Should you pay for an extended warranty?

Extended warranties are a major source of confusion for consumers.

Whether you are buying electronics, whitegoods or cars, retailers and manufacturers will often try to sell you an extended warranty and make various claims about its coverage.

But knowing some basic consumer rights can help you avoid these additional costs.

Under Australian consumer law, shoppers have a right to a refund, repair or replacement from the retailer for a "reasonable" time after purchase.

These rights work alongside a manufacturer's basic warranty, which might last for 12 or 24 months.

For an extended warranty to have any value, it will go beyond these rights and promises.

For example, it might have extended customer support, allowing you to borrow a replacement product while yours is being repaired or covering you for accidental damage.

Read the terms and conditions to ensure the extended coverage gives you rights over and above your rights under consumer law.

Ask the salesperson to explain exactly what extra benefits you will get from the policy. They are required to tell you.

You should also think about how expensive the extended warranty is, compared with the price of the product, and consider how long the product will last before being superseded.

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