Why, in most cases, do you want to avoid extended warranties or repair plans when purchasing most small household appliances or most consumer electronics?

Question

What will be an ideal response?

Answer 1

: Extended warranty and repair plans are nothing more than insurance policies -and they are extremely lucrative for retailers. Policies for individual items, such as an iPod or a refrigerator, are expensive compared with what you are actually insuring. They result in huge profits for retailers, as very few people use them. Statistics show that if there is going to be a problem with a major purchase, it usually happens during the manufacturer's warranty period. Extended warranties easily result in adding 10% or more to the purchase price. In addition, many extended warranties require a deductible or co-pay. Imagine that. You have a deductible to replace that $30 toaster. If you can pay for the loss without much heartburn, then forgo extended warranties.