The beauty of extended warranties..

[transplant99]

Now i KNOW everyone here (becuase you own a puter) has bought an electronics device of some sort, and been offered an extended warranty. Sometimes they make sense, most times they dont.

Well, here is one story. I left my home in late July for a full 4 week holiday to the best part of the world, (Calgary and into the Windermere area) and when i got home, at some point things had gone terribly wrong. We had clearly had a lightning strike/power surge of somekind, and it nailed a bunch of stuff.

Specifically it had smoked the computer, on which i so eloquently illustrate my opinions on CP (J/K guys )

Anyhow, I had purchased that computer in Oct of 02, and it was a 3 year extended deal. So i came in under the gun by 2 months. Good lord am i happy i did.

Now, i was NOT real happy when Best Buy explained they needed to send it away for repair/estimate, but it was great news when they called me after 2 1/2 weeks to say that my system was unrepairable and I would get full replacement. I was asked to come to the store and settle up, which I did about 3 weeks ago.

Now going in there...I thought that I would be given a couple hundred bucks towards the new toy.....well i was wrong. The way these warranties work is that they have to at least replenish what you had (if it was a 46" TV, then you get one as big or bigger). So they informed me that i had $499 to work with and anything above that I had to cover.

I was astounded to find out that what i had (it worked for what i needed) was no longer even a thought.

I went from a 233 Intel Celeron and 128 MB RAM, 40 GB HD that had a DVD player and a CDRW, to a 340 Intel Celeron, 512 MB RAM, 80 GB HD with a DVD/CD RW and all sorts of newfangled connections.......all for 20 bucks on top of the 499 i was alloted.

On top of all that, there is NO question that both my video and audio cards are 100 times better than the last ones.

Great deal and something to consider when buying any sort of electronics in the future.

[ricosuave]

i hear ya

i bought an extended service warranty on my fridge 4 years running

the cost of the warranty each year was cheaper than the ice water filter (which needs to be changed yearly).

2 weeks ago, my compressor died and we lost about $200 worth of food.

not only was the compressor and parts fixed (to the tune of $800), the food was warrantied for $200 as well.

whew.

rico

[Antithesis]

Extended warranties are particularly solid investments when purchasing laptop/notebook computers. Sure, you might go through the three years with nothing failing on the machine but nearly everything that could fail would cost more than the price of the warranty to replace.

The one problem I had with Best Buy was that they initially told me it would take a week and a half for my laptop to be repaired. After this time it kept getting pushed back two to three days at a time until I got my laptop back ... three and a half weeks later. Of course its not their fault that the repairs took longer, after all it was sent to HP, however, I am a firm believer in people telling me when I can reasonably expect something to be done. If you tell me one week, it better be done in a week, or I'll be disappointed. If you have no idea, then tell me so.

[MassFlames]

i always buy the warranty at best buy when i buy serious hardware for one reason

if yours breaks and they no longer make it any more, they can't downgrade you. for example, my friend bought a 30gb iPod and it broke. he took it back, but they no longer make 30gb iPods, so they gave him to a 60gb iPod photo

that's a solid deal

[ken0042]

You bought a 233 Celeron in 2002?

[transplant99]

Originally posted by ken0042@Oct 6 2005, 11:16 PM
You bought a 233 Celeron in 2002?

Sorry..i honestly dont remember at this point, but it may have been a 166...just simply dont reacll

[ricosuave]

maybe a 2.2 celeron? god i hope so.

also, for future reference, google a program called "everest system info" for all your computer info needs.

rico

[Hack&Lube]

166 is even more preposterous.

166 is circa 1997 technology. 233 is what I had in 1999.


Probably 1660Mhz in 2002

[Bill Bumface]

I still argue that the average person will come out way ahead by never purchasing an extended warranty.

Every fee that you pay for an extended warranty has to cover the following for the warranty company:

1. The cost of the average repair for the device you are buying
2. Commision for the salesperson who conned you into the warranty
3. Overhead for running a company. Office space, employees, utilities etc
4. Profit

What do you get if your device breaks? Just #1

I'll never buy one, and I'm sure I'll come out far ahead in the end.

[kdogg]

Originally posted by hulkrogan@Oct 6 2005, 10:28 PM
I still argue that the average person will come out way ahead by never purchasing an extended warranty.

Every fee that you pay for an extended warranty has to cover the following for the warranty company:

1. The cost of the average repair for the device you are buying
2. Commision for the salesperson who conned you into the warranty
3. Overhead for running a company. Office space, employees, utilities etc
4. Profit

What do you get if your device breaks? Just #1

I'll never buy one, and I'm sure I'll come out far ahead in the end.

Agreed hulk.

Extended warrenties are scams. It is heart break for those guys at future shop when you tell them you don't want it (a good buddy of mine works there).

I bought an LCD TV a couple of days ago, for an extra 2 years of warrenty, they wanted 1/3 of the price of the TV! That is a bunch of garbage. No extended warrenty is worth that much.

If my TV ever breaks down I
- fix it, probably the cost of the warrenty
- buy a new one. I'm sure that same TV in 3 years will be approximately the price of the extended warrenty was.


Just say no to drugs and extended warrenties.
________
DEPAKOTE LAWSUIT

[Jiggy_12]

I sell extended warranties on a daily basis, and when you see and hear about how much a repair costs it sometimes is a no brainer to buy it.

If the extended warranty, 4 years extra, costs less than 1 service call...it can be impossible to refuse. Sure, you might be wasting $140 bucks, but it guarantees you will not be paying a dime more than that for the allotted time.

It's insurance (on a scaled down version). Why do we buy insurance on our cars? If you're making an investment, why is it a bad idea to protect it?

[Bill Bumface]

Originally posted by Jiggy_12@Oct 6 2005, 11:06 PM
I sell extended warranties on a daily basis, and when you see and hear about how much a repair costs it sometimes is a no brainer to buy it.

If the extended warranty, 4 years extra, costs less than 1 service call...it can be impossible to refuse. Sure, you might be wasting $140 bucks, but it guarantees you will not be paying a dime more than that for the allotted time.

It's insurance (on a scaled down version). Why do we buy insurance on our cars? If you're making an investment, why is it a bad idea to protect it?

Insurance is different. I have insurance of my car, but if its out of warranty and the engine blows, i'm still stuck. Unless I bought the extended warranty. There is some overlap, so I see what you are talking about.

The biggest reason people buy car insurance is because they have to, and because its much more likely you will damage your car or someone elses property. I'm not going to accidentally kill someone with my TV. I don't have a risk of hitting my TV into a wall every day.

Look at my post again and tell me if you can refute my points at all

[transplant99]

Originally posted by hulkrogan@Oct 7 2005, 12:28 AM
I still argue that the average person will come out way ahead by never purchasing an extended warranty.

Every fee that you pay for an extended warranty has to cover the following for the warranty company:

1. The cost of the average repair for the device you are buying
2. Commision for the salesperson who conned you into the warranty
3. Overhead for running a company. Office space, employees, utilities etc
4. Profit

What do you get if your device breaks? Just #1

I'll never buy one, and I'm sure I'll come out far ahead in the end.

In this particular case, the warranty was 100 bucks for 3 years.

Im WAY further ahead.

[Frank the Tank]

I am very much against extended warranties but I have a good story for getting them.

We bought a new fridge as we wanted something bigger and had already repaired our old fridge once. We bought a nice new Maytag and got the extended warranty. It was $150 for ten years and if you never used it, you got the $150 back as store credit. Since we had had bad luck with fridges (our old one broke twice, I fixed it myself the first time, and the fridge in our old apartment freaking exploded) we decided to go ahead with it. Well lo and behold, when the fridge is 13 months old, one month past the manufacturers warranty, it dies. We had just brought our son home from the hospital after his little extended stay, so there I am with almost zero sleep in six days, brand new baby, fridge full of formula and groceries so we don't have to cook for a few weeks and our $1400 fridge dies. Needless to say it has a huge imprint of my fist in the freezer door now. Wife wasn't too happy about that.

[Jiggy_12]

Originally posted by hulkrogan@Oct 7 2005, 12:33 AM

Look at my post again and tell me if you can refute my points at all

Well, none of your points were wrong. All 4 things you listed were completely true.

Now, I should have been specific. I don't sell electronics. I sell major home appliances. IMO, a TV has less of a chance of breaking down then say, a fridge.

If the compressor in your fridge malfunctions, not only is it $300 to replace the part, but an additional $150 + for labour. The extended warranty I would have tried to sell you, would have been $140. Which covers all parts and labour for 5 years.

All controls have gone digital, and for ths most part, brands don't build their appliances to last much longer than 10 years. You could have bought an appliance 20 years ago and have counted on it lasting till today. Not anymore.

I hear about service nightmares all the time. 90% of the time the extended warranty will not be used. The customer wasted $140. But those that use it are sure thankful they bought it.

[ken0042]

I used to sell electronics and appliances, and yes the waranties are a cash grab. But, if you end up needing to use it; it becomes a God send. Here's a few tips:

- Haggle. The salesperson wants you to buy it, the manager wants you to buy it, and it's something that doesn't have a "store cost" associated. On big ticket items, you can often get the waranty for 1/2 the asking price.

- Check the manufacture's waranty. (Check it yourself, don't just trust the word of the commision salesperson.) The fridge example above, many fridges offer longer waranties on the "sealed refrigeration unit." Sometimes 5 years parts & labour.

- The "store credit if you don't use it."- Read the fine print. The store isn't going to mail you out a certificate; you have to redeem it 5 years from now, and often only have a 1 week window to do so. It's not always easy to remeber to do something next week, let alone 5 years from now.

The comparison against insurance is fair, however you must take things into consideration. My last accident was witnessed by a cop, and his words to me were "I probably would not have been able to avoid it either, but technically you were in the wrong; here's your ticket." The total payout from that accident was around $150K. Without insurance, I would still be paying for that 13 years later.

Insurance is to cover you for losses that you cannot afford to pay on your own. For that reason I may get the $400 waranty on my $2000 TV, but not the $10 waranty on the $50 phone. Both are proportionally the same, but I can replace a $50 phone easy- $2000 TV is a differnet story.

In any case, I am very happy it worked out positively for you, Transplant.

Edit- adjust my math.

[Bring_Back_Shantz]

Originally posted by Jiggy_12@Oct 7 2005, 07:41 AM
Well, none of your points were wrong. All 4 things you listed were completely true.

Now, I should have been specific. I don't sell electronics. I sell major home appliances. IMO, a TV has less of a chance of breaking down then say, a fridge.

If the compressor in your fridge malfunctions, not only is it $300 to replace the part, but an additional $150 + for labour. The extended warranty I would have tried to sell you, would have been $140. Which covers all parts and labour for 5 years.

All controls have gone digital, and for ths most part, brands don't build their appliances to last much longer than 10 years. You could have bought an appliance 20 years ago and have counted on it lasting till today. Not anymore.

I hear about service nightmares all the time. 90% of the time the extended warranty will not be used. The customer wasted $140. But those that use it are sure thankful they bought it.

Okay, so let's do a little math.

let's say the average repair bill on a home appliance is 50% of the cost of a new one (not unreasonable in my opinion).

If 90% of the people who buy them don't use them, then my expected cost would be 10%(chance of needing it) * 50% (cost or reapir) = 5%.

So for that $140 to be a reasonable deal, that had better be the price for of the warranty for a $2800 appliance.

And if you really want to do some specific math, if I'm banking on my compressor going and I've got ~ 10% chance of using it then really what I'm looking at is
($300 + $150)*10% = $45

So if I'm buying the extended warranty for a job that will only cost $450, then that warranty had better only cost me $45.

Plain and simple, companies wouldn't sell these things if they didn't make money off of them. Sure it's a gamble, it's just like going to the casino. There's alwasy the possibility that your house will get strck by lightning and your $140 warranty will save you $5000, but you're probably just as well off going and putting that $140 on the roulette table. If these things didnt' make money for the store they woudln't sell them, so if they're making money off of it, then the consumer in the long run is losing.

[Bill Bumface]

Originally posted by transplant99@Oct 7 2005, 05:28 AM
In this particular case, the warranty was 100 bucks for 3 years.

Im WAY further ahead.

Yes, but thats like me saying "I bought a $5 lottery ticket and won $1 million. Everyone should buy lottery tickets"

Even though I know the lottery is just a tax for people who are bad at math

[transplant99]

Originally posted by hulkrogan@Oct 7 2005, 11:08 AM
Yes, but thats like me saying "I bought a $5 lottery ticket and won $1 million. Everyone should buy lottery tickets"

Even though I know the lottery is just a tax for people who are bad at math

But honestly, with a computer in particular, isnt it a pretty safe bet that something will go wrong within 3 years?

Im just asking.

[ken0042]

Originally posted by Bring_Back_Shantz@Oct 7 2005, 08:45 AM
If these things didnt' make money for the store they woudln't sell them, so if they're making money off of it, then the consumer in the long run is losing.

I don't disagree with your sentiment, just your logic.

Should a restaurant not be allowed to make money? Well, if all restaurants closed up I would probably have to cook for myself. But I couldn't buy food at Safeway, because they make money too.

I do agree that they are a cash grab, though.