MBR Financial, Inc.
2000 West Loop South
Ste. 1510
Houston, TX 77027

Is buying an extended warranty worth it?

If you've ever purchased an electronic device, a major appliance, or a vehicle, chances are you've been asked if you also wanted to purchase an extended warranty or service contract. Extended warranties are offered by retailers for an additional cost to customers and provide repair or product maintenance for a specific period of time.

Selling extended warranties may be quite profitable for retailers. It's an easy way for them to make money because they get to keep a percentage of what they charge for the service contracts.

Before you purchase an extended warranty, consider the following questions.

  • Does your purchase come with a manufacturer's warranty? Many products already come with a warranty from the manufacturer that covers replacement or repairs within a certain time period. Even if the warranty period is short, manufacturers may offer low-cost repair or replacement of items if they are known to be defective, although there are no guarantees unless state or federal laws apply.
  • Will the manufacturer's warranty overlap with the extended warranty? You may want to forgo purchasing an extended warranty if it will result in duplicate coverage.
  • If you're using a credit card, does your card issuer automatically extend the manufacturer's warranty? Some double the warranty period or extend it up to a year for products purchased using the card.
  • Do you plan on purchasing your product from a well-known manufacturer? Research online product reviews to gauge reliability and the potential for problems to occur before you spring for an extended warranty.
  • If the product you've purchased needs repairs, will they be costly? You should weigh the cost of the extended warranty against what it will cost to pay for the repairs out of pocket.

If you decide to purchase an extended warranty, read the terms carefully. Extended warranties contain coverage exclusions and limitations. In addition, some extended warranties may require you to pay additional charges to have a covered product serviced (e.g., deductibles, fees, and shipping costs).

IMPORTANT DISCLOSURES Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual's personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2020.