Understanding Extended Service Plans

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    Most Manufacturers will offer some type of standard Warranty for their products. This may be a 1 year parts and labor coverage or a lifetime limited service plan. The difference depends on the product and the manufacturer.

    Understanding the coverage that you have and any additional plans offered by your contractor or retailer is important when you purchase any item.

    First is unconditional returns – Most large retailers will offer a 30- 60 or even a 90 day unconditional return policy. This means that purchases can be returned for full refund with your sales receipt, Store Credit without your receipts or like kind / exact product replacement depending on the policy of the store.

    Most people are aware of this type of discount and have taken advantage of it at retail stores for items that may be home related or not.

    You should know that when you are purchasing products from a contractor that uses a third party supplier most states require the contractor to supply you with a full listing of where the product was purchased and for what price. This allows you to double check their price markups.

    One thing you might want to do when ordering a large appliance or other product is to ask your contractor to pay cash for that item or buy the item yourself so you can take full advantage of any rebates, returns or future servicing by the manufacturer.

    This will allow you to work directly with the retail store or the manufacturer and not have to go through or depend on your contractor to supply you with receipts or order information years down the line.

    Manufacture Warranties are often split between full exchange for a short period of time maybe 60 days to a year and then parts only or Limited Warranty for an extended period. Each product you buy will have different terms and the selection to purchase one item over another may hinge on how good the warranty is.

    Some Manufacturers will allow full servicing but you must return the item to one of their Certified Repair Centers. You may want to also take this into consideration. If one product has a Service Center in your area you can drive your product to their location. Some companies may make you mail the item overseas at your own expense and this is cost prohibitive for most repairs.

    Another option is purchasing parts yourself or having a local repair person replace the parts in your home.

    When you send a product in for service you should always ask that they give you an estimate of repairs before the do the work if the work is not covered under your warranty. Often the cost to repair a product will come very close to the price to replace the item with a new or remanufactured product with full warranty.

    If you find any product is within 50% of its replacement price you should think about buying a new product. Fixing problems with old tools or appliances may introduce new problems down the line if improper care is taken during the repair process. You may also find that once one part starts to go the rest of the product is nearing full replacement so purchasing a new item is to your benefit if the repairs are not covered under warranty and they cost more then 50% of a new product.

    Retail Warranties
    Retail establishments have been providing extended product service plans for some time now and their cost is about 10 to 20 % of the total original cost per year after the Manufacturer’s warranty runs out.

    Retailers offer extended warranties for one reason they make money off of it.
    For every person that purchases a product they immediately get a 10% to 20% markup.
    The number of people that use their warranty is very limited and they depend on this.

    Many products installed in homes may be assumed by the new home owner when homes are sold. In this instance the new owner may not have the right to redeem the warranty. In other instances the warranty is just lost or forgotten about.

    If all else fails the Retailer will have a provision for charging off some of the costs by stating the item has excessive wear or was damaged during use.

    Purchasing a Retail Warranty should be done with extreme caution.

    The only exception to this rule is one retailer that we saw offered the original sales ammount back to the customer for one to 3 years after the manufacturer’s warranty ran out.

    In this way you would get your money back and be able to apply it to the purchase of a new different model.

    This is a good option but remember the Retail Warranty does not kick in until after the manufacturer’s warranty runs out so even in this situation if you buy an item and it breaks the retail warranty may be no good if you still have time left on the Manufacturers Warranty.

    You should also know if the Warranty includes delivery and install of the item. And remember base installs do not include special service that may be required for your item.

    Many new products will include free delivery and install with take away of the old item.

    If your warranty does not include those added services you may end up paying more for warranty service of your appliance then you would buying a new one.

    End Note
    You should always be skeptical about any warranty that you need to pay for.

    Manufacturer’s Warranties are offered free as an incentive for the customer to return products to the manufacturer that way their repair centers can track what parts are breaking and the manufacturer can re-engineer their products.  You become the Beta Tester for the companies products and in return they fix the item. But they may make you pay shipping.

    Paid Warranties can be a good thing if you plan on using the item for an extended time and if the warranty provides good benefits at a very low cost.

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