Warranty Purchases and Debt
Insurance is a common necessary to ensure financial protection for an individual's home, car, and health. In the case of a catastrophic event, insurance protection protects an individual from the accumulation of excessive debts. The purchase of a warranty offers consumers that financial protection for goods ranging from televisions to vacuums. Warranties provide the saving hundreds or thousands of dollars if the product breaks or is damaged at a reasonable price. On the other hand, if an individual were to purchase every warranty that came along, they would generally end up paying much more money than they would ever save.
Factors to Consider when considering a warranty purchase are your risk tolerance. Statistically most people will never have a need for a warranty. If they did, then companies would not make money by selling them. However, if the prospect of an untimely repair bill keeps you up at night, then maybe it would be worth it. Many times buying a warranty is dependent on how costly the product is. For lower end mass produced products, in most cases it would be in your best interest to pass on this type of warranty. The worst case scenario would be buying a replacement for a few more. On the other hand, if the product is a necessity and somewhat expensive, and you cannot afford to easily replace it, then a warranty may be a good option.
If you are only planning on keeping an item for a period that does not exceed its included warranty, such as three years on a garbage disposal, there would be no reason to purchase an extended warranty. However, extended coverage on automobiles is one of the most popular warranties on the market today and they can vary between locations, if you are interested make sure and shop around.
Determining when a warranty may be right for you is something that needs to be done on a case by case basis. There is no hard and fast rule that can be applied across the board. One important factor to keep in mind is that warranties are very high profit items, so be wary of buying one under pressure.