Seems like you can buy an extended warranty on anything these days, but is it really worth the investment?

• Extended warranties are a big source of profit for both the retailers selling the product, but also for third party warranty dealers that operate outside of the retailers’ awareness.
• Car dealers in particular try to sell extended warranties to increase their bottom line because the average car purchase today results in a net loss for the dealer.
• In most cases, springing for the extended warranty probably isn’t worth it. But if you’re famous for breaking your cell phone, or the item you’re buying is known to break down a lot, it may save you a lot of repair and replacement money in the end.

Facts & Figures

• 34.4% of new car buyers bought extended warranties in the first half of 2009.
• 65% of Consumer Reports survey respondents reported that they spent more on their car warranties than they recouped in repair savings.
• To extend the coverage on a Toyota Highlander to 8 years or 100,000 miles, an extended warranty will cost between $1,325 and $1,600.

Best Quote

“It’s insurance. It depends on the customer’s views about risk.” – Paul Taylor, Chief Economist for the National Automobile Dealers Association