Quote:
Originally Posted by murraypaul
Financially, they are still a very good deal for the companies selling them, and therefore must be a bad deal (purely financially) for those buying them. It is a zero sum game, if the finance companies are making money, it is because on average they are charging more than they are paying out.
The products may have become more likely to break, but that in case the prices charged for the insurance will also have risen.
And that is a perfectly good reason to buy them, just note a purely financial one. Peace of mind is something that has to be valued by each person individually, and can't be reduced to a simple dollar figure.
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Yes. If you want piece of mind and don't mind spending extra money, buy them, if you want.
The Consumer Reports link I posted above explains most of the reasons why buying an extended warranty is a bad purchase.
If nothing goes wrong (most likely event)...you've literally thrown away money.
Let's say you spend $40 on an extended warranty (pulling number from nowhere). 18 months down the road, your Nook dies. Have fun being on hold, talking with customer service, packing and shipping your nook back, and waiting for it to show back up.
Meanwhile, IF my nook has died, I've ordered a new Nook 3 for $100, with no holding on phone, no shipping, and no hassle. I think that is more piece of mind than the warranty repair method, personally, and $100 isn't a giant financial hardship.
Let's put it this way. There are 2 people. One buys every extended warranty for every purchase. One buys none of them. One gets a few things replaced under warranty. The other replaces or fixes the one or two things that have a problem. Guess who spent more money? That's right, the person that bought every extended warranty. You're financially better off saving every $20 here and $40 there on every warranty than the one or two warranty gambles that might "pay out".
These things are a big profit center for a reason - they generally get unused. That's why these things are a profit. They're a safe bet by the house.
Insurance/warranties should be reserved for things which create a financial hardship if you need to replace or fix them yourself. Otherwise, you're just losing more money than you're gaining, in the long run.