Should I purchase a prepay 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 providing you with interactive tools and financial calculators as well as publishing authentic and objective content. We also allow you to conduct research and compare data for free and help you make financial decisions with confidence. Bankrate has partnerships with issuers, including but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make money The products that appear on this website are provided by companies that compensate us. This compensation may impact how and when products are featured on this website, for example the sequence in which they appear within the listing categories and other categories, unless prohibited by law. This applies to our mortgage and home equity products, as well as other home lending products. This compensation, however, does affect the content we publish or the reviews that you read on this site. We do not include the vast array of companies or financial offers that may be available to you. SHARE: Westend61/Getty Images
3 min read Read Published March 13, 2023
Written by Rebecca Betterton 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 borrowing money to purchase an automobile. Edited by Helen Wilbers Edited by Helen Wilbers is editing for Bankrate since the end of 2022. He values clear reporting that helps readers easily find deals and make the most appropriate choices regarding their finances. He is a specialist in auto and small business loans. The Bankrate guarantee
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We are compensated in exchange for the placement of sponsored products and services, or when you click on specific links that are posted on our site. Therefore, this compensation may impact how, where and in what order items are displayed within the categories of listing and categories, unless it is prohibited by law. We also offer mortgage, home equity and other home loan products. Other elements, such as our own proprietary website rules and whether or not a product is offered in your area or at your self-selected credit score range could also affect how and where products appear on this site. Although we try to provide a wide range offers, Bankrate does not include specific information on each financial or credit item or service. Dealerships offer prepaid auto maintenance plans like warranty extensions, insurance for credit, as well as anti-theft devices. They are not necessarily an excellent bargain. The most effective way to determine 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 apply the prepaid maintenance plan your auto loan, it may make more sense to keep an account in savings where you earn, rather than pay, interest. What is a prepaid car maintenance plan? Car maintenance programs that are prepaid cover regular and planned maintenance. In contrast to other plans, they provide preventative maintenance such as tire rotations and . The warranty provided by the manufacturer or extended warranty may provide for unexpected repairs. A prepaid maintenance plan may be considered when you purchase an automobile that does not have scheduled car maintenance built into the retail price , or when that the manufacturer no longer covers. In either case, make certain to inquire if the plan offered is able to be utilized at an independent mechanic’s workshop or the plan is restricted to services in the dealer. A lot of these plans will only permit service at the dealer selling the plan which limits the options you have to future maintenance. Depending on the plan for prepaid maintenance you are considering, maintenance might be restricted to certain intervals (for instance, oil changes only cover every 10,000 miles). Certain prepaid plans will 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. Several manufacturers — like Jaguar, Toyota, BMW, Volvo, MINI and Land Rover — offer Prepaid maintenance plans. Certain of these plans also include wear-and-tear items including windshield wiper blades and brake pads, however others don’t. Therefore, it’s essential to conduct research prior to going 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 key to making savings. Compare the price of the plan to the estimated cost of the cost of the scheduled or out-of-pocket expenses within the time frame covered. Your owner’s manual should list the types of maintenance you’ll need as well as the time you’ll require it. Contact the service manager of your dealer and request details of maintenance costs. You can also by considering the cost of insurance, maintenance and other costs. If the cost estimate for regular maintenance of your new car’s first 30,000 miles is $400 and you are paying $880 for the service, a prepay car maintenance plan is ultimately not worth it. If you pay 250 for the program you can save money. You can strike a balance but remember that if you’re able to include the plan for prepaid maintenance as part of the loan, calculate how much you’ll have to pay in interest in addition to the maintenance fee to figure out the full cost. Pros and cons of prepaid car maintenance plans Do not just sign up for a prepaid maintenance plan. Before you step foot into a dealership, know the anticipated maintenance costs for the vehicles you’re considering. Be sure to keep the pros and cons as you negotiate. Pros Costs for covered services are fixed and cannot be changed by inflation. It is possible transfer the plan if you decide to sell your vehicle. The residual value of leased vehicles might increase with a prepay maintenance plan. Prepaid costs may be discounted compared to normal maintenance costs. Manufacturer-backed plans are usually offered by dealerships that are affiliated, regardless of the location. Cons Service intervals may not be as specified in the manual of the owner. Prepaid maintenance plans can be more expensive than the actual price of maintaining. In many instances, you need to have your car repaired at the dealer which you bought the vehicle from. Most wear-and-tear issues are not covered. May include coverage that is unnecessary or is already part of an the extended warranty. The bottom line Prepaid maintenance plans can be negotiated -therefore don’t be content to agree to the rate provided by the finance office of the dealership. If you are aware of the costs of regular maintenance, you can plan ahead and eliminate the hassle of deciding when and where to transport your car. It’s not the most ideal option if you already have a trusted mechanic or body shop or do not plan on staying in the same area that you bought the vehicle. Also, if you include a prepaid maintenance plan into your auto loan, you could pay more in interest than what the maintenance will be worth. Be aware of your loan’s rate of interest and do not hesitate to . To determine if a prepaid maintenance plan will benefit you, make the effort to research expected costs and then compare them to the plans the dealership has to offer.
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Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers to navigate the details of borrowing money to purchase cars. Edited by Helen Wilbers Edited by Helen Wilbers has been editing for Bankrate since the end of 2022. He is a firm believer in transparent reporting that allows readers to easily find deals and make the best choices for their money. He is a specialist in auto and small business loans. Related Articles Auto Loans 5 minutes read March 03 2023 Auto 6 minutes read Mar 02 2023 Auto Loans 3 min read October 13, 2022. Auto Loans 4 min read August 22, 2022
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