong

Right after I got out of the Navy I temporarily worked selling TVs and Stereos. If we sold the Extended Warranty we received double commission, even if the price of the warranty was far less than the price of the item. My boss told me that the company needed to spend about 17% of the money paid for warranties on actual repairs, with the other 83% being pure profit.

Another thing to take into account is what you're actually getting. If you buy a three-year warranty on an item which comes with a two-year manufacturers warranty you are only getting coverage for one extra year. Some "replacement" Extended Warranties actually pro-rate the benefit, meaning that if it croaks midway through the third year they will refund you 1/6 of what you actually paid for the item.

For example:

$600 TV with a "Three-Year" warranty (which like I said, might only cover the third year, the rest being on the manufacturer), costing an extra $100.

You're thinking, hey - I'm already laying out 600 clams for the set. Why not go another hundred for "three" extra years. The set dies after 2.5 years. They don't make that model any more and it's not worth fixing. They offer you the replacement value, but pro-rated, just like it specified in the contract you signed. Since you've already received 5/6 of the three-year life of the warranty contract they refund you 1/6 of the cost. You get $100 back and still have no TV. They get to draw interest on your $100 for 2.5 years, meaning they still make out OK. They worked the same deal with many other customers who never had a problem - meaning they get to keep all of that money.

Yeah, so basically they ended up throwing in the extended warranty for nothing once you added it all up, right?

Tells you how much it's worth.

I do agree with it maybe being worth getting one for something like a plasma TV, depending on the terms and price of the warranty. On the other hand, if you stuck the money for the warranty in a decent investment account (do those still exist?) you'd be able to pay for repairs or replacement out of pocket down the road and probably still come out ahead.

(Unless you're like me and decided to spend my "savings" on a new home theater audio setup to go along with the TV...)

Dang. I was not expecting this much feedback at once. I really appreciate all of the input!

If you have anything else to say, please, do not hesitate!

If you have any bad experiences with any particular stores or companies (US or otherwise), I'd like to know that, too!

EDIT: 888th post

profdlp said:

Yeah, so basically they ended up throwing in the extended warranty for nothing once you added it all up, right?

No, they are cutting their profit on the TV in order to sell the warranty. The warranty makes them a higher percentage profit. If you settle on the price for the TV, then when they try to sell you the warranty, you say I already spent as much as I can afford. Miraculously the price on the TV will come down. Perhaps as much as the actual cost of the warranty, if you stick to it. A Guy

A Guy said:

profdlp said:

Yeah, so basically they ended up throwing in the extended warranty for nothing once you added it all up, right?

No, they are cutting their profit on the TV in order to sell the warranty. The warranty makes them a higher percentage profit. If you settle on the price for the TV, then when they try to sell you the warranty, you say I already spent as much as I can afford. Miraculously the price on the TV will come down. Perhaps as much as the actual cost of the warranty, if you stick to it. A Guy

It amounts to the same thing:

$800 TV
$150 Warranty - $150 Discount = $0 = Free
=$800

or:

$800 TV - $150 Discount = $650
$150 Warranty
$650 + $150 = $800

If you're getting a TV and a warranty for $800 either way, what's the difference?

The difference for you is the same. But they won't lower the price of the warranty. They will lower the price of the TV to be able to sell the warranty. Selling the warranty is their goal. A Guy

I suspect that getting the $800 out of you is their goal, no matter how the terms of the deal are written.