This question is asked so frequently that it is almost becoming as popular as “Would you like fries with that?” Deciding if you want fries is a relatively simple decision: are you hungry, do you like them, etc. But the warranty question instantly brings up doubt: “What if the thing stops working?” “Will I have money to pay for it?” “Maybe it’s not a good deal after all?”  Perhaps you have adopted a standard response where you either always say yes or always say no. Maybe you just don’t care and are irritated by the delay in processing your transaction, or maybe you simply don’t care, and if you feel ‘rich’ at the time, you’ll go for the warranty and its subsequent extra expense, and if you’re not, you will take a gamble and pass on the extra expense.

What is the best way to handle this question when it comes up? Because we all know it will, whether you’re buying a new $40 computer accessory or a $3000 appliance, you’re going to be faced with the question and therefore the decision and, like all your financial decisions, you have to take control of the situation. So, let’s make this easy, there are a lot more detailed questions you can ask and other information that is important to know, especially on larger purchases. To get you started so you are in control, you need to remember two things: 1) What percentage of the purchase price does the warranty represent? In all likelihood, it will be in excess of 10%. For example, a $100 item will likely have a warranty price of $15 or more representing 15% – hmmm… do you want to pay a 15% premium? 2) Do you have money that you could access or have available to pay for a repair or replacement on the item if it did stop working? If so, then do you need to pay the premium upfront – likely not. If not, then perhaps the additional money on the front end is worthwhile. However, if you decide to say yes, you have to ask a whole series of additional questions such as under what conditions can you claim on the warranty? Will you remember that you have the warranty?

Where will it be stored if you have to use it?

Ultimately, it’s your call. However, do yourself a favor and take control on the front end and become aware of the cost of the warranty and the cost of the repair or replacement on the item before you just adopt a simple yes or no.