Do I need to purchase 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 offering interactive tools and financial calculators, publishing original and objective content. We also allow users to conduct studies and compare information for free and help you make informed financial decisions. Bankrate has agreements with issuers including, but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The deals that are displayed on this site come from companies who pay us. This compensation may impact how and when products are featured on the site, such as, for example, the order in which they appear within the listing categories, except where prohibited by law. This applies to our mortgage and home equity products, as well as other products for home loans. This compensation, however, does have no impact on the information we provide, or the reviews that you see on this site. We do not include the universe of companies or financial deals that might be open to you. SHARE: Westend61/Getty Images
3 minutes read. Published 13 March 2023
Authored by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers to navigate the ways and pitfalls of borrowing money to purchase an automobile. Edited by Helen Wilbers Edited by Helen Wilbers Editing for Bankrate from late 2022. He is a firm believer in transparent information that allows readers to successfully find deals and make the best decisions for their financials. He is a specialist in small and auto loans. The Bankrate guarantee
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So, this compensation can affect the way, location and when products are listed, except where prohibited by law for our mortgage or home equity products, as well as other home lending products. Other elements, such as our own rules for our website and whether or not a product is available in the area you reside in or is within your self-selected credit score range may also influence the way and place products are listed on this site. While we strive to provide the most diverse selection of products, Bankrate does not include information about every financial or credit product or service. Dealerships can offer prepaid car maintenance plans, such as extended warranties, credit insurance and anti-theft tools. They’re not always an ideal deal. However, the best way to decide if a prepaid maintenance plan is the right option is to study the expected maintenance costs — then examine them against the cost you’re being offered. If you’re planning to include the prepaid maintenance plan your auto loan, it may make more sense to keep a savings account for where you earn, rather than make payments for interest. What is a prepaid car maintenance plan? The plans for car maintenance that you pay for provide the scheduled maintenance and anticipated maintenance. Unlike , they only pay for preventative maintenance, like tire rotations , and . The manufacturer warranty or extended warranty may be able to cover any the unexpected repair. A prepaid maintenance plan may be considered when you purchase a new vehicle that doesn’t include scheduled maintenance for cars built into the retail price or in the event that the manufacturer doesn’t cover. In either case, make certain to inquire if the plan you are offered can be utilized at an independent mechanic’s shop or the plan is restricted to servicing at the dealership. Some plans allow servicing at the dealership selling it, limiting your options for maintenance in the future. Depending on the prepaid maintenance plan that you are considering, maintenance might be restricted to certain intervals (for instance, oil change only cover every 10,000 miles). Certain prepaid plans cover services once a calendar year, or every six months. Depending on how often you travel, you could require additional maintenance paid for the car. Many manufacturers, including Jaguar, Toyota, BMW, Volvo, MINI and Land Rover — offer Prepaid maintenance plans. Some of these factory plans also include wear-and-tear items, such as windshield wiper blades as well as brake pads. However, some don’t, so it’s critical to research before heading to the dealership. Do these plans that are prepaid for maintenance worth the cost? Like many aspects of the car-buying process, doing the math before going to the dealer is essential to getting the most value for money. Compare the price of the insurance plan against the estimated cost of expenses that are scheduled or out of pocket within the time frame covered. The owner’s manual will list the maintenance you’ll need and the times you’ll need it. Call the dealer service manager and request a breakdown of scheduled maintenance expenses. Also, you can consider the cost of insurance, maintenance, and other expenses. If the cost estimate for regular maintenance of your new car’s first 30,000 miles is $400 and you’re paying an amount of $800, a prepaid maintenance plan for your car is not worth the cost. If you’re willing to pay $25 for the service you’ll save money. You can make a deal, but keep in mind: If you include the prepaid maintenance plan part of your loan consider the amount you’ll be paying in interest along with the flat maintenance cost to figure out the total cost. Pros and cons of prepaid car maintenance plans Do not just sign up for a prepaid maintenance plan. Before you step foot into an auto dealership, you should know the expected maintenance costs for the vehicle you’re considering. And keep this list of pros and cons while you’re negotiating. The benefits of covered services are that they are locked in and not changed by inflation. It is possible transfer the plan if you decide to sell your vehicle. The value of the residual on vehicles leased could increase when you purchase a prepaid maintenance plan. The cost of prepaid maintenance may be reduced when compared to the normal maintenance cost. Plans that are backed by the manufacturer are typically covered by affiliated dealerships, regardless of the location. Cons Service intervals may not be as specified in the owner’s manual. Prepaid maintenance plans can be more expensive than the actual cost of maintaining. In many cases, you must get serviced at the dealership where you purchased the car. Common wear-and-tear items are generally not covered. It is possible to include coverage that is redundant or is already covered by an extended warranties. The bottom line: Prepaid maintenance plans are a matter of negotiation- so don’t just agree to the rate that is offered by the finance office of the dealership. If you know the potential cost of regular maintenance, you can plan ahead and avoid the stress of making a decision about when and where you will drive your vehicle. It’s not the ideal choice when you already have a reliable mechanic or body shop , or are not planning to remain in the area where you purchased your car. If you incorporate an prepaid maintenance plan in your auto loan it could cost you more in interest than what the maintenance is worth. Be aware of your interest rate on your loan and don’t be afraid to . To determine if a prepaid maintenance plan can benefit you, you should take the time to research expected costs and compare them with what the dealership has to offer.
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The article was written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers with the ways and pitfalls of taking out loans to purchase an automobile. Edited by Helen Wilbers Edited by Helen Wilbers Editing for Bankrate since late 2022. He values clear reporting that helps readers confidently find deals and make the most informed decisions regarding their money. He is a specialist in small business and auto loans. Related articles: Auto Loans 5 minutes read in Mar 03 2023 Auto 6 min read March 02, 2023 auto Loans 3 min read Oct 13, 2022 Auto Loans 4 minutes read Aug 22, 2022
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