Chances are that you will be offered a vehicle service contract when you purchase your car. Whether you should pay money for this is not a simple question. There are numerous pros and cons to vehicle service contracts that you should consider before you make a final decision. In the end, the answer may be different for two vehicle owners because there are a number of considerations at play.
Pros of a Vehicle Service Contract
Your Vehicle’s Warranty May Not Be as Long
One reason why some experts tell you to avoid a vehicle service contract is because it duplicates the existing warranty on your car. However, when you are dealing with a used car, you will find that this is not as much of an issue. If your used car has a warranty, chances are that it is much shorter than that of a new vehicle.
Your car may be more at risk of experiencing mechanical issues when its warranty runs out, especially as the car ages. Since you want to make sure that you do not get hit with large repair bills without any kind of warranty, you may want to consider a service contract to act as an extended warranty.
Car Repairs Can Set You Back
The obvious reason for a vehicle service contract is that you want to keep your hard-earned money for yourself, as opposed to forking it over to the auto mechanic. Every time a mechanic goes under the hood of your car, you need to be prepared for it to cost money. Parts alone are expensive, and this is before you even pay for a minute of the repair person’s time. If your issue is complex, you can imagine how you could be hit with a four-figure bill. However, a service contract can help keep mechanical issues from hitting you hard in the wallet.
Routine maintenance isn’t often covered in service contracts. However, breakdowns and accident damage generally cost more than routine maintenance. Even if a service contract does not cover 100% of a mechanic’s cost, having it in place will ensure you won’t be held responsible for the entirety of the repairs.
Your Car’s Life Will Be Prolonged
As your car gets older, you’ll be faced with the choice of whether to keep putting money into it or to simply get rid of the car. If the repair bills keep mounting, you might want to consider putting that money toward a new car instead of maintaining an older one.
A service contract, though, can bring those costs down and ensure your vehicle lasts longer. Although the specifics of each contract vary, service contracts will often cover unexpected issues like mechanical breakdowns. Even though your car being in the shop will cause you some inconvenience, at least you can sleep easier knowing your car will see another day.
Peace of Mind
As much as you may love the car that you just bought, the fact is that it will need repairs at some point. While normal wear and tear isn’t often covered in service contracts, you’ll be able to focus on routine maintenance instead of worrying about how you’ll pay for unexpected issues that may arise. Knowing that the contract is in place will also help you keep your head in the case of a breakdown or accident.
The Cons of a Vehicle Service Contract
The Contract Does Not Always Cover the Repair
Everyone who purchases any kind of warranty knows that it is not always easy to use when you actually need it. While you may assume that the vehicle service contract will cover the repair no matter what it is, that is not always the case. Some service contract holders report that they submitted the claim for the repair costs and were denied.
The problem is that you never know whether the service contract will cover your repair until your car actually breaks. The only way that you would find out that your claim was denied is either after you submitted it or after your car breaks. While there is information on what is and isn’t included in the contract, a lot of times it is in the fine print. Make sure you work with your provider to understand what isn’t covered before you purchase a service contract.
Service Contracts Can Be Expensive
While your contract may cover your car repair, you may have to pay a substantial amount of money upon purchase. This can add a considerable amount to the initial price of your car. In some cases, the cost of the service contract could near the cost of the repairs that you would be avoiding.
You need to look very closely at the small print before you buy the service contract so you can do a full cost comparison. In the meantime, you should know that a service contract will not come cheap. Companies know that repair costs add up, and they price the contracts accordingly.
Some Service Contracts Cover Part of the Repair
Even if the contract does cover your specific repair, it may not be the end of the story. Your plan may only give you partial coverage. Thus, you may end up with a bill even when you were expecting none.
This could work in a couple of ways. First, the coverage could only be for a certain part or aspect of the repair. Second, your service contract could expect you to cover a part of the bill. This would work similarly to a deductible with your health insurance. Either way, you could have to pay for a contract and a repair bill.
You May Be Stuck With a Certain Shop
Not every mechanic will work with a service contract. They might not get reimbursed at their full listed rates, so they choose not to accept the plan. The company usually chooses to work with preferred mechanics who have an agreement with them, often so the business can save money on the reimbursement.
This means that you may have to choose from a list of mechanics to service your car. If you have a longstanding relationship with a trustworthy mechanic, they might not be on the list. Thus, you may need to bring your car elsewhere. You may end up with a mechanic that you do not know.
While the mechanics on the list would be reputable and certified, if you are planning to move or if you are purchasing your vehicle in an area away from your home, you might want to ensure that the allowed mechanics are nearby. It’s also something to keep in mind when traveling, as some contracts will only allow local mechanics.
It really is up to you to decide if you want a vehicle service contract. Make sure to take into account all of the pros and cons before making your choice.
