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Originally Posted by JohnnyBuddha
I've read this in a few articles recently and am a bit surprised. I've recently purchased extended warranties for my video iPod and my PS2 when I bought it years ago. I ended up using my PS2 warranty about two years after buying it because it just wore out (the warranty cost $50) and I just sent my iPod in a month ago (~2 years after buying it) because the battery was really weak and it was shutting down randomly. This warranty also cost me about $50.
Do people buy warranties that are shorter than the life-span of what they're buying, do they lose their warranty slips/receipts? I've got a special shoe-box for mine.
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The idea behind the warranty is similar to the idea behind the mail-in rebate. The companies are hoping that:
1. You'll forget to register your extended warranty
2. Nothing will happen to the shitty product you bought
3. You'll forget you even bought the warranty
Same thing with rebates. Statistics show that if you forget to fill out a mail-in rebate the day you purchased a rebate item, there's an 80% chance you'll never fill it out. Which means you just paid full price for something you could have gotten money back for.
Plus, the extra money you spend before you get the rebate check is first invested by the company. That way, the company can snag a little interest off you before they give you your money back.
Warranties on more expensive items are usually more cost effective. But where I work, we try to sell warranties on the stupidest shit. Unless you're buying something for more than $500 dollars, it probably isn't worth your money (unless you KNOW that what you're buying is gonna crap out). Also, you gotta make sure that the warranty you buy is good for full reimbursement, and not just repair. Fine print is important.