What Is a Service Contract on a Used Car

We wrote this guide to demystify one of the best-selling products in the automotive industry. As you probably know by now, car dealers don`t make their money selling vehicles, they make their money selling ancillary products. Vehicle maintenance contracts are often sold to car buyers and are high-margin sales for dealers. That being said, it`s of utmost importance that you understand what vehicle maintenance contracts are (and what they aren`t) so you can make an informed decision. 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. It`s always a good idea to know what your warranty covers and how long it lasts. But you definitely want to know before you pay someone to try to sell you a new one. First, let`s define both warranties and vehicle maintenance contracts. According to the Department of Justice, a warranty is a statement by the seller or manufacturer that: Few auto service contracts cover all repairs and maintenance. Beware of exclusions that deny coverage for any reason. For example, if the contract states that only “mechanical failures” are covered, problems caused by normal wear and tear can be excluded.

Service contracts cover parts that may fail during the warranty period. For example, the contract could include repairs to key vehicle components such as the engine, transmission and air conditioning, as well as roadside assistance and rental car refunds. As mentioned earlier in this article, these products (and other financial and insurance products) are usually labeled significantly before being sold to a car buyer. Please don`t feel obligated to buy a vehicle maintenance contract from the dealership, and be aware that if the dealer tells you that you have to “buy the extended warranty to get the car contract”, or anything like that, they are behaving in a misleading (and illegal) manner. Most third-party administrators have up to 60 days from the date of vehicle purchase to purchase a vehicle maintenance contract. This means that you have two months from the date of purchase of your vehicle to purchase extended coverage. Don`t feel pressured to make a decision the day you buy your car from the dealership. 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. You don`t need (or want) double coverage. Before you buy a service contract, compare it to the manufacturer`s warranty you already have. New car warranties usually offer coverage for a certain period of time or miles, whichever comes first. It probably won`t be helpful to have a service contract that starts before the manufacturer`s warranty expires. You`ll often hear that the term “extended car warranty” or “car warranty” is used synonymous with “vehicle service contract.” Despite the fact that both protect you from costly mechanical failures, warranties and vehicle maintenance contracts are actually two different things.

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. A vehicle maintenance contract is nothing more than that; A promise between two parties that describes how and when the administrator pays for certain repairs to a vehicle. In particular, a vehicle maintenance contract is not an extended warranty. We will discuss the differences between the two below. There are common reasons why people don`t buy vehicle maintenance contracts. Assurant Solutions` research sheds light on the most common reasons why people avoid paying for service contracts. If it`s a third party, you know they`re not selling you an extended powertrain warranty, but an extended service contract that covers the vehicle`s powertrain. There is a difference between the two.

You know it`s a third party if the name on the contract is not the company name of the dealer or manufacturer. Also, do some research before deciding whether or not to purchase an automotive service contract. Drivers can purchase vehicle service contracts from dealers and third parties. Let`s take a quick look at the differences. Car maintenance contracts and so-called extended warranties are common “add-ons”, optional products and services offered by the dealer as part of a new or used car purchase. Often, add-ons such as extended warranties and service contracts can cost thousands of dollars and are only mentioned at the end of an already difficult and long day at the dealership. In other cases, merchants may try to include these and other add-ons in your offer without ever discussing them with you and without your knowledge or consent. So you want to be sure to ask questions, get written answers, know what you`re going to pay and what you`re going to get. When a customer pays for extended coverage, it is a vehicle service contract. According to Magnuson Moss, if a dealer sells a vehicle maintenance contract to the customer within 90 days of the sale, the dealer cannot exclude implied warranties.

In approximately 38 states, a merchant may otherwise exclude express and implied warranties. This is done in the Used Car Buying Guide and in the RISC or rental agreement. If you are considering buying a vehicle maintenance contract, where should you buy it? Our recommendation would be that if you buy one from a dealership, you negotiate the price for it. Since the new vehicle is covered by the manufacturer`s warranty, administrators can evaluate their new car maintenance contracts more favorably. .