When you purchase a new product, you may be asked if you want to buy an extended warranty or a service contract. While these two terms might seem interchangeable, they actually refer to two different types of protection. In this article, we’ll explore the difference between an extended warranty and a service contract.
Extended Warranty
An extended warranty, also known as a service plan, is a type of insurance policy that covers the repair or replacement costs of your product after the manufacturer`s warranty has expired. This type of warranty can be purchased from the manufacturer or a third-party provider, and it usually extends the coverage for a set period of time.
For example, if you purchase a new refrigerator with a one-year manufacturer’s warranty, you can buy an extended warranty that covers the repair or replacement costs for an additional one or two years. The main benefit of an extended warranty is that it provides you with peace of mind, knowing that you won’t have to pay for expensive repairs if your product breaks down after the manufacturer`s warranty has ended.
Service Contract
On the other hand, a service contract is an agreement between you and the provider that covers the cost of maintenance and repairs during the period of the contract. Unlike an extended warranty, a service contract doesn’t extend the coverage of the manufacturer`s warranty. Instead, it provides additional services beyond the warranty period, such as regular maintenance or repair services.
A service contract may be offered by the manufacturer or a third-party provider, and it can cover multiple products or services. For example, a service contract for a car may include regular oil changes, tire rotations, and other maintenance services. The cost of the contract depends on the length of the contract and the type of services provided.
Which One Should You Choose?
When it comes to choosing between an extended warranty and a service contract, it’s important to consider your needs and budget. If you’re worried about the cost of repairs after the manufacturer`s warranty has expired, an extended warranty might be a better choice for you. However, if you want to ensure that your product is properly maintained and serviced beyond the warranty period, a service contract may be a better fit.
In conclusion, an extended warranty and a service contract are two different types of protection for your products. An extended warranty covers the repair or replacement costs after the manufacturer`s warranty has expired, while a service contract provides additional maintenance and repair services beyond the warranty period. By understanding the difference between the two, you can make an informed decision on which option is best for you.