Many published articles advise against vehicle service contracts. However, after experiencing the car business for as long as we have, we’ve learned that they are highly beneficial for most customers. Could YOU benefit from a service contract? Keep reading to learn more.
What is a Vehicle Service Contract?
A vehicle service contract is essentially an agreement between a customer and the service contract company that the company will cover the cost of select repairs. Similar to car insurance, which helps cover repair costs after an accident, a vehicle service contract helps cover repair costs after a breakdown. You can pay a deductible rather than trying to tackle a bill of hundreds or even thousands of dollars.
How Does it Work?
You can pay the contract monthly by adding it to your car loan or as a lump sum upfront. There is a wide variety of contract options, from comprehensive to basic engine transmission coverage. When you speak with your service advisor before your appointment, give them your information. A factory-trained technician will diagnose the issue(s) on your vehicle. Your service advisor contacts your plan administrator, who approves or denies the claim. If approved, the technician fixes the repairs, and the administrator submits the payment. All you will have to do is pay your deductible!
In the event you trade your vehicle before the contract is up, most service contracts are cancellable and will give you a prorated amount of money back.
Why You Should Invest in a Vehicle Service Contract
Breakdowns are unexpected, expensive, and can happen to anyone. With most shops in the region charging a minimum shop rate of $110 per hour, it’s easy to rack up a hefty shop bill. Anyone who owns a newer car is likely aware that high-tech components alone are expensive to replace. Though we suggest everyone invests in a service contract, there are situations where we highly recommend it:
- A contract will keep you covered if you purchase a vehicle where the warranty has already expired or if you plan to keep your vehicle for a few years.
- For those who are budget conscious, a sudden repair bill can be stressful. Without an emergency fund, it may pose quite a financial burden. A vehicle service contract eliminates this risk.
- If you’re a high-mileage driver, you risk driving out of your original manufacturer’s warranty sooner than you’d like. A long-term, high-mileage coverage plan may be best for you. Most service contracts also include trip interruption perks, such as lodging, car rental, and roadside assistance.
Protect Your Investment
Your vehicle is a serious investment. Keep it protected! Regardless of how new or reliable your vehicle may be, mechanical issues are bound to arise. Consider a vehicle service contract if you’re looking for comfort in knowing you will be covered.
Still have questions? Stop by or give us a call! Our helpful and knowledgeable finance team is here for you.
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