After you have done all your research, debated with yourself and maybe your spouse, and looked at many different models in one or more stores you finally get to make the BIG decision. You have finally weighed all the pros and cons of different manufacturers and models, considered technical specification, and getting the most for your hard-earned dollars. It seems that you have done something at least as significant as climbing Mount Everest or walking across the United States. You have told the salesperson of your final, carefully considered choice of a computer, a television set, a camcorder, a CD player, or whatever. You have your credit card out and are thinking about getting your new possession out of the store and into your car. But then the world skips a beat. You are handed another decision to make. The salesperson in all sincerity asks “I assume you want the three-year service contract – correct?”
Stop time. Go into a kind of cerebral coma. Start asking yourself some tough questions and think through this new decision. You are tired of course. You’ve just finished making the BIG decision of what to buy, and now you are being asked to consider a pretty darn expensive service contract. Another significant expense that you had not factored into the BIG decision.
Some years ago, after I, like millions of other consumers, had purchased several service agreements on some products, I realized that I had been totally suckered into buying those contracts. I realized that I never got my money’s worth. Here are ten reasons why you should not buy a service agreement from a retail store.
1. Virtually every product you buy already comes with some type of manufacturer’s warranty to cover defects and other kinds of problems that pop up in the first year. Either you can get a good remedy by dealing either with the manufacturer or the store where you bought the product if the problem arises pretty soon after the purchase. So, you really have to ask yourself whether buying an expensive service agreement that provides some benefits after that initial one-year period is cost-effective.
2. You have to consider the probability of something going wrong with the product itself. These days the level of quality in manufactured goods is pretty good. Manufacturing technologies have become so advanced through automation and incredible new methods of design, and even the packaging of products has become so sophisticated, because nearly everything is made in foreign countries and transported over incredible distances. Truth is, the odds are totally in your favor these days. And remember, virtually no service agreement will cover consumer idiocy that involves some truly ridiculous mistreatment of the product.
3. So consider the possibility that something goes wrong. What would it cost to have the thing repaired? The cost of a service contract is likely to be higher than what a repair job would cost.
4. Here is the most subtle factor of all. What is the life of the product likely to be? These days, most electronic type products have surprisingly short lifetimes, not because they break down, but because we have a tendency to want to replace these things with a newer, higher level of technology. Refrigerators and other types of appliances have very long lifetimes and buying a service contract might make more sense, except for one reality. To be useful for such appliances a service contract would have to be long-term, and usually that is not offered.
5. For electronic products that become technologically obsolete pretty quickly, remember that you can donate them to charities like Good Will and get a nice tax deduction, or you may have a friend or child that could use the older technology product. After a few years when newer, better versions of the product become available you have this option to take advantage of.
6. Should you really be concerned about having a service backup for your new possession, what you should consider is not buying a service agreement from the retailer, like Best Buy, but rather buying one from the manufacturer. Retailers like Best Buy actually have terribly low quality service operations, while manufacturers have a lot more at stake and typically provide better service and technical help. Just getting through on an 800 number to Best Buy is pure torture; I say this from actual experience. You are much more likely to have a better experience with a manufacturer’s service department. And the prices for service agreements from manufacturers are usually as good or lower than those from retailers.
7. The worst possible time for buying a service contract is when you purchase the product. You simply are not in the right emotional state to take more time necessary to make an informed decision about yet another financial expenditure. You always have time to buy a service contract after you initial purchase.
8. To be fair to yourself, you should admit that whatever comparison shopping you did in the first place, either on the Internet or in stores, did not factor in the cost of comparable service agreements from different retailers. You may have gotten the best price on the product, but that could be offset by an overly expensive service contract.
9. You probably have better things to do with your hard earned money. Spend some time after the purchase to consider what you could do with the money necessary to buy the service contract.
10. In the worst case scenario, you might buy a contract only to discover in a year or more that the company has gone bankrupt and out of business. These days, that is all too likely. You could get caught with having no reasonable ability to get the service you thought you had secured.
You get the picture. From a consumer perspective, service contracts for electronic products are a lousy financial investment. But what you almost always encounter is that after making that exhausting BIG decision, the salesperson will lean on you pretty hard to buy a service agreement. Guess why? Retailers usually make more money from selling service agreements than they make from selling the products themselves.
Enough said. The next time you go through the agony of buying a new electronic product be prepared beforehand to deal with the inevitable pitch to sell you a service contract. Just say no, quickly, firmly and without any hesitation. Don’t ask for detailed information. Just say no thanks!