Are extended warranties actually worth the money?
<p>If you’re on the market to buy a brand new fridge and the salesperson (or website) is offering an extended warranty you might want to check what you’re actually getting for your money.</p><p>Australians are being warned to think twice about paying for an extended warranty when buying household goods such as whitewoods and electronics. Under Australian Consumer Law, consumers may be protected beyond the manufacturer’s warranty period without the purchase of an extended warranty.</p><p>Most electronics or appliances you buy come with their own warranty from the manufacturer. For many devices, this is usually around a year, though it can vary from device to device and from manufacturer to manufacturer. This usually only covers malfunctions and defects within that short-period of time, to protect you from being stuck with a device that might have just been defective. It won’t cover accidental damage.</p><p><em><strong><span style="text-decoration: underline;"><a href="http://oversixty.com.au/finance/money/2015/03/things-moneywise-people-do/" target="_blank">Related link: 5 things moneywise people never do</a></span></strong></em></p><p>It’s worth remembering that under Australian consumer law, you already have warranty rights, and these aren’t supplanted by extended warranties or anything the manufacturer says. If someone sells you a TV and tries to tell you that it’s only covered for 60 days, you’d be in a strong position to argue that it wasn’t reasonable to expect a new TV to break down that quickly. There are no hard-and-fast rules on how long these rights last for; it depends on the price and usage of the goods.</p><p>It’s also worth remembering that extended warranties may offer options that you aren’t guaranteed under consumer law, such as loan replacement items while yours is being repaired, coverage for accidental damage, or extended customer support. At the same time, companies can’t argue that if you don’t buy an extended warranty, you have no rights at all.</p><p>How you use the device is also relevant. For stationary devices, like TVs, an extended warranty starts becoming less useful (unless you’re prone to playing football in the living room). Keep in mind, too, that as a rule of thumb you should never pay more than 20 per cent of an item’s price for the warranty – if it’s more expensive than that and you want the extra protection, shop somewhere else.</p><p>Guarantees under the ACL, including for replacements, repairs or refunds, do not have a specific expiry date and can apply even after any warranties have expired – although there are no set guidelines on time-frames.</p><p>Consumer group, Choice, has likened extended warranties to throwing money down the drain. “What we’ve found when it comes to extended warranties is in very few cases are they worth the money,” said spokesman Tom Godfrey.</p><p>“Under Australian Consumer Law, consumers have rights to refund, repair or replacement, and really spending money on extended warranties is just throwing cash away.</p><p>“The other thing to suggest is if you are tempted by an extended warranty, it’s really important to read the terms and conditions carefully to make sure you’re getting value for money.”</p><p><strong>Related links:</strong></p><p><em><strong><span style="text-decoration: underline;"><a href="http://oversixty.com.au/finance/money/2015/02/spending-habits-of-the-rich/" target="_blank">The surprisingly frugal spending habits of the rich</a></span></strong></em></p><p><em><strong><span style="text-decoration: underline;"><a href="http://oversixty.com.au/finance/money/2014/12/extending-the-life-of-your-car/" target="_blank">Top tips for extending the life of your car</a></span></strong></em></p><p><em><strong><span style="text-decoration: underline;"><a href="http://oversixty.com.au/finance/money/2014/10/how-to-hunt-for-bargains-online/" target="_blank">How to hunt for bargains online</a></span></strong></em></p>
