Warranties and service contracts 101

Ever wonder about the difference between a warranty and a service contract? Well, wonder no more.

Many consumer products, including cars, appliances and electronic devices come with a warranty — the manufacturer’s promise to stand behind the product. Warranties are included in the price of the product. If a company offers a warranty, it must be available for you to read before you buy — even when you’re shopping by catalog or online. It’s the law. However, what a warranty covers varies. So, when you’re shopping for things by price or style, consider comparing what the warranty covers, too.

A service contract is sometimes called an “extended warranty,” but service contracts are not warranties. A service contract can help you fix or maintain your product for a specific time — like a warranty. But, unlike a warranty, service contracts cost extra. When you’re shopping, compare specific manufacturers and products. You might find that some service contracts give you the same coverage you get from the warranty that is included in the purchase price. Some service contracts cover only part of the product, and some make it nearly impossible to get repairs when you need them. And, if repairs are cheap, you might not really benefit from the extra cost of a service contract.

Auto service contracts are different. They’re sold by car manufacturers, dealers, and independent companies. Usually, they won’t kick in until the manufacturer’s warranty expires. If you’re thinking about an auto service contract, shop around so you understand exactly what you’re buying and to ensure you are not buying overlapping coverage. What you get varies widely, as does what you pay for it, so be sure you know what the service contract covers.

No matter what you’re buying, some consumer advocates suggest that you might be better off skipping service contracts. Instead, they recommend putting that money in a savings account. That way, if you need repairs, you’ll have savings to fall back on. And if you don’t need repairs, you’ll have some cash in the bank.

Blog Topics: 
Money & Credit

Comments

Norton have made me, two charges to my credit card withouth my autorizathion

please let you help me by stoping scam messages about income.

please how can take part about this issue

Thank you FTC.

Can you help block scammers and people using or try to take my income and autroization use of my credit cards

Remember also that when a company asks you at the point of purchase if you want to buy a "warranty", i.e. service contract, that service contract over laps the manufacturer's warranty. For example, if you receive a one year manufacturer's warranty, and buy a three year service contract, the first year overlaps, thus, in essence, you are paying only for a two year contract.

I purchased A "Service contract" for my used car in 2007 for 5 years and $2,100. 75,000or 5 years (what ever comes first). my previous auto had the same "Service contract", but was at another Auto dealer, and it was used with no problem. The Service contract I purchased from the second Auto dealer was to be a 5 years.or 75,000 miles. after 3 years ( 2010 ), i had to use this ,but was told " the contract for was omly good for March 2004, ( delivered date), to march 2009! ) I tried everything ,with no effort on my part. I paid $100.00 a mile for this "service contract". My door was damaged by one of the service workers , but was denied when I reported it. Thank You Bill

I purchased a T.V. from Wal-Mart never used the line of credit for anything else. It was on a promotional code, over 500.00 no interest if paid with in 24 months. I pd off in 9 months. I have been having problems with Wal-Mart making the amount owed on my bill to the correct owed amount. since Sept., Oct., of 2014. Now they say I used the charge card for 87. dollars for something. I do not use credit card or the cash advance card for anything.I know know it's not best to improve credit with these store cards.

Don't give up, that's what they want you to do! Gather all your receipts and write Wal-Mart a nice firm letter. Send it to the director of the credit card dept. Since it has been since 10-2014, don't waste anymore time. I experienced a similar problem with a different retailer, but I finally got my refund. It took me 2 mos and 3 weeks to resolve. Make sure to keep accurate records. Doing so is key to satisfactory results.

Also if I'm not mistaken, warranties (type, duration, coverage, etc.) can vary from state to state so it might be a good idea to check with the Consumer Protection office in their state.

I was driving a new Audi, it burned in a car fire with electrical shortage according to the insurance. the company recovered insurance money for the car, but I did not receive payment for medical or my belongings. I tried to talk to several attorneys about it, but couldn't get past the intake persons. I believe the short was between the iPhone and the Audi navigation system. Shouldn't This be investigated. I could have died! It would have cost me less if I had.

If you want to see a real scam just read your Manitoba Hydro bill. how is it legal to tax a tax. If you look at your bill this is what you will see. 5.00% City Tax 1.60% Prov. Tax 5.00% GST 5.00% GST on City Tax. is this even legal or just in Manitoba

how much time does the dealer have to fix my warrantied transmission? they have had the car for over three months and keep telling me the part i need is on back order. how long can they keep the car before i can take legal action?

can someone answer this question, im in Manitoba Canada and my car has been in the shop as well for almost 3 months. this is ridiculous, its costing me money registering it. HELP

You can contact the consumer protection agencies in your area and explain the situation.

I have aa kenmore french door refrig purchased april j2011 it was made for sears by g repairman has been at my house 7 times and temp inside refrig is 80 degrees. What are my legal rights it has a warranty but they keep trying to repair it. We have had no refrig since dec 4 it is now dec 29

You may need to speak to a supervisor or someone at the company’s headquarters. Many companies include a toll-free number or email address for their customer service department on the product packaging, warranty, or receipt. If that’s not the case, visit the company's website and look for a "Contact Us" link, or call 1-800-555-1212 for toll-free directory assistance. For more tips, please see Solving Consumer Problems.

Hello.. can u help me to understand about the warranty. .I buy laptop 4months ago ang it is 2years warranty I had a trouble on it no bootable device. . I ask whats the problem they said they can't detect the hard drive that's why no bootable device.. so they want me to leave the laptop for fix it coz they said it is warranty and saying they said minimum to fix 1month maximum 3months. I been waiting morethan 2months and I call for update they said.. I am void to warranty I ask why. They said at the back of laptop there is small paper wrote warranty and it is broken which is they void my warranty..I get mad Coz why they don't tell me before about the issue and why I need to wait for that long.. also..they said I open the laptop back that cause me void and I am xplaiNing them never ever open the laptop.. and now they don't fix it.. can u help me please what to do..about this..I really do not open the lappy and they do not fix it .. they ask partial payments for fix. Pls help thanks .. pls advice me thanks

This FTC article about warranties has more information. The article explains how to write to the manufacturer if the seller won't resolve the problem.

You also need to know what coverage your warranty gives you. For example, your warranty might say some parts of the product or some repair problems are not covered. The warranty might say you must pay for labor charges. Read the warranty to see if it says:

  • Who to contact to get warranty service.
  • What the manufacturer will do if the product fails.
  • What parts and repair problems are covered.

 The article about warranties tells more about what you could do if you have warranty problems.

Service contract and warranties should be checked before you buy any car. This will help to understand that what are the parts of car coming in warranties and how much service charge dealers going to apply.

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