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 decisions by offering financial calculators and interactive tools, publishing original and objective content. This allows you to conduct research and compare information for free to help you make sound financial decisions. Bankrate has partnerships with issuers such as, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn money The products that appear on this site come from companies that pay us. This compensation can affect the way and when products are featured on this website, for example for instance, the order in which they may appear within the listing categories and other categories, unless prohibited by law for our mortgage, home equity and other home loan products. This compensation, however, does have no impact on the information we publish, or the reviews you read on this site. We do not include the universe of companies or financial offerings that could be available to you. SHARE Westend61/Getty Images
3 min read Read Published March 13, 2023
Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers with the ways and pitfalls of taking out loans to buy a car. Edited by Helen Wilbers Edited by Helen Wilbers has been editing for Bankrate from late 2022. He is a firm believer in transparent information that allows readers to confidently find deals and make the best choices for their finances. He specializes in small business and auto loans. The Bankrate promise
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We are compensated in exchange for the placement of sponsored products and, services, or through you clicking certain links posted on our site. So, this compensation can affect the way, location and in what order products appear within listing categories, except where prohibited by law. This is the case for our mortgage or home equity products, as well as other home loan products. Other factors, like our own proprietary website rules and whether or not a product is offered in your region or within your own personal credit score could also affect the manner in which products are featured on this website. We strive to offer an array of offers, Bankrate does not include specific information on every financial or credit product or service. Dealerships will offer prepaid car maintenance plans like extra warranties and credit insurance, and anti-theft tools. These aren’t necessarily a bad bargain. However, the most effective way to determine whether a pre-paid maintenance plan is the right option is to investigate the anticipated maintenance costs, and then evaluate them against the price you’re given. If you’re planning to apply the prepaid maintenance plan your auto loan It may be more sense to instead keep an account in savings where you earn, rather than paying interest. What is a prepaid car maintenance plan? Prepaid car maintenance plans cover regular and planned maintenance. Contrary to the other types of plans , they only pay for preventative maintenance, like tire rotations and . The manufacturer warranty or extended warranty will still provide for the unexpected repair. A maintenance plan that is prepaid could be considered when you purchase a new vehicle that doesn’t include scheduled maintenance for cars built into the retail price or when that the manufacturer’s warranty is no longer valid. In either case, make sure to ask whether the plan offered is able to be utilized by an independent mechanic’s shop or the plan is restricted to service from the dealers. Many such plans only allow servicing at the dealership selling it, limiting the options you have for future maintenance. Based on the prepaid maintenance plan that you are considering, maintenance may be limited to specific intervals (for instance, oil change only cover each 10,000 mile). Some prepaid plans only provide services once per calendar year, or every six months, which means that based on how often you travel, you could require additional maintenance that is paid for the car. A variety of manufacturers — such as Jaguar, Toyota, BMW, Volvo, MINI and Land Rover — offer prepaid maintenance plans. Certain of these plans also cover wear and tear items including windshield wiper blades as well as brake pads, but others don’t. Therefore, it’s critical to research before heading to the showroom. Are these maintenance plans worth the price? Similar to many other aspects of the buying process taking the time to calculate the cost prior to going to the dealer is essential to getting the most value for money. Check the cost of the plan with the estimated cost of cost of the scheduled or out-of-pocket expenses during the covered period. The owner’s manual should detail the types of maintenance you’ll need as well as when you’ll need it. Contact the service manager of your dealer and request a breakdown of scheduled maintenance costs. It is also worth considering the cost of insurance, maintenance, and other expenses. If the cost estimate for regular maintenance for your brand new vehicle for the first 30000 miles is $400, and you are paying $880 for the service, then a prepay maintenance plan for your car is not worth the cost. If you are paying 250 for the program you save money. You could find a balance, but remember that if you’re able to include the prepaid maintenance plan as part of your loan then calculate the amount you’ll be paying in interest along with the cost of maintenance per month to estimate the total price. The pros and cons of pre-paid car maintenance plans Don’t just agree to the prepaid maintenance plan. Before you even step foot in a dealer, be aware of the maintenance fees expected for the vehicles you’re considering. Be sure to keep these pros and cons in mind when you negotiate. Pros Prices for covered services are locked in and not changed by inflation. You may be able transfer the plan if you decide to sell your vehicle. Residual value on leased vehicles might increase with a prepay maintenance plan. Costs prepaid can be discounted compared to normal maintenance costs. Plans that are backed by the manufacturer are typically offered by dealerships that are affiliated, regardless of where they are located. Cons Service intervals may not match those listed in the manual of the owner. Prepaid maintenance plans may be more expensive than the actual price of maintenance. In most instances, you will need to get fixed at the place where you purchased the car. Common wear-and-tear items are generally not covered. May 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 office of the dealership. If you are aware of the costs of regular maintenance, you can prepare ahead and eliminate the hassle of making a decision about when and where you will take your vehicle. However, it’s not the ideal choice for those who already have a reliable body shop or mechanic, or don’t plan to stay within the region where you purchased your car. If you incorporate the maintenance plan you have prepaid into your auto loan, you could pay more in interest than the maintenance plan is worth. Be aware of the interest rate on your loan, and don’t hesitate to . To determine whether a prepaid maintenance plan is beneficial to you, you should take the time to study the expected cost and compare it to 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 in navigating the ways and pitfalls of taking out loans to purchase cars. Edited by Helen Wilbers Edited by Helen Wilbers has been editing for Bankrate from late 2022. He is a firm believer in the clarity of reporting that can help readers confidently land deals and make the most appropriate choices regarding their finances. He is a specialist in small business and auto loans. Similar Articles: Auto Loans 5 min read Mar 03 2023 Auto 6 min read Mar 02 2023 auto Loans 3 min read October 13 2022. Auto Loans 4 minutes read Aug 22, 2022
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