Well put! I will definitely follow your good advice. Thanks.
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@Connie_S. I donât think extended warranties make sense for anything. Here is my repair experience on appliances for which I was offered an extended warranty and turned it down:
Refrigerator. 23 years no repairs
Kitchen range 29 years new burner $15
Dishwasher 29 years 1 repair $75
Washing machine 26 years 2 repairs $400
TV set 1 repaired on factory warranty 8 years old
TV set 2 repaired on factory warranty 5 years old
From the money I saved not buying an extended warranty, I could replace any of the above equipment. Besides, the extended warranty would have run out a long time ago on these appliances.
Great examples! Iâm convinced! Thanks.
Iâve never bought an extended warranty and never will. They are nothing more then just a very expensive insurance policy.
The wildest extended warranty I was offered was on a vacuum cleaner. I was single and had just purchased a house. The house had carpeting, so I bought an upright vacuum cleaner. However, as was typical of upright vacuum cleaners, there wasnât much suction for the tools. Besides that, it was inconvenient to lug the upright vacuum out to clean the interior of the car. I just happened to walk through Sears and they had a canister vacuum on sale for $19.95. When I inquired about it,I was told that the tools had been lost and all I would get for $19.95 was the canister and the hose. âThatâs perfectâ, I said and bought it on the spot. I figured quite correctly that the tools for my upright vacuum cleaner would work. A week after I made my $19.95 purchase, Sears appliance sales department called and offered me a great deal on an extended warranty. For only $20 a year for the next three years, if anything went wrong with the vacuum cleaner, it would be repaired free of charge. I declined that extended warranty.
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@Connie_S - Hereâs more info on CarMax:
I was offered one just as wild. In the late 1990s I bought a microphone from Radio Shack for $14.95. The clueless kid behind the counter offered me a 2 year extended warranty for âonlyâ $29.95! He did not seem to understand when I declined even when I explained I could replace it twice for the same price as the warranty. The 20 year old microphone is fine. Radio Shack? Not so much. I wonder whyâŠ
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And BS like this is why Sears is heading in the same direction. My microwave that I purchased new just over a year ago (and is therefore just a few weeks out of warranty) broke, so we called for service. Just a few years ago, a service visit was $79, so I was shocked that it would be $250 now (just to come diagnose - not fix - a microwave that cost $300). But if we signed up for their service plan (for $50 per month), the diagnosis would be the previously regular $79. The customer service rep seemed more concerned with selling us the extended warranty than actually fixing the problem we had. Needless to say, I wonât be shopping there again.
As for warranties in general, look at it like insurance. Most people will never use it, but if your house burned down or blew away in a tornado, and you got a half a million dollar check in exchange for your few thousand a year in premiums, youâd be glad you had it. Car and appliance warranties are like that except that the annual insurance premiums are as about much as replacing the thing thatâs insured. 
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Back in 03 we bought a new car, took out a 5 year loan, a major car expense would have caused budgetary woes, got a 7 year 70k miles warranty for $1400, canât say it paid off for us, at 6 years needed plenum orings or something that would have been about $500. So $900 cost us in the end $15 a month on the car payment, got 2 years more warranty after car payments were done, as we are just under 10k per year. I think it was a good idea for us.
They wouldnât offer warranties if they werenât going to make money on them.
A carmax warranty is wonderful if you buy a less reliable or expensive to service model of vehicle. Toyota does not fall into that category. If you were thinking Land Rover or MB/BMW/Audi high performance model then it makes sense.
Another good case for warranties is personal finance habits. Do you have liquid cash available for a $1000 repair or is that hard for you? If that would be a struggle/hardship then warranty makes sense. Also do you get nervous and get rid of vehicle past warranty at first repair? If yes again it may make sense to get a warranty as changing vehicles has cost involved if not really savvy which most folks are not.
+1
⊠and if you want a decent interest rate on those savings, avoid the local brick & mortar bank and instead place the money into an account with one of the online banks. I used to use Barclays Bank, and for the past couple of years Iâve been using Synchrony Bank, whose interest rate is ~10x the rate paid by most brick & mortar banks. Currently, their interest rate on savings accounts is 1.75%.
They are insurance policiesâŠbut EXTREMELY EXPENSIVE and EXTREMELY PROFITABLE insurance policies. Yes if your house burns down you need insurance to replace it. But do you need the same insurance for an appliance or vehicle? The answer is NO. If an appliance breaks - I buy a new one. If my car breaks - I fix it. The cost of doing the later is far far far less then insuring these devices.
What insurance policies to people like Bill Gates have? Answer - NONE. They donât have any insurance on anythingâŠthis includes life insurance and even insurance on their homes. They can afford to build a new house if it burns down. I canâtâŠso therefore I have insurance on my house. I also have liability and collision insurance on my truck. But will NEVER EVER buy warranty insurance on ANYTHINGâŠ
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Many years ago, I was buying some sort of small electronic device at Best Buy. I have no recollection of exactly what the item was, but it cost something on the order of $29.95. The cashier asked if I wanted to buy an extended warranty forâIIRCâ$13.95. When I pointed out how bizarre that was, he admitted that he agreed with me, but that he was required to push extended warrantiesâeven on very cheap items.
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I think weâre saying the same thing here. 
Many people have an extended warranty through the credit card used to purchase a product.I like to rell the sales clerk that my credit card doubles the factory warranty at no cost. Does it work? I donât know I have never used it.
The circuit board on my swimming pool contols failed. I called the mfg who stated it was two months out of warranty but the would supply a new board if I paid the local installer. I was nice, but never even asked for a free $ 400+ part. It was his idea. The bill was $79. The installer showed me it was new, not rebuilt and had been shipped from the supplier. Per the installer, warranty claims usually called for a rebuilt board.
I bought a small transistor AM radio on sale for $2.95 back in the early 1970s. It came with a two year factory warranty. If the radio failed, itvm would be repaired or replaced for free. All I had to do was ship it to a repair center along with $5 for shipping and handling.