If your existing vehicle is already covered by the manufacturer`s warranty, this is a good reason not to purchase a vehicle maintenance contract. As already mentioned, it`s all about your personal willingness to take risks at this point. Overall, the term “extended warranty” is incorrectly used to refer to a vehicle maintenance contract. There are a handful of direct consumer companies that sell vehicle service contracts, and chances are you`ve heard from their informants, received calls from them, or received a written letter saying, “Your vehicle is not covered, get our products!” These companies can offer good products, but we strongly recommend that you read the Better Business Bureau reviews for each company you are considering. Of all the vehicle service contract providers we`ve reviewed, Endurance is the one we recommend the most. In fact, we`ve rewarded it overall for its extensive repair network, excellent customer service, the fact that it`s directly related to the repair shop, and the number of different coverage options it offers, from a powertrain warranty to a bumper-to-bumper warranty. It is crucial that you read the contract carefully before signing a vehicle maintenance contract. In the contract, you can see which repairs the administrator excludes. The last thing you want to do is sign a service contract, only to go to the repair shop one day and have to pay the bill because what broke was not covered. However, there are subtle differences between vehicle maintenance contracts and extended warranties, even if they are largely the same. The main difference is that service contracts do not literally extend a manufacturer`s warranty – only the manufacturer can do this. Instead, they mimic the factory warranty.
Sometimes they offer additional coverage that is not included in the manufacturer`s warranty. This ties in with the third reason why people don`t buy service contracts, they`re just too expensive. 29% of respondents said that vehicle maintenance contracts are simply not worth the money, which makes a lot of sense. Dealers typically increase their vehicle maintenance contracts by 200 or 300 percent, which means that what would cost them $300 to buy wholesale will be sold to you for $1,000 or more. According to a recent BBB study of eastern and southwestern Missouri and southern Illinois, there has been an alarming increase in complaints about companies selling vehicle service contracts to consumers nationwide. Now that we know the difference between a vehicle maintenance contract and an extended warranty, the question arises as to whether vehicle maintenance contracts are worth it. To answer this question, we need to break down the two types of vehicles (new and used) and also discuss the pricing of vehicle maintenance contracts. The FTC points out that many auto service contract offers may not come from companies associated with the dealership or automaker.
Consumers also told BBB that they believe senders and advertisements are misleading. Vehicle repairs that they believed were covered by policies purchased through vehicle maintenance contract marketing companies are sometimes later rejected by policy administrators, which are separate companies. As a result, consumers can spend hundreds or thousands of dollars on repair costs that they thought would be covered by their policies, in addition to the cost of covering the vehicle`s maintenance contract. Since the new vehicle is covered by the manufacturer`s warranty, administrators can evaluate their new car maintenance contracts more favorably. Unfortunately, most dealers add an incredible markup to these products, so you`d be hard-pressed to consider them “cheap” if you`re sitting in the dealership`s finance and insurance office, but be aware that most extended service contracts for new cars only cost a few hundred dollars wholesale. You can use vehicle maintenance contracts at any time if your vehicle needs a repair covered by your contract. Note that all vehicle maintenance contract providers offer multiple levels of coverage, so not all service contracts cover all repairs. If you want to be fully insured, you`ll probably want to get a contract that offers exclusion coverage. This means that the contract covers everything except the parties listed as exclusions in the contract. While we recommend Endurance, we invite you to request quotes from various warranty providers to ensure you get the right coverage at the best price. It`s always a good idea to ask for a sample contract so you can read the fine print and better understand what parts are covered and what counts as normal wear and tear.
Some companies use the U.S. Postal Service to send documents to consumers informing them that their manufacturer`s service coverage may expire. Some companies also use electronic media, television, and radio commercials, where influencers advertise the product and its ease of use to promote service contracts. Some companies have been accused of using robocalls to bombard unsuspecting consumers with offers for their services. Ultimately, if you`re able to negotiate a fair price for a vehicle maintenance contract for a new car, it can definitely be worth it. Would we recommend spending thousands of dollars on a vehicle maintenance contract for a new Toyota Camry? No way! The value is simply not there. However, if you are offered the same contract for less than a thousand dollars, it may have value for you. Buying a vehicle maintenance contract for a new car depends entirely on you and your risk tolerance. And as always, read the contract before signing! You can`t use it, but if an important component of your car breaks and you don`t have a blanket, you can easily start regretting your decision not to take one. However, keep in mind that not all vehicle maintenance contracts are created equal, so be sure to read our guide to the best extended car warranties in case you haven`t already. That being said, it`s important to understand that different vehicles fall into different categories or “classes” for pricing.
For example, an all-new Toyota Camry is classified in Class 1. A vehicle maintenance contract for this vehicle will be really cheap. However, a vehicle service contract for a used BMW i3 will be incredibly expensive as the i3 is a Class 9 vehicle (the highest on many administrator scales). Let`s start with the most common misconception in the automotive industry; that you can purchase an extended warranty for your vehicle from a third party. You can`t. Believe it or not, there is actually no “extended warranty” for a car, truck, or SUV that comes from a third party (not the manufacturer or dealer). The contract can be supported by the manufacturer, the distributor or an independent company. Many service contracts sold by merchants are managed by independent companies called directors. The directors act as claims adjusters and authorize the payment of claims to merchants under the contract. However, third-party verification doesn`t take long (we`ve already done it for you in this article), and when you find a supplier you like, you often have a lot more flexibility in terms of repairs. Endurance, for example, has a gigantic network of service providers in the United States, so it`s much more likely that you can get your car serviced at your favorite local store while being covered. Of course, exclusions are very complicated, so it`s important that you read all the jargon carefully to make sure you understand what you`re getting into before you buy a service contract.
The value of a vehicle maintenance contract depends entirely on the company you buy from, the amount you pay, what is covered, and the condition of your vehicle. Keep in mind that it`s not uncommon these days for motorists to put more than 150,000 miles on their car during the life of their vehicle, so if you plan to keep your car for a while, a vehicle service contract may be worth a look. .