Shady warranty sales

Clark Behind The Headlines

From HLN's Money Expert Clark Howard

My wife was doing me a favor the other day and went to an electronics store to get some equipment for me. When she's getting ready to pay for it, the salesperson says, "Which term extended warranty would you like?" Not, “would you like an extended warranty?” And she said, “I don't want one at all.” The salesperson then proceeds to say, “Do you know whoClark Howardis?” And she says, “yes.” And he says, “Well, you know, when he shops here, he buys extended warranties.” And she says, “He does, really?” And he said, “Yeah. In fact, he came in recently and he bought a pair of headphones, and when he bought those headphones, he bought an extended warranty.”

I have never bought headphones at this particular specialty store. Well, my wife being the gentle lady that she is, said, “No, that's ok, I'm not interested.”

The guy had no idea that it was my wife he was saying this to. And this happens all too often. And I want you to know that my position on extended warranties remains what it has always been. When should you buy an extended warranty on electronics, computers, any type of purchase like that? Never, never, never, not ever. When should you buy an extended warranty on appliances? Same answer. When should you buy a warranty on an existing home? Only if you are selling the home and you want to provide it as a sales tool to a potential buyer, a confidence builder that you are providing a warranty. The only other exception to buying an extended warranty is, potentially, a car. You buy an extended warranty on a car if you know that you don’t have the savings to pay for repairs to a major component of the car. But with any warranty of any kind, remember this: they'll talk to you in the stores about how you're protecting your investment. Let me tell you something. A television is not an investment. A washer is not an investment. Whatever item it is, you're not investing in it. You're spending money to have that item. But I just want you to know that anytime anybody at any retail store tells you that I buy an extended warranty on their products, all you need to know is, they're lying.

Filed under: Behind the Headlines • Clark Howard • Commerce • Insurance