| Bankruptcy and Guarantees |
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Just how valuable is a guarantee? Be careful of what you ask for, because when purchasing anything from cars and electronics, to fitness club memberships; an important part of the purchase is the guarantee or warranty offered with the product. Some products offer a money-back guarantee if you are not satisfied, while others include a factory warranty, which you can choose to extend for an additional cost. These guaranties or warranties give the purchaser a sense of security, but the problem arises when we pay more for an extended warranty, and the warranty is not what we bargained for.
There are a growing number of consumers who find out that their costly guarantee or warranty is worthless. Sometimes this occurs when the warranty does not cover the defect or destruction to the product, and thus the warranty is useless. Other times, the price of the warranty is higher than simply fixing the product, and thus the warranty is ends up being more costly than the repairs. Finally, there is the growing realization that the manufacturer or warranty provider may file bankruptcy, in which case, the warranty will be void and a waste of money upfront. When making a purchase, I would suggest that you evaluate just how likely a repair or replacement will be over time versus the cost of a warranty. Most importantly, think about the source—the reliability of the company making the guarantee. Remember a guarantee means nothing without a sound, financially responsible company backing it up. I guarantee it. |