When you have recently bought a home appliance, computer equipment, or a used car, you may have been given an extended warranty. In several cases, the salesman will have tried to get you to buy it. They will have told you about the advantages of the guarantee and the bad feelings you will get if your investment doesn't work out. Is it a good idea for people to get extra warranties on things? The answer is a big no. People who buy these policies don't get a good deal at all. Here are the reasons why say no to extended warranties:
1. Insurance Is a Bad Idea
It must. Insurance companies pay for all of their costs and make money from the policies they sell. They will do this since, on mean, you will charge them extra than they could pay you - a lot more. This is why they can do this. The policies are still being sold by companies, so they want their salespeople to force them tough because they are very profitable for them. If the guidelines are cost-effective for the businesses that issue them, they aren't profitable for the person who buys one.
Throughout your life, you will buy many things like appliances, computers, cell phones, and car repairs. The chances are that you will be much better off paying for these things yourself than you would be if you bought insurance to cover them. If you are worried about it, you might want to think about setting up a small emergency fund to help you pay for repairs or replacements down the road. This can be more effective in the long run, and at least you can get some attention.
2. You Might Be Buying Insurance That You Already Have
Most of the things you buy will come with a manufacturer's warranty. If you buy something and it doesn't work out, this warranty could help you out. A credit card may help you get money back if the manufacturer's warranty has run out. Some warranties come with many credit cards. Not all credit cards have them. You should find out if your purchase comes with any other kind of insurance, too. It's a waste of money to buy something you already own.
3. The Perfect Print Can Be Expensive
Most extended warranties come with a lot of small print. Almost no one does this. The companies that give out extended warranties already know this. However, they know what the small print says. It was written by their lawyers to protect them. Claim: If there is anything in the fine print that will let the company not pay, they will take advantage of it. You might find out that your new purchase isn't covered by the thing that caused it to break down.
4. Your Investment Will Lose Value over Time
Computers and phones that have been used before can be sold for how much they are worth. A lot less than you think. These purchases start to lose value the moment you buy them. A settlement may be much less than you need to buy a new thing, even though you are covered for the market value of what you bought. This is another thing you won't read in the small print.
5. You Might Overlook The Warranty
Companies that sell these policies expect things to go wrong. That's because many people who have a covered loss don't claim for it. They will forget that the purchase was paid for. Remember that it was covered, but they won't find the proof. Regardless of the reason, many insurance claims go unclaimed. Again, the company that gave you the policy won, and you lost again.
The point is that when you buy small things, you should insure them yourself. Do not buy the extra warranty that costs too much. If you lose something early, pay for the new one yourself. In the long run, you will be the winner with money.
Conclusion
Make sure you get a good deal on the price of an extended warranty if you decide to get one. Make sure you don't just pay the warranty price and move on to the next thing. They should at least read all the small print to make sure they understand what they're getting. The point of an extended warranty is to make you think that you are getting more for your money. Even so, unless you can get a better deal on the price or get some freebies, you won't see any value at all. If you don't think you need extended warranties, think about how you can put the money you spend on them to better use elsewhere.
