You hear and read a lot about
maintenance agreements and extended warranties, so much so that you probably
get confused as to which is which and should you bother with any of them.
Let's see if I can help clear it
up.
An extended warranty is something
you pay for in case your product goes bad.
You can then get a little relief with repairs and perhaps a small
percentage off the price of a new unit.
Often, extended warranties are
costly and are something to avoid. They
can sometimes cover the same time period as your products warranty, which makes
them a waste of money.
A lot of the time if you would
just bank the money the seller wants for an extended warranty, you will have
plenty of money for repairs and/or replacement models.
You will hear consumer gurus
telling you that extended warranties are bad.
I concur.
A maintenance agreement on the
other hand, is something that you renew every year and comes with a tangible
benefit. You mostly hear of maintenance
agreements in the field of heating and air, plumbing and electrical work for
your home.
For an example, let's look at a
heating and air maintenance agreement.
In this agreement you pay a set
amount each year. (In the Atlanta market
if you are spending more than $158 per system per year then you are spending
too much. Also, look for discounts on
the second and third system if you have them.)
The company you purchase the
agreement from will then come to your house twice a year, once in the spring to
tune-up your air conditioner, and once in the fall to tune-up your
furnace. Or vice-versa depending on when
you purchase your agreement.
The agreement is for 12 months
and in addition to the two tune-up calls you will often also get a discount on
parts and service should you need them, and you will generally be on a
preferred customer list in case of emergencies, which is nice.
The agreement must be renewed
every year (unless you buy a multi-year agreement) and, here's a tip: if I were
purchasing a new hvac system I wouldn't sign on the dotted line until I had at
least 2 years of free maintenance included in the deal, and even then I would
ask for 3.
Plumbing deals and electrical
deals all work in the same fashion.
Value for your money. It's always a great trade-off.
Some extended warranties can be
dressed up to look like maintenance agreements, just like some hvac lease
offers can be drawn up to look like new purchases so beware.
One last note - if your hvac system
is over 10 years old and you do not have a maintenance agreement you are
pushing the envelope for.
Often years can be added to the
life of a system with proper care and maintenance, and now would be the time to
jump on board.