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Extended warranties – Here’s why NOT to buy one
Buy a washing machine, cooker, fridge, or any white good from a major store these days and you can be pretty sure they’ll try and ‘upsell’ an extended warranty to go with it.
This is basically an insurance policy against the item breaking down. If it does, you get it repaired or replaced for free.
Sounds like a good idea?
They’re certainly a great idea for the shop that makes a fat profit by selling them to you.
But for the average customer, they can be little short of a rip-off.
After you've had an item for a year or two, you probably wouldn't want it repaired anyway.
It would be more efficient and cost effective to replace it with a more up to date model.
And most household goods are, believe it or not, are getting much more reliable.
Which? research has found a new TV or fridge, for example, is highly unlikely to break down within the first five years of its life.
Extended warranty, extended price
Which? also discovered that extended warranties for most household appliances from many suppliers are – surprise, surprise – very expensive!
With one washing machine model, for example, they found that the extended warranty cost £170, which was over half the purchase price of £260.
Repair timeframes are NOT extended
Another thing to bear in mind is that extended warranties, especially for electrical appliances, often specify that repairs only have to be done within a certain timeframe.
And that can be many weeks.
Would you really be able to wait that long without a fridge or washing machine?
Isn't it better to take a small risk and keep the money you’d spend on a warranty IN CASE you need it for a replacement?
Read the small print
If you’re still tempted by a warranty extension, remember to read the small print.
Repairs may well be covered, but are parts and labour?
Are there limits on claims in terms of the time in which you need to lodge a claim or an amount of money you can claim? Are there any exclusions? How many times can you claim?
We would advise NEVER to be pressured into signing up for an extended warranty in the shop when buying a product – you simply haven’t the time to check the small print and think of all the correct questions to ask.
Bear in mind, too, that many of these products are not classed as financial products, but only service ones, so they’re not covered by the Financial Conduct Authority.
In that respect, if a company that sells you a warranty goes bust, you lose your money AND the cover.
Make sure you calculate the cost of the warranty compared to the cost of the item – be especially wary of contracts in which you pay monthly as these can work out very expensive indeed.
Are you protected anyway?
Keep in mind too that under the new Consumer Rights Act, which applies on any goods bought after October 1 2015, you have powerful rights that can extend over six years.
Essentially, just as with the old Sale of Goods Act, which the new act replaced, a product should perform for a ‘reasonable’ time and if it doesn’t you can ask for the retailer to replace or repair it.
This applies regardless of any guarantee that comes with the product.
The Act also means you can send an item back for a full refund within 30 days of buying it.
Replacement or repairs to a faulty good must be carried if an item breaks down within six months of purchase.
And, as mentioned above, you have a right or repair or replacement for up to six years if the product could reasonably be expected to perform that long.
But, after the first six months, the onus is on the buyer to show that the fault was present at the time of purchase.
And, finally, if you do buy extended warranty cover and realise it was a mistake, you have 45 days to cancel it for a full refund.
Just quote the Supply of Extended Warranties on Domestic Electrical Goods Order 2005 regulations.
After that you can still get a refund but it’ll be pro rata.
If you have taken out a warranty and feel let down by the supplier, post your complaint on A Spokesman Said.