From: rjn@hpfcso.FC.HP.COM (Bob Niland)
Newsgroups: rec.audio
Subject: Re: Should I buy extended warranty on a CD changer?
Date: 30 Jul 92 02:24:20 GMT
Organization: Hewlett-Packard/WSY Ft.Collins,CO,USA

In rec.audio, cole@unix.SRI.COM (Susan Cole) writes:

> ...Tuesday 7/28, which gives me a day to decide
> whether to buy the extended warranty.

Too late for you, but perhaps of value to someone else...


Subject: Extended warranties for camcorders ...
From: rjn@hpfcso.FC.HP.COM (Bob Niland)
Date: Thu, 19 Dec 1991 00:20:40 GMT
Newsgroups: rec.video

My first test on extended warranties (EW) for consumer products is:

  * Is it less than 4% of purchase price per year?  Use the "future value"
    of the payment(s), at a reasonable interest rate, to compute the
    percentage.  4% is approximately what HP charges for return-to-HP
    service on our computer products (and the charge is periodic and doesn't
    start until the warranty expires).

Almost all EWs on consumer products exceed 4% by a substantial amount.
Furthermore, since you often pay a lump sum up front, the seller is getting
the use of your money, plus a free ride for during the manufacturer's
warranty period (which is when the bulk of the failures occur anyway).

If the contract passes this test, then check into:

 * Actual legal terms & conditions - many EWs are only described in brief
   flyers, and the retailer often cannot provide the full terms of what you
   are agreeing to (which may differ from what you are being told verbally,
   and may even differ from the flyer).
 * Who underwrites the contract?  Will they be around in 3 years?
 * Who services the product?  Are they factory-trained and authorized?
 * Is the contract for "repair or replace"?  If so, what constitutes a
   "replacement" - and can you veto it?
 * What is your recourse in cases of extreme repair delays, or "repairs"
   that aren't or damage your equipment even further.
 * What does the retailer have to do to "register" your EW?  How can you
   confirm that this step actually happens?

Generally, based on typical EW prices, if you were to invest the contract-
equivalent amount of money on each product purchase, you would shortly have
about ten times what you need to replace a product by the time the first one
fails.

Consumer EWs are primarily a way for retailers and their salespeople to
generate extra profits and commissions, respectively.  They rely on the the
following:
- consumer electronics has a very low failure rate;
- if it fails, it will probably fail on the manufacturer's dime;
- if it fails later, you will probably have forgotten the EW;
- if you remember, you won't be able to locate the paperwork;
- if you find the papers, you won't be able to locate the provider;
- if you locate the provider, they will hassle you until you give up;
- if you don't give up, they will either fix your device beyond repair, or
- insist on replacing it with something that may or may not be "equivalent"
  but surely will be lots cheaper than today's models.

Regards,                                              Hewlett-Packard
Bob Niland      Internet: rjn@FC.HP.COM               3404 East Harmony Road
                UUCP: [hplabs|hpfcse]!hpfcrjn!rjn     Ft Collins CO 80525-9599

This article represents only the opinion[s] of its author, and is not an
official or unofficial position of, or statement by, the Hewlett-Packard
Company.  The text is provided for informational purposes only.  It is
supplied without warranty of any kind.