Value of Extended Warranties?

Just read a good article originally published from the Baltimore Sun on the value of extended warranties.

It mentioned that for most products, extended warranties don't make sense. For a few products, it might make sense. These products include plasma TVs, treadmills, or products that may be costly to repair.

For cars, the article provided some useful general info. First, only get an extended warranty if you plan on keeping the car for a long time. If you decide to get an extended warranty, don't be pressured to get one right away. In addition to the dealership pushing you to get the extended warranty after the sale, you'll often receive mailings to purchase the extended warranty all through the period of your basic warranty. Remember, you can wait till the basic warranty nears expiration. Also remember to negotiate the price. This is especially true if you're buying one at the dealership.

Finally, the article mentioned that consumer advocates tend to prefer the manufacturer's extended warranty rather than those from outside companies even though it may be more expensive. Some of the downsides of warranties from outside companies include: repairs may be made with after-market parts, claims may be more difficult to make, and you may have to pay upfront and wait for reimbursements. One thing the article didn't mention as a downside was the possibility that the company might not be around by the time you need to make a claim. Clark Howard always mention this possibility when he discusses this topic.

I believe careful research in the extended warranty companies can eliminate these downsides. The big upside with an outside company is the big savings. Manufacturers make huge profits from these, and because of this, you could pay twice as much or more for a similar warranty.