Extended warranties?

[Soonerchaz]

I just dropped some cash on a front loader washing machine/dryer for our new house. Hanh Appliance in Tulsa is offering a 5 year extended warranty covering all parts and labor for $99 per appliance. They come with a one year factory warranty.

I typically steer clear of extended warranties...but the kicker here was a 100% money back guarantee if you never use the warranty.

I'm leaning toward either not getting the warranty (counting on if anything goes wrong it'll likely happen in the first year)...or getting the extended warranty just for the washing machine (more complicated moving parts).

What's the lowdown here?

[nanimonai]

I typically steer clear of extended warranties...but the kicker here was a 100% money back guarantee if you never use the warranty.


That doesn't make any sense and would seem to defeat the whole purpose of extended warranties.
Maybe they're just banking that most people aren't going to go through the trouble five years later.

[Vaevictis]

Maybe they're just banking that most people aren't going to go through the trouble five years later.

Don't forget the time value of money -- if they never do a warranty service, they still get any interest/ROI that may occur from having had that money. Or the fact that the person offering the money back 5 years in the future may be unable to pay it back for varying reasons.

For large dollar items, I have a tendency to buy the extended warranty any time the warranty is <= 1 year. Failure rates are usually approximated as a curve (often exponential) and the shorter the warranty, the sharper the curve.

Generally, I find that anything <= 1 year is fairly likely to fail by the second year, and highly probable to fail by the third. If you can't tolerate that, buy the warranty.

Also, take a strong look at your credit card benefits. They'll often have warranty extension programs, and what's already built into your credit card may meet your needs.

[StoopTroup]

Also, take a strong look at your credit card benefits. They'll often have warranty extension programs, and what's already built into your credit card may meet your needs.


Good Point there.