One of the challenges with extended service plans, is that all too
often, by the time you have a need of it, it is less expensive to replace the
original product. This is often less expensive then what you would have paid
for the service plan. It's important to remember, that companies are making good
money on extended service plans. Whether an extended service plan is good, or
evil is up to each individual consumer to determine.
Crucial considerations
Stop and consider the types of items that are currently available with
extended service plans. Let's take a laptop computer for an example. An extended
service plan often costs between $150 and $200. The reality is you can easily
replace a laptop computer for about $300. Extended service plans are not always
in the best interest of the consumer. In fact, they are almost always in
the best interest of the manufacturer. If you are considering an extended
service plan, one thing you will want to verify is what the exclusions are. The
irony of most extended service plans, is that the parts that are most likely to
fail, are typically the ones that are excluded.
When extended plans are good
While an extended service plan may be valuable when you are purchasing
a car, they probably are not the best option for items such as computers,
televisions, vacuum cleaners, etc. In fact, you may consider that once you have
purchased these products, they are almost entirely disposable! Unfortunately,
manufacturers regularly promote extended service plans, and you may even find
that you have inadvertently purchased one especially, if you have been shopping
online.
More important considerations
Another thing to take into consideration, is that today more and more
credit cards are allowing you some type of security for purchases. In many
states, the "lemon laws" will also protect the consumer for large
ticket items. Before you consider purchasing an extended service plan, you want
to know exactly what you are paying, what you are paying for, and what benefit
you will get from the plan.
Understanding what you need
Before you agree to extended service plan, if you are purchasing an
item via a credit card, verify what coverage your credit card extends regarding
large ticket items. Many consumers will purchase extended service plans
believing that it offers them major protection only to discover that they cover
only "routine" items. Major defects or failures that occur are often
excluded from extended service plans.
As with any other consumer product item, some people will swear by
extended service plans, and tell you they are the best thing that ever happened
to them. Other consumers will tell you that extended service plans are flat out
evil. You must make your own decision based on the product you are purchasing,
the amount you are spending, and by carefully reviewing all the things that
could potentially go wrong and whether they are covered by your extended
service plan.
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