Man with clipboard looking under car hood

Tips to Choosing the Best Vehicle Service Contract

Car problems are not something that the average driver plans for. Outside of regular oil changes, new tire purchases, and other minor maintenance tasks, most owners don’t worry about mechanical issues until after they notice something isn’t quite right with their vehicle. An extended vehicle service contract is a way for auto dealers, repair facilities, lenders, and insurance companies to offer an affordable solution for their customers’ unplanned car repairs.

Auto Service Contracts: The Basics

Not all vehicle service contract providers offer the same services at the same cost for car owners; they can vary significantly. There are generally three different types of vehicle service contract providers: dealerships, car manufacturers, and third-party independents. Each has its own benefits and drawbacks.

  • Upfront costs for the customer vary, depending on the make and model of the vehicle, its condition, the coverage provided, and the length of the contract. Generally, the upfront costs required by the manufacturer are the highest. The service contracts offered by the dealership are a lower cost, but customers may not like the fact that they must use only the repair services offered by the dealership. Third-party vehicle service contract companies are generally between 30 and 50 percent less than manufacturers’ options, and they allow customers to choose from a network of approved repair facilities.
  • There are both limited and comprehensive auto service contracts available. While limited contracts usually cover only the powertrain and some mechanical issues, comprehensive plans include electrical, audio, sensor components, and other technological components that are equipped in many of the newer vehicles. Few contracts cover all repairs, however.
  • Customers are generally not happy about the inconvenience associated with car repairs. The best vehicle service contract companies offer 24-hour assistance and rental car costs, which help ease the frustration.
  • Consumers are keeping their cars for longer periods of time before buying a new one. Check to see if the contract provider also offers coverage for vehicles from 10 to 20 years old.

Mechanic giving keys back to customer

Know the Company

There are thousands of VSC providers and plenty of scams in the marketplace, so it’s important to do some homework before deciding which ones offer the best extended vehicle service contract options for your customers.

  • Check the contract providers’ website. Not only should you find customer approval ratings and reviews, but there should be some information about the company and how long they’ve been in business. A physical address should be provided, along with an email and phone number.
  • Verify whether the extended service contract provider is both the administrator and servicer of the contracts. This makes a difference in the quality of customer service. Many VSC providers don’t provide this level of service.
  • Find out if the VSC company uses new or reconditioned parts for repairs, and if the authorized repair facility keeps a sufficient stock of parts on-hand. Repairs are an inconvenience for customers. Repair delays are worse.

Customer Responsibilities

Most service contracts require the car owner to maintain the car sufficiently through routine maintenance, such as oil changes. Some require them to keep detailed receipts to prove they’ve followed the requirements of the service contract. If the provider doesn’t think the customer has properly maintained the vehicle, they may terminate the VSC. Consumers are wary of any service contracts with tiny print that adds a number of additional stipulations. The top vehicle service contract companies offer great service, easy-to-understand requirements, and quality repairs.