Extended warranty is a much maligned concept, and has faced a lot of criticism from various quarters. The consumers â you and I â are left wondering about the usefulness of Extended warranty. It really feels like being stuck between a rock and a hard place â to buy an extended warranty, and increase the cost of acquisition for a particular product (as consumer groups warn), or not buy and extended warranty, and forego an advantage to get free repair and replacement (as extended warranty sellers advise). So, what exactly should a consumer do?
Relax, help is here! This short and sweet article is an extended warranty review that will help you understand the concept of warranty, extended warranty, and whether you need it, if at all. Just keep reading!
What is a Warranty?
Warranty is a legal contract, an agreement between a seller and buyer, that the goods sold will be fit for the purpose that they are supposed to fulfill, and in case of a defect, will be replaced or repaired. The agreement need NOT be in writing, it can even be an implied warranty.
In simpler words, when you buy something at a store â let's say a laptop â you expect that the laptop will perform certain functions â that are expected from a normal laptop. This means that the laptop is fit for computing, playing games, surfing the internet etc. It should work reasonably. If it does not work properly due to an inherent defect that can be traced to the manufacturer, the manufacturer is bound to replace the laptop, or repair the laptop.
The warranty is limited to a fixed time period, mostly one year for most goods. Some manufacturers offer a longer warranty period, even up to three years as a normal part of purchase.
A warranty essentially has this benefit â that if there is an inherent manufacturing problem, or a faulty component that hinders an optimum performance, the maker will replace or repair the goods free of cost. This means that the consumer is covered from financial losses for that period.
What is an Extended Warranty?
So, what happens when the standard period of manufacturer provided warranty ends, and then a defect crops up in the laptop?
Ahh, it is here that our new friend, the Extended Warranty steps in!
By now, you must have guessed the correct meaning of the term "Extended Warranty". Yes, it means a warranty for a period beyond the normal manufacturer provided warranty.
An important point to remember here is this â the original warranty is almost always provided by the manufacturer, while the extended warranty is almost always provided by a third party (specialized companies such as Squaretrade).
So, why should someone provide an extended warranty to me?
Simple, you pay them money for that service, that's why!
An extended warranty works quite like an Insurance coverage â you pay a small premium to cover an even that may or may not happen over a specified period. If it happens, you are spared the financial burden. If it does not, then, well, at least your bases are covered!
Extended Warranty Advantages
> You are protected from a financial burden in case your stuff develops a problem, or is damaged.
> The extended warranty is easily and widely available â even on online retailing sites such as Amazon.com.
> For a small payment, you get protection against a wide variety of damages â even for those causes that are not covered in manufacturer provided warranties.
Extended Warranty Disadvantages
> Your cost of acquisition for a product is increased, sometimes by as much as 15-20%. Would you like to buy a $ 20 extended warranty for a $ 50 product?
> The salespersons that sell the extended warranty get a hefty commission â even up to 25% of the warranty sale price. This leads to sometimes unpleasant, pushy sales pitches by sales staff.
To Buy or Not to Buy?
Even the most strident critics of extended warranty agree (and this is supported by extensive research too) that in certain classes of products, it is advantageous to buy extended warranty. These include -
> LCD TV Extended Warranty
> Digital Camera Extended Warranty
> Laptop Extended Warranty
One last thing â you don't even need to step out of your home and make a trip to your nearest store. You can easily buy extended warranty online.