Businesses offer guarantees and warranties for various products and services, but it is often times unclear as to what they mean. Guarantees and warranties, by nature, are forms of consumer protection; however, they are not the same.
In an attempt to demonstrate confidence in their product, a company will advertise a guarantee to show their belief in their product or service.
Guarantees do not come as an additional cost, whereas a consumer will have to pay for a warranty on top of purchasing a product. When a company guarantees that their products or services will do exactly what they claim it will, a consumer is protected for a period of time if the company falls short of their promise. Guarantees typically imply that a consumer will be compensated for a defective product.
A guarantee is essentially a legal contract that does not come at an extra charge. The company is promising that they will replace (or sometimes repair) your purchased item if it does not perform correctly.
Guarantees can be reassuring when buying a product, but make sure you know exactly what is covered, how long it is covered, and what terms and conditions exist. Sometimes guarantees only cover specific parts of a product, so it is important to read the small print of the guarantee.
When a company offers a warranty to their customers, they are essentially offering an insurance plan on a product or service. Unlike the guarantee, warranties cost money and also only last as long as the proposed period of time states.
A warranty does not always mean a customer will be reimbursed if their product breaks or is damaged. Generally, but not always, a warranty covers the costs to repair the item. Before purchasing the warranty, it is a good idea to see if you will be compensated for a product or service, or if it will simply be repaired.
Warranties are also viewed as legal contracts. Companies agree to repair products, after the warranty is purchased, for a limited period of time.
Purchasing a Warranty:
If a product comes with the option of purchasing a warranty that does not necessarily mean that the item is going to break. Warranties can be rather expensive, so if you do not think the product is worth buying an “insurance plan,” than don't buy the warranty.
Before shelling out the cash to buy a warranty, figure out if the cost to replace the item is worth buying a warranty for. If the difference in replacing the product and buying the warranty is minimal, then you can probably make do without the extra costs of buying a warranty.