|
You have waited two years to buy your new washing machine. As your purchase is being written up, the salesperson asks if you would like to buy a service contract for your new appliance.
You can pay extra money to buy a service contract for your new appliance. This way, you can make sure your new washer will be repaired at no cost to you if it breaks down after the normal warranty runs out. Manufacturer’s warranties usually cover the first six to twelve months after purchase Stores often make more money from selling service contracts than by selling the merchandise itself, according to Consumer Reports magazine. And while a service contract may sound like a good deal, they are not always needed. Up to eighty percent of service contracts purchased are never used. By carefully choosing your new appliance or other major item beforehand, you can cut your chances of having to pay for costly repairs. Consider the cost of repair before purchasing a service contract. If the extended warranty costs $100, but the average cost of a repair is only $45, you could save money by not buying the extended warranty.
|
|
Does the extended warranty cover the same time period as the manufacturer’s warranty that comes with the product? A service contract should not begin until after a full warranty runs out. You do not need double coverage, especially while the manufacturer is providing it for free. Here are a few things to look for in a service contract: Does it cover all costs of repairs, including labor, parts and travel time for the repair person? When does coverage begin and end? Is service available at a convenient location? It’s best if repairs can be made in the town where you live. Who backs the contract? Sometimes consumers find out the hard way that the company that backed the service contract is no longer in business. Of course, in such a case, the cost of repairs would not be covered. The money to buy the service contract has been wasted. Will you be able to get the coverage later or through a different company? Ask if you can decide later to buy the extended coverage. How much would it cost? Even if the store won’t sell it to you later, you can sometimes get service contracts through a repair shop or service company. Check on this before you go to purchase the item. That way you can compare costs. What if you decide later you do not want or need the service? Can you cancel the contract and receive a partial refund? What happens to the service contract if you sell the product? Can the new owner use it? |
Educational programs of the Kentucky Cooperative Extension Service serve all people regardless of race, color, age, sex, religion, disability or national origin.
-30-
How
is a service contract different from a warranty? A service contract, also
called an "extended warranty," is not the warranty from the manufacturer
of the washing machine which comes along with the product. A service
contract is a form of insurance being sold by the store, in addition to
any warranties offered by the manufacturer.