In case you are buying a car, an electronic device, or a major appliance, you may well be offered the chance to buy an “extended warranty” or service contract. Both service contracts and warranties provide repair or maintenance for a certain time. But will be certainly an important difference: a guarantee is included in the price of an item; a service contract costs extra. It’s an add-on that may not be well worth the price.
Some service contracts duplicate the guarantee coverage that the manufacturer provides; some cover only part of the product; and some ensure it is practically impossible to get repairs when you really need them.
Here are a few factors to consider before deciding to buy a service contract.
Will be the Product Likely to Need Repairs?
Does the Service Contract Really Offer Extra Coverage?
How Usually are Claims Handled?
Who will be Dependable for the Contract?
Is There a Better Option?
A Alert About “Cold Calls”
Will be the Product Likely to Require Repairs?
You might not exactly profit from a service contract if the product isn’t likely to need repairs or if the potential cost of repairs is low. Check websites offering information about products that are most likely to need expensive — or comprehensive — repairs.
When most likely shopping, compare specific manufacturers and products. If you buy a reliable product from the company with a good reputation, a service deal might not be necessary.
Will the Service Contract Really Provide Extra Coverage?
Just before considering a service agreement, be sure to know very well what your guarantee coverage is. Compare the guarantee coverage to the service contract to see if there’s any advantage to additional coverage.
See the costs and conditions of the service contract. If you’re shopping online, look for a hyperlink to the terms, and save a copy so you can label them later.
Depending on the terms, a service contract could final less than a yr or more than 5. Accidental damage may well not be covered. And there may be clauses that allow the company to deny coverage if, for example, you don’t follow their instructions for routine maintenance.
A service contract might cover specific parts of the product or specific repairs. In case the conditions don’t list a part or a function as specifically protected, assume that it’s not.
Keep in mind that you might have other expenses, like a deductible or a payment every time the product is serviced. You may be required to mail the product to a repair centre — so consider shipping and delivery costs. Some service contracts set reimbursement amounts. With regard to example, auto service agreements may well not completely cover towing or car hire expenses. Inside addition, you may have to pay for a transfer charge if you sell the product.
How Are Claims Dealt with?
Find out if the retailer or someone more takes care of the repairs. What’s the process for a claim? With regard to example, could you return the item to their grocer where you bought it?
When a local retailer or dealer offers the service contract, you might be capable to get local service only. Consider the probability that problems may develop while you are traveling or after you move away.
Who Is usually Responsible for the Contract?
The FTC often becomes letters from consumers who ask what they can do whether they have a service contract with a business that goes out of business and cannot repay statements. Unfortunately, there is certainly little you can do if that happens. Before you sign a contract, think about the company’s financial situation and consider whether or not the business is reputable:
Search for an deal with and an unknown number for questions or problems.
Do an online search with the name of the company and words like “review” or “complaint” to see if there are negative reviews of the company.
Call your state consumer protection office and ask if they have any complaints against the company.
Is There a Much better Option?
Some consumer advocates suggest that folks are better off skipping extended warranties, and putting the money they would’ve spent in a savings account. If you need repairs, you’ll have your savings to fall again on. And if you don’t need repairs, likely to have a little extra money in the financial institution.
A Warning About “Cold Calls”
Many extended guarantees are offered at the point of sale, but sometimes marketers call or send mail long after you’ve made a purchase. More than likely, these pitches are from unrelated businesses. In the event you respond to them, you’re likely to hear high-pressure sales tactics, as well as demands for private financial information and a down payment, before you get any information about the service contract. And if you buy a service contract from a telemarketer, you may find that the business behind it won’t be in business long enough to fulfill the commitments.