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Alejandra on Twitter explains why buying an extended warranty may not be worth it. 12% of the cost covers the statistical probability of the item breaking, while the rest goes to salaries, overhead, profit, and marketing fees. For example, if you buy a $1500 extended warranty, the dealership may make $700 profit, but the average repair cost is only $180. It's important to consider whether purchasing an extended warranty is truly necessary and cost-effective.