Do I need to purchase a prepaid maintenance plan for my car? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make smarter financial decisions by offering financial calculators and interactive tools as well as publishing authentic and objective content. We also allow users to conduct studies and compare data for free – so that you can make sound financial decisions. Bankrate has agreements with issuers such as, but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The deals that are displayed on this website are provided by companies that pay us. This compensation could affect how and where products appear on this website, for example for instance, the order in which they be listed within the categories of listing and other categories, unless prohibited by law. This applies to our mortgage and home equity products, as well as other home loan products. This compensation, however, does have no impact on the information we publish, or the reviews you see on this site. We do not cover the vast array of companies or financial offers that may be open to you. SHARE Westend61/Getty Images
3 minutes read. Published 13 March 2023
Written by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in helping readers in navigating the ways and pitfalls of taking out loans to buy cars. Edited by Helen Wilbers Edited by Helen Wilbers Editing for Bankrate since the end of 2022. He believes in clear information that allows readers to confidently land deals and make the best decisions for their financials. He is a specialist in small business and auto loans. The Bankrate promise
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We are compensated for placement of sponsored products and services, or through you clicking specific links that are posted on our website. Therefore, this compensation may influence the manner, place and in what order items appear within listing categories in the event that they are not permitted by law for our mortgage home equity, mortgage and other home lending products. Other factors, such as our own rules for our website and whether a product is offered in the area you reside in or is within your self-selected credit score range could also affect the manner in which products are featured on this website. We strive to offer the most diverse selection of products, Bankrate does not include specific information on every credit or financial product or service. Dealerships can offer prepaid car maintenance plans like extra warranties and credit insurance, and anti-theft devices. These aren’t necessarily an excellent bargain. The best method to determine if a prepaid maintenance plan is the right option is to study the expected maintenance costs — then compare these with the price you’re being offered. If you plan to apply the prepaid maintenance plan your auto loan It may be more sense to save a savings account for where you earn, rather than paying interest. What is a prepaid vehicle maintenance plan? The plans for car maintenance that you pay for are contracts that cover regular and planned maintenance. In contrast to other plans, they cover preventative maintenance such as tire rotations and . The manufacturer warranty or extended warranty can be able to cover any the unexpected repair. Prepaid maintenance plans may be considered when you purchase a new vehicle that doesn’t include scheduled maintenance for cars built into the retail price or when the manufacturer’s warranty is no longer valid. In either case, make certain to inquire if the offered plan can be utilized at an independent mechanic’s shop or when it’s limited to service at the dealership. Many such plans only allow servicing at the dealership selling it, limiting your options for future maintenance. Depending on the prepaid maintenance plan you are considering, maintenance may be restricted to certain intervals (for instance, oil change are only covered once each 10,000 mile). Certain prepaid plans offer services once a calendar year or once every six months. Depending on how much you drive, you may require additional maintenance paid for the vehicle. Many manufacturers, including 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 and brake pads, but others don’t. Therefore, it’s important to do your research prior to heading to the dealership. Do these plans that are prepaid for maintenance worth the price? Similar to many other aspects of the buying process, doing the math before sitting down with the dealer is essential to saving money. Check the cost of the insurance plan against the estimated price of scheduled or out-of-pocket costs during the covered period. The owner’s manual should detail the services you’ll require and when you’ll need it. Contact the service manager of your dealer and request a breakdown of scheduled maintenance costs. Also, you can consider the cost of maintenance, insurance, and other expenses. If the cost estimate for regular maintenance for your brand new vehicle for the first 30,000 miles is $400 and you pay an amount of $800, a prepaid maintenance plan for your car is not worth the money. If you are paying $250 for the plan, you will save money. You can strike a balance but remember that if you’re able to include the plan for prepaid maintenance as part of your loan, calculate how much you’ll pay in interest alongside the flat maintenance cost to figure out the total price. The pros and cons of pre-paid car maintenance plans Do not just sign up for the prepaid maintenance plan. Before you even step foot in an auto dealership, you should know the anticipated maintenance costs for the vehicles you’re considering. And keep this list of pros and cons while you make a deal. Pros Costs for covered services are set and are not changed by inflation. You may be able transfer the plan if you sell the vehicle. The value of the residual on vehicles leased could increase when you purchase a prepaid maintenance plan. Costs prepaid can be discounted in comparison to regular maintenance costs. Plans that are backed by the manufacturer are typically provided by affiliated dealerships regardless of the location. Cons Service intervals may not be as specified in the owner’s manual. Prepaid maintenance plans may cost more than the actual cost of maintenance. In many instances, you will need to get fixed at the place which you bought the vehicle from. The most common wear and tear items are not covered. It is possible to include coverage that is redundant or already included with the extended warranty. The bottom line: Prepaid maintenance plans can be negotiated — so don’t just agree to the rate offered by the dealership’s finance office. If you know the potential expense of regular maintenance you’ll be able to plan ahead and avoid the stress of deciding when and where to take your vehicle. But, it’s not the best choice when you already have a trusted mechanic or body shop or don’t plan to stay within the region where you bought the vehicle. If you incorporate an prepaid maintenance plan in your auto loan, you could pay more in interest than what the maintenance is worth. Be aware of the loan’s interest rate and don’t be afraid to . To determine whether a prepaid maintenance plan will benefit you, make the effort to study the expected cost and compare it to what the dealership provides.
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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 cars. Edited by Helen Wilbers Edited by Helen Wilbers is editing for Bankrate since the end of 2022. He is a firm believer in transparent reporting that allows readers to successfully get deals and make most appropriate choices regarding their finances. He is a specialist in small business and auto loans. Similar Articles: Auto Loans 5 minutes read March 03 2023 Auto 6 min read on Mar 02, 2023 Automobile Loans 3 min read Oct 13, 2022 Automobile Loans 4 min read Aug 22 2022
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