Should I get a prepaid maintenance plan for my vehicle? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial choices by providing you with financial calculators and interactive tools as well as publishing authentic and objective content, by enabling users to conduct research and compare information at no cost to help you make financial decisions with confidence. Bankrate has agreements with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The deals that are displayed on this site come from companies that pay us. This compensation may impact how and when products are featured on this site, including, for example, the order in which they may be listed within the categories of listing, except where prohibited by law for our mortgage or home equity, and also other home lending products. But this compensation does affect the information we provide, or the reviews that you read on this site. We do not contain the universe of companies or financial offers that may be available to you. SHARE Westend61/Getty images
3 min read Read Published 13 March 2023
Authored by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers to navigate the ins and outs of securely taking out loans to buy cars. Edited by Helen Wilbers Edited by Helen Wilbers has been editing for Bankrate from late 2022. He believes in clear information that allows readers to confidently get deals and make most appropriate choices regarding their finances. He is a specialist in small business and auto loans. The Bankrate guarantee
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So, this compensation can affect the way, location and when products appear within listing categories, except where prohibited by law for our mortgage home equity, mortgage and other home lending products. Other factors, such as our own website rules and whether the product is available within your area or at your own personal credit score can also impact how and where products appear on this site. While we strive to provide the most diverse selection of products, Bankrate does not include specific information on each financial or credit item or service. Dealerships will offer prepaid car maintenance plans like extra warranties and credit insurance, as well as anti-theft tools. They are not necessarily an excellent deal. However, the most effective way to determine whether a prepaid maintenance program is the right choice is to study the expected maintenance costs, and then evaluate them against the price you’re offered. If you’re looking to include the prepaid maintenance plan your auto loan, it may make more sense to instead keep a savings account for where you earn, not pay, interest. What is a prepaid vehicle maintenance plan? The plans for car maintenance that you pay for are contracts that cover the scheduled maintenance and anticipated maintenance. Unlike , they only pay for preventative maintenance, like tire rotations and . The warranty of the manufacturer or extended warranty will still provide for the unexpected repair. A prepaid maintenance plan may be discussed when purchasing new vehicles that don’t include scheduled car maintenance into the retail price or when the manufacturer doesn’t cover. In either case, make sure to inquire whether the offered plan can be used at an independent mechanic’s workshop or if it is limited to servicing in the dealer. Some plans allow servicing at the dealership selling it which limits your options to future maintenance. In the case of the prepaid maintenance plan that you are considering, maintenance may be limited to specific intervals (for example, oil changes only being covered every 10,000 miles). Certain prepaid plans provide services once per calendar year or every six months, which means that based on the amount you drive, you may need additional paid maintenance on the car. Many manufacturers, such as Jaguar, Toyota, BMW, Volvo, MINI and Land Rover — offer pre-paid maintenance plans. Some of these factory plans also come with wear-and-tear products like windshield wiper blades or brake pads, but others don’t. Therefore, it’s important to do your research prior to heading to the showroom. Are these maintenance plans worth the price? Similar to many other aspects of buying a car making the calculations prior to meeting with the dealer is key to saving money. Check the cost of the insurance plan against the estimated cost of the cost of the scheduled or out-of-pocket expenses during the covered period. The owner’s manual should detail the services you’ll require and the times you’ll need it. Call the dealer service manager and ask for details of maintenance expenses. Also, you can consider the cost of maintenance, insurance and other costs. If the cost estimate for scheduled maintenance of your new car’s first 30000 miles is $400, and you are paying $880 for the service, a prepaid car maintenance plan is ultimately not worth the cost. If you are paying $25 for the service, you’ll save money. You can make a deal, but keep in mind: If you include the prepaid maintenance plan as part of the loan then calculate the amount you’ll be paying in interest along with the flat maintenance cost to get an idea of the total cost. The pros and cons of prepaid car maintenance plans Do not just sign up for a prepaid maintenance plan. Before you even step foot in a dealer, be aware of the maintenance fees expected for the vehicle you’re looking at. And keep these pros and cons in mind when you’re negotiating. The benefits of covered services are that they are fixed and cannot be increased by inflation. It is possible to transfer the plan once you sell the vehicle. The residual value of leased vehicles could increase when you purchase a prepaid maintenance plan. Costs prepaid can be discounted compared to normal maintenance costs. Manufacturer-backed plans are usually covered by affiliated dealerships, regardless of location. Cons Service intervals may not match those listed in the owner’s manual. Prepaid maintenance plans may be more expensive than the actual price of maintenance. In many instances, you need to have your car serviced at the dealership which you bought the vehicle from. Most wear-and-tear issues are not covered. It is possible to include coverage that is redundant or is already covered by an extended warranties. The bottom line is that prepaid maintenance plans are a matter of negotiation- so don’t just agree to the rate that is offered by the finance department of the dealership. If you are aware of the expense of regular maintenance you’ll be able to plan ahead and eliminate the hassle of deciding when and where to take your vehicle. It’s not the best choice when you already have a trusted body shop or mechanic, or are not planning to remain in the same area that you bought the vehicle. And if you wrap the maintenance plan you have prepaid into your auto loan it could cost you more interest than the maintenance is worth. Be aware of your loan’s interest rate and don’t be afraid to . If you want to determine whether a prepay maintenance plan can benefit you, make the effort to research expected costs and then compare them to the plans the dealership provides.
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Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers to navigate the ways and pitfalls of borrowing money to purchase a car. Edited by Helen Wilbers Edited by Helen Wilbers has been editing for Bankrate since the end of 2022. He values transparent reporting that allows readers to confidently land deals and make the most appropriate choices regarding their financial situation. He specializes in small and auto loans. Related articles: Auto Loans 5 minutes read in Mar 03 2023 Auto 6 minutes read March 02 2023 Auto Loans 3 min read Oct 13, 2022 Auto Loans 4 min read August 22 2022
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