So we commissioned a report and conducted an extensive survey into the extended warranty market to get a better understanding of what's going on. Our findings show that extended warranties don't offer good value for money, supporting calls from consumer organisations such as Which and Citizens Advice – who’ve urged consumers to say no to such warranties.
Why Do We Say Yes to Warranties if They Offer Such Poor Value?
The majority of warranties are sold by the retailers themselves at the point of sale.
Their marketing materials focus on "peace of mind" and rely on the fact that we overestimate both the likelihood of an appliance breaking down and the cost of repair.
Warranties are highly profitable for the retailers, often with margins much higher than on the appliances themselves. That's why they put sales incentives in place for their staff, and it's why 48% of the people we spoke to said they’d felt pressured into buying an extended warranty.
The competition commission described the warranty market as a complex monopoly when they reviewed it in 2005. This report suggests that not much has changed. We've sent a copy to the Office of Fair Trading and have urged them to investigate further and make the retailers publish more data about the real value of warranties.
Here's Matt with some advice for consumers when it comes to extended warranties.
Hi, I'm Matt from eSpares.
If you're buying a new appliance, chances are that the retailer will also try to convince you to buy an expensive extended warranty, here are our 4 tips when it comes to warranties.
Really consider whether it's offering you good value for money. They are highly profitable for the retailers, and consumer organisations like Which and ConsumerDirect have advised people to say no, and we at eSpares agree.
Plan ahead, most people who do buy an extended warranty didn’t plan on doing so. If you’ve already decided you're not going to buy one then you’ll be less likely to be swayed by pushy salespeople.
Know your rights, you don't have to say yes there and then. You have up to 30 days after you buy the appliance in which to take the retailer's warranty and if you have felt bullied into buying one, you've got 45 days in which to cancel for a full refund.
Look for an appliance with a good track record for reliability. Many websites show reviews from previous customers, and that can help you decide. You can also look for independent reviews from people like Which? Paying a little bit more for a reliable appliance is probably going to offer you much better value for money than an extended warranty.
In the unlikely event that things do go wrong, we've got over half a million spare parts and a couple of hundred videos where we show you just how easy it is to fix it yourself.