Should I purchase a prepay maintenance plan for my car? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make better financial decisions by providing you with financial calculators and interactive tools as well as publishing authentic and objective content. We also allow you to conduct research and compare data for free and help you make sound financial decisions. 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 products that appear on this site are from companies who pay us. This compensation could affect how and where products appear on this site, including, for example, the order in which they be listed within the categories of listing in the event that they are not permitted by law. This applies to our mortgage and home equity products, as well as other home lending products. However, this compensation will not influence the information we provide, or the reviews that you read on this site. We do not include 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
Authored by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in helping 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 since the end of 2022. He values clear information that allows readers to confidently get deals and make best choices for their finances. He is a specialist in auto and small business loans. The Bankrate promise
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We are compensated in exchange for the promotion of sponsored goods and services or by you clicking on specific links that are posted on our site. So, this compensation can influence the manner, place and in what order items are listed in the event that they are not permitted by law. This is the case for our mortgage home equity, mortgage and other home lending products. Other elements, such as our own proprietary website rules and whether or not a product is available within your region or within your personal credit score may also influence how and where products appear on this website. Although we try to provide an array of offers, Bankrate does not include information about each financial or credit item or service. Dealerships offer prepaid auto maintenance plans like warranty extensions, insurance for credit and anti-theft devices. They’re not always an ideal bargain. The most effective way to determine whether a pre-paid maintenance plan is the best option is to research expected maintenance costs — then compare these with the price you’re given. If you plan to include the prepaid maintenance plan to your auto loan it might make more sense to keep an account in savings where you earn, and not paying interest. What is a prepay car maintenance plan? Car maintenance programs that are prepaid are contracts that cover regular and planned maintenance. Contrary to the other types of plans , they only provide preventative maintenance like tire rotations and . The warranty of the manufacturer or extended warranty can cover unexpected repairs. A maintenance plan that is prepaid could be discussed when purchasing an automobile that does not include scheduled car maintenance into the retail price , or in the event that the manufacturer’s warranty is no longer valid. Whatever the case, you should be sure to inquire whether the plan offered is able to be utilized by an independent mechanic’s shop or the plan is restricted to service at the dealership. Many such plans only allow service at the selling dealership which limits the options you have to future maintenance. Depending on the prepaid maintenance plan you are looking at, maintenance could be restricted to certain intervals (for instance, oil change only cover at intervals of 10,000 miles). Certain prepaid plans offer services once a calendar year or every six months, which means that based on the amount you drive, you may require additional maintenance that is paid for the vehicle. Many manufacturers, such as Jaguar, Toyota, BMW, Volvo, MINI and Land Rover — offer Prepaid maintenance plans. Certain of these plans also include wear-and-tear items like windshield wiper blades or brake pads, but 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? Similar to many other aspects of buying a car, doing the math before sitting down with the dealer is key to making savings. Examine the cost of the insurance plan against the estimated price of scheduled or out-of-pocket costs within the time frame covered. The owner’s manual should detail the services you’ll require and the times you’ll need it. Call the dealer service manager and request an overview of the scheduled maintenance costs. Also, you can consider the cost of insurance, maintenance and other costs. If the estimated cost for regular maintenance for your brand new car for its first 30000 miles is $400, and you’re paying an amount of $800, a prepay car maintenance plan is ultimately not worth the money. If you pay $250 for the plan, you’ll save money. You could find a balance, but remember when you add 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 estimate the full cost. The pros and cons of prepaid car maintenance plans Don’t simply sign up to an prepaid maintenance program. Before you even step foot in a dealership, know the anticipated maintenance costs for the cars you’re interested in. Keep this list of pros and cons when you negotiate. Pros Prices for covered services are fixed and cannot be increase due to inflation. It is possible to transfer the plan once you sell the vehicle. The value of the residual on vehicles leased might increase with a prepay maintenance plan. The cost of prepaid maintenance may be reduced in comparison to regular maintenance costs. Plans that are backed by the manufacturer are typically offered by dealerships that are affiliated, regardless of location. Cons Service intervals may not match those listed in the manual of the owner. Prepaid maintenance plans may cost more than the actual price of maintenance. In many instances, you will need to get repaired at the dealer where you purchased the car. 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 are negotiable — so don’t just agree to the price provided by the finance department of the dealership. If you’re aware of the cost 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 body shop or mechanic, or are not planning to remain in the area where you purchased the car. If you incorporate a prepaid maintenance plan into your auto loan, you could pay more in interest than the maintenance is worth. Be mindful of your loan’s interest rate and do not hesitate to . To determine whether 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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The article was written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers with the details of borrowing money to buy cars. Edited by Helen Wilbers Edited by Helen Wilbers has been editing for Bankrate since the end of 2022. He values clear reporting that helps readers confidently find deals and make the most appropriate choices regarding their finances. He specializes in small and auto loans. Similar Articles: Auto Loans 5 minutes read March 03 2023 Auto 6 minutes read Mar 02 2023 Auto Loans 3 min read Oct 13, 2022. Auto Loans 4 min read Aug 22 2022
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