Should I purchase a prepay 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 as well as publishing authentic and objective content, by enabling users to conduct studies and compare information at no cost 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 Earn Money The offers that appear on this site come from companies that compensate us. This compensation could affect how and where products appear on this website, for example for instance, the sequence in which they appear within the listing categories and other categories, unless prohibited by law. Our mortgage and home equity products, as well as other home loan products. But this compensation does not influence the information we publish, or the reviews you see on this site. We do not include the entire universe of businesses or financial offerings that could be open to you. SHARE Westend61/Getty images
3 min read Published 13 March 2023
Authored 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 cars. Edited by Helen Wilbers Edited by Helen Wilbers has been editing for Bankrate since the end of 2022. He believes in clear reports that help readers easily find deals and make the best decisions for their financials. He specializes in small and auto loans. The Bankrate promise
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Therefore, this compensation may influence the manner, place and when products are listed and categories, unless it is prohibited by law. This is the case for our mortgage or home equity products, as well as other products for home loans. Other factors, such as our own rules for our website and whether a product is offered in your area or at your self-selected credit score range can also impact the manner in which products are featured on this website. Although we try to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Dealerships offer prepaid auto maintenance plans like extended warranties, credit insurance, and anti-theft devices. These aren't necessarily a bad bargain. The best way to decide whether a prepaid maintenance program is the best option is to research expected maintenance costs, and then examine them against the cost you're given. If you're planning to add the prepaid maintenance plan your auto loan it might make more sense to save an account in savings where you earn, and not pay, interest. What is a prepaid vehicle maintenance plan? Car maintenance programs that are prepaid provide the scheduled maintenance and anticipated maintenance. Contrary to the other types of plans , they only pay for preventative maintenance, like tire rotations and . The manufacturer warranty or extended warranty may cover unexpected repairs. A maintenance plan that is prepaid could be considered when you purchase new vehicles that don't include scheduled maintenance for cars built into the retail price , or in the event that the manufacturer doesn't cover. Either way, be sure to ask whether the plan you are offered can be utilized by an independent mechanic's shop , or when it's limited to service from the dealers. Many such plans only allow service at the dealer selling the plan which limits the options you have for future maintenance. In the case of the prepaid maintenance plan that you are considering, maintenance might be restricted to certain intervals (for instance, oil changes are only covered once at intervals of 10,000 miles). Certain prepaid plans will only cover services once a calendar year or every six months. Depending on the amount you drive, you may require additional maintenance paid for the car. Several manufacturers -- including Jaguar, Toyota, BMW, Volvo, MINI and Land Rover -- offer prepaid maintenance plans. Some of these factory plans also come with wear-and-tear products, such as windshield wiper blades as well as brake pads, however others don't. Therefore, it's essential to conduct research prior to going to the dealership. Are these maintenance plans worth the price? As with most aspects of the car-buying process taking the time to calculate the cost prior to meeting with the dealer is the key to saving money. Examine the cost of the plan with the estimated price of cost of the scheduled or out-of-pocket expenses within the time frame covered. The owner's manual should detail the maintenance you'll need and the times you'll need it. Call the dealer service manager and request an overview of the scheduled maintenance expenses. You can also by considering the cost of insurance, maintenance and other costs. If the estimate of regular maintenance of your new vehicle for the first thirty-three miles is $400 and you are paying $800 for the plan, a prepay maintenance plan for your car is not worth the money. If you are paying $25 for the service you will save money. You could make a deal, but keep in mind: If you include the plan for prepaid maintenance as part of your loan then calculate the amount you'll be paying in interest along with the flat maintenance cost to estimate the total cost. The pros and cons of pre-paid car maintenance plans Don't simply sign up to a prepaid maintenance plan. Before you set foot in a dealership, know the anticipated maintenance costs for the vehicle you're looking at. Be sure to keep the pros and cons when you negotiate. Pros Prices for covered services are fixed and cannot be increased by inflation. It is possible to transfer the plan once you sell the vehicle. The residual value of leased vehicles might increase with a prepay maintenance plan. Prepaid costs may be discounted compared to normal maintenance costs. Plans that are backed by the manufacturer are typically covered by affiliated dealerships, regardless of location. Cons Service intervals may not be as specified in the owner's manual. Prepaid maintenance plans can cost more than the actual price of maintenance. In many instances, you need to have your car serviced at the dealership where you purchased the car. Common wear-and-tear items are generally not covered. Some insurance plans may include coverage that's redundant or is already covered by an the extended warranty. The bottom line: Prepaid maintenance plans are negotiable -- so don't just agree to the price that is offered by the dealership's finance office. If you're aware of the costs of regular maintenance, you can plan ahead and avoid the hassle of choosing when and where to take your vehicle. However, it's not the most ideal option if you already have a reliable mechanic or body shop or do not plan on staying within the region where you purchased your car. And if you wrap an prepaid maintenance plan in your auto loan and you are able to pay more in interest than what the maintenance plan is worth. Be aware of the loan's rate of interest and don't be afraid to . To determine whether a prepaid maintenance plan will benefit you, you should take the time to study the expected cost and compare them with what 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 has a specialization in helping readers to navigate the details of borrowing money to purchase a car. Edited by Helen Wilbers Edited by Helen Wilbers is editing for Bankrate since the end of 2022. He is a firm believer in transparent reporting that allows readers to successfully find deals and make the most informed decisions regarding their financial situation. He specializes in small business and auto loans. Similar Articles: Auto Loans 5 min read Mar 03 2023 Auto 6 minutes read on Mar 02 2023 auto Loans 3 min read Oct 13, 2022. Auto Loans 4 min read August 22 2022

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