If you have purchased a car you may enjoy the added feeling of protection with a car service contract. You may feel compelled to purchase a contract to protect yourself from unexpected repairs for your vehicle, that could end up being quite costly. It's a promise to perform or pay for defined repairs and services. Sometimes it is known as an extended warranty, it is important to note that a service contract is not a warranty as defined by federal law. A car warranty that comes with a new car is included in the original price; a car service contract is purchased separate and costs extra money. Before you decide to purchase a car service contract it is important to understand what it entails.
– Find out if the extended auto warranty overlaps with the warranty on the car. If there are parts that overlap it may not be necessary to purchase the service contract.
– Who backs the service contract? It is important to understand who performs or pays for the repairs based upon the contract. Under the terms of the contract it could be the manufacturer, the dealership, or an outside company. Many times the contracts are handled by an independent company. The auto warranty companies, known as administrators, act as claim adjusters. They authorizing payment for dealers covered under the contract. If either the dealership or administrator goes out of business, either one may still be required to cover the other no matter what happens.
– How much does the car service contract cost? Most contracts do not cover parts like brakes and clutches. If something is not listed, it is safe to assume that it is not covered. Make sure to keep an eye on absolute exclusions that can deny coverage for any reason. For example if only mechanical breakdowns are covered, then you will have to pay for problems that are caused by wear and tear. Another thing to watch for is a depreciation factor, which can lessen the amount paid to repair certain parts over the life of the car.
– What are your responsibilities? Under the contract you may have to follow what the manufacturer recommends for regular maintenance. This usually entails oil changes, changing spark plugs, and other routine maintenance. Failure to follow the guidelines could void the contract. Make sure to keep detailed records of all regular maintenance.
Although an auto warranty may cover a majority of the car, many people like the added feeling of security if something goes wrong. Purchasing a Before car service contract it is important 's to understand all the details of the contract to see the if it meets all of your needs.