If you’re buying a new appliance it’s likely that you’ll be offered an extended warranty at the time of purchase. Paying a bit extra when you’re already shelling out a considerable sum, in exchange for peace of mind sounds sensible. The reality is that while there may be times when an extended warranty represents value for money, more often than not it doesn’t.
The Shady History of Extended Warranties
Over the years, extended warranties have been extremely profitable for retailers. There have been times when customers have reported a hefty degree of persuasion applied by salesmen, not to mention a less than full disclosure about just what was or wasn’t covered by the warranty anyway. This eventually led to an investigation by the office of fair trading and as a result of this, extended warranties may represent a fairer deal than they once did. There are still several factors you should take into account before buying one however.
Arguments against Extended Warranties
You may already be covered anyway
The Consumer Rights Act 2015 states that goods must be fit for purpose, of a satisfactory quality and last a reasonable length of time. If your new washing machine breaks down within six months you’re perfectly entitled to take it back to the shop and it’s up to the retailer to prove that it wasn’t already faulty when you bought it. The definition of ‘a reasonable length of time’ may be a bit vague but in some circumstances could extend to as long as six years.
Purchasing by credit card gives you additional protection
If you’re buying something that’s worth between £100 and £30,000, section 75 of the consumer credit act states that the credit card company has to cover you if the goods are faulty or not as described. It’s a powerful argument in favour of paying for domestic appliances by card whenever possible, even if you then pay off the bill before interest falls due.
You should be covered by a manufacturers guarantee
Most manufacturers guarantee new appliances for at least twelve months, in many cases longer. There’s little point in purchasing additional protection that just doubles up on what you already have. An extended period of cover that kicks in when your manufacturer’s guarantee expires may be worthwhile but in essence it’s a bet…you’re betting that your appliance will break down, the provider of the warranty is betting that it won’t. You can be sure they’ve set the cost so that on average they win.
Are There Times When Extended Warranties Are Worth the Cost?
It is, at the end of the day a personal choice, so your personal circumstances do play a part. If you know you have the money available now to purchase the extended cover, and know you wouldn’t have the cash available to pay for expensive appliance repairs twelve or eighteen months down the line, it may be worth it. Just check to see exactly what is covered by the warranty and make sure you meet any conditions attached to it.
A Better Way
If you’re disciplined with money, here’s the best way to cover yourself against expensive appliance repairs.
- Every time you purchase a new appliance check out the yearly cost of the extended cover.
- Divide that cost by twelve and stick that amount of money into an easy access savings account every month
- Use the cash to pay for any repairs you do need
You do need to have a reserve fund available just in case you hit a maintenance cluster before your repairs fund builds up but over time you’ll end up in profit and you’ll be free to choose whoever you want to use for your repairs.