Key points
- A service contract is usually optional.
- Coverage is not the same for every plan.
- Adding it to the loan increases the amount financed.
- Read cancellation, deductible, and claim requirements.
What to compare
- Covered components and excluded repairs.
- Contract term, mileage limit, and waiting period.
- Deductible per visit or per repair.
- Where repairs can be completed.
- Claim authorization and reimbursement process.
- Transfer and cancellation rules.
Check existing coverage first
A new or certified pre-owned vehicle may already include manufacturer coverage. Compare the start date and mileage of the service contract with existing warranty protection so you understand when the additional coverage actually begins.
Calculate the financed cost
A service contract priced at several thousand dollars can cost more when financed for years. Ask for the cash price, the change in amount financed, and the total payment difference.
Ask for the buyer's order both with and without the service contract.
Decide based on risk, not pressure
Consider the vehicle's expected reliability, your emergency savings, the contract quality, and your ownership plans. Avoid accepting a product only because the payment change sounds small.