Should I get a prepaid maintenance plan for my car? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial decisions by offering interactive tools and financial calculators that provide objective and original content. We also allow you to conduct research and compare data for free and help you make informed 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 Make money The products that appear on this site are from companies that pay us. This compensation could affect how and where products appear on the site, such as the order in which they appear within the listing categories, except where prohibited by law. Our mortgage and home equity products, as well as other products for home loans. But this compensation does affect the information we publish, or the reviews that appear on this website. We do not include the entire universe of businesses or financial offers that may be open to you. SHARE Westend61/Getty images
3 min read Published 13 March 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 to navigate the ins and outs of securely borrowing money to purchase an automobile. Edited by Helen Wilbers Edited by Helen Wilbers Editing for Bankrate from late 2022. He believes in clear information that allows readers to easily get deals and make best decisions for their financials. He specializes in auto and small business loans. The Bankrate promise
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We are compensated for the placement of sponsored products and services or through you clicking specific links on our website. Therefore, this compensation may influence the manner, place and in what order products appear within listing categories, except where prohibited by law. We also offer mortgage home equity, mortgage and other home lending products. Other elements, such as our own rules for our website and whether a product is available in the area you reside in or is within your own personal credit score can also impact 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 each financial or credit item or service. Dealerships will offer prepaid car maintenance plans like warranty extensions, insurance for credit, and anti-theft tools. They’re not always an ideal deal. However, the best method to determine whether a pre-paid maintenance plan is the best option is to research expected maintenance costs and evaluate them against the price you’re given. If you’re looking to apply the prepaid maintenance plan to your auto loan it might make more sense to instead keep a savings account for where you earn, rather than paying interest. What is a prepay car maintenance plan? Prepaid car maintenance plans provide regular and planned maintenance. Unlike , they only pay for preventative maintenance, like tire rotations , and . The warranty provided by the manufacturer or extended warranty will still provide for the unexpected repair. A prepaid maintenance plan may be discussed when purchasing new vehicles that don’t have scheduled car maintenance built into the retail price or in the event 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 if it is limited to service in the dealer. A lot of these plans will only permit service at the dealer selling the plan, limiting the options you have to future maintenance. Depending on the prepaid maintenance plan that you are looking at, maintenance could be limited to specific intervals (for instance, oil change only cover every 10,000 miles). Certain prepaid plans will only offer services once a calendar year, or every six months, so depending on the amount you drive, you could require additional maintenance that is paid for the car. A variety of manufacturers — like Jaguar, Toyota, BMW, Volvo, MINI and Land Rover — offer Prepaid maintenance plans. Some of these factory plans also cover wear and tear items like windshield wiper blades or brake pads, however certain plans don’t. It’s critical to research before heading to the showroom. Are prepaid maintenance plans worth the price? As with most aspects of the buying process taking the time to calculate the cost prior to going to the dealer is key to saving money. Compare the price of the plan with the estimated cost of scheduled or out-of-pocket costs within the time frame covered. The owner’s manual will list the types of maintenance you’ll need as well as the time you’ll require it. Contact the dealer’s service manager and request a breakdown of scheduled maintenance costs. It is also worth considering the cost of maintenance, insurance and other expenses. If the estimate of regular maintenance for your brand new car for its first thirty-three miles is $400 and you pay $800 for the plan, then a prepay maintenance plan for your car is not worth it. If you pay $25 for the service you can save money. You could make a deal, but keep in mind: If you include the prepaid maintenance plan as part of your loan then calculate the amount you’ll pay in interest alongside the cost of maintenance per month to estimate the total cost. Pros and cons of prepaid car maintenance plans Don’t simply sign up to a prepaid maintenance plan. Before you even step foot in an auto dealership, you should know the anticipated maintenance costs for the vehicle you’re looking at. Keep the pros and cons while you make a deal. The benefits of covered services are that they are locked in and not increased by inflation. You might be able transfer the plan if you decide to sell your vehicle. The value of the residual on vehicles leased may increase with a prepaid maintenance plan. The cost of prepaid maintenance may be reduced 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 owner’s manual. Prepaid maintenance plans could cost more than the actual price of maintaining. In many instances, you need to have your car serviced at the dealership which you bought the vehicle from. Most wear-and-tear issues are not covered. It is possible to include coverage that is redundant or is already covered by an an extended warranty. The bottom line Prepaid maintenance plans are a matter of negotiationtherefore don’t be content to agree to the cost offered by the dealership’s finance office. If you’re aware of the expense of regular maintenance you can prepare ahead and avoid the hassle of choosing when and where to transport your car. It’s not the ideal choice if you already have a trusted mechanic or body shop , or are not planning to remain within the region where you purchased the car. Also, if you include the maintenance plan you have prepaid into your auto loan and you are able to pay more interest than the maintenance plan is worth. Be aware of the loan’s interest rate, and don’t hesitate to . To determine whether a prepaid maintenance plan is beneficial to you, you should take the time to investigate the anticipated costs and then compare them to the plans the dealership offers.
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This article is written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers to navigate the details of borrowing money to purchase cars. Edited by Helen Wilbers Edited by Helen Wilbers is editing for Bankrate since late 2022. He believes in the clarity of reporting that can help readers successfully find deals and make the most appropriate choices regarding their finances. He specializes in small and auto loans. Related Articles Auto Loans 5 minutes read in Mar 03 2023 Auto 6 minutes read March 02 2023 Auto Loans 3 minutes read Oct 13, 2022 Auto Loans 4 min read Aug 22 2022
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