When purchasing an appliance, electronic equipment or a car, you may be offered an additional contract to handle repairs on your item for a period of time, also known as a service contract or extended warranty.

Most consumers do a great deal of comparison shopping before making a major purchase and feel confident about the final decision when making the purchase. However, many of us are not familiar with the terms and conditions of service contracts.

Before committing to any long-term contract, consider the purchase price of the item. If the purchase price of the item is relatively low, chances are a service contract is not necessary. Generally, most household budgets can allow for an unexpected low cost repair of $100 or $200 every so often.

Would you buy car insurance from some person on a street corner? The same should hold true when making the decision to purchase an extended warranty. You will want to know who exactly will honor the contract should the need arise.

It is extremely important to know exactly what the service contract will and will not cover. Most of us rely on the salesperson suggesting the contract to answer these questions; however, it is doubtful they have read the contract.

Ask if you can have a copy of the contract to take home and review. This will eliminate the pressure of having the salesperson standing over you while you try to decipher the exact terms of the extended warranty. If they will not provide a copy of the contract for you to review at home, that should send up a red flag regarding the purchase of the service contract.

Many times consumers are led to believe the extended warranty must be purchased at the time of the sale this is not necessarily true. By doing some research, you may find a company that will offer pricing and terms that fit your budget. You may also find that some extended warranty companies will offer the contract up to one or two years after the initial purchase.

One final note, the government offers many free to low cost pamphlets that cover the ins and outs of extended warranties. Use the following in your internet browser search field for more information, consumer information center Pueblo, Co.