Step 62: Warranties and Service Contracts

Step 62 of the 100 steps to financial independence: Warranties and Service Contracts
Step 62: Warranties and Service Contracts

When you make a big purchase such as a new car or appliance for your house, the selling company often provides a warranty on the product. The warranty is a guarantee for a set period of time during which the manufacturer promises a correct functioning of the product and to replace or repair the product if the product is faulty.

Warranties are very important to understand and keep as they can save you a lot of money and worries if you ever need them. This step will look at warranties and extra warranties in detail, so you can assess any current warranties you have and to allow you to compare and evaluate warranties on any future purchases.

What a warranty typically includes

Normally a warranty will specify and /or include the following:

  • How long it is valid for. For some products this might be no more than 6 months, other products might be covered for several years.
  • What circumstances might void the warranty. The manufacturer often includes reasons why a warranty might cease to be valid, such as not having done regular maintenance check ups and servicing or using the product incorrectly.
  • Services included: what happens if the product is faulty? Will it be replaced, repaired or will your money be refunded?
  • Services excluded: this might not actually be stated in the warranty, but make sure you find out what is not included if your product fails. Think of costs to do with transporting the product to the shop or factory, labor charges etc.
  • Does it include costs you might have as a consequence of the product being faulty? For example if your washing machine floods your house, will the damage to other objects and furniture be covered, or if the fridge-freezer breaks will you be reimbursed for any of the contents gone off?

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