10 Lessons I’ll Teach My Daughter To Be Happy, Successful and Rich.
Extended warranties are the rave these days at retailers and cash register checkouts. At one time they were exclusively used to boost profits at car dealers.
Margins are thin so car dealers weren’t making much on the sale of the car, but they made a killing when they sold extended warranties. Car dealers now offer paint protection warranties, tire warranties, rust warranties and the list goes on and on.
Its getting out of hand now, I was at a well known Toy retailer the other day in Toronto buying a small birthday gift for my daughter and a lady in front of me was offered an extended warranty for a squirt gun she was buying her son. It was a $21 purchase and for about another $5 she was offered this “warranty” that would let her return the toy for a new one if it broke in the next year.
That $5 was over 20% of the purchase price. She took the bait, hook, line and sinker. Was it a good idea? No, it was an awful waste of money for her but a great way for the Retailer to make another 20% on that sale.
Most products are well made, even the stuff coming from China is considerably better then it used to be. Extended warranties are rarely used, and if you do try to claim on them, the hoops you need to jump through to qualify make it very difficult. At the end of the day they just aren’t worth it.
Consumers need to stop the madness, wake up and just say “no”. The next time you are offered an extended warranty, just say “no thanks, I’ll pass” and keep your hard earned money.
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