Excited about buying your new ride? Well, guess what, that’s not the only thing you might end up buying. What may accompany that shiny new ride is an expensive vehicle service contract.
What’s important is that you know what you’re getting yourself into with one.
As opposed to a manufacturer’s warranty, a vehicle service contract will cost extra. But the good part is that getting one isn’t compulsory—personal priority factors into your decision to get one.
So, what are the various pros and cons of all vehicle service contracts?
Pros of vehicle service contracts:
Extended Warranty:
What health insurance is to man, a vehicle service contract is to the buyer.
Brand new cars already carry a manufacturer warranty, but a limited one. This is where vehicle service contracts come into play.
If you think you’ll cross that 40k mileage manufacturer’s warranty hastily, I’d strongly suggest considering one. Eventually, your car will start acting up. Taking an extra protective measure now will save you a lot of trouble in the future.
Easy On The Pocket:
It’s a known fact that once the hood opens, money flows. Car healthcare is almost as expensive as human healthcare. No one wants to spend their retirement bonus on fixing clutch plates.
Paying small monthly payments seems much better than emptying your bank account all at once. Go on a vacation instead.
Longer Vehicle Life:
The hefty sums it costs when a vehicle gets old sometimes exceed its original price. In this case, you might want to sell the vehicle once it gets old. This isn’t an ideal situation.
Vehicle service contracts allow people to keep their vehicles longer. They tone down repair expenditures and prevent drastic measures. You can spend much longer with your car than the manufacturer’s warranty initially allowed.
Feeling Secure:
Even though the vehicle looks new and shiny now, I know what you’ll be thinking while you drive it back home. It won’t always be this new. This subconscious worry at the back of one’s mind can be avoided.
Vehicle service contracts help you sleep easier knowing your car will be repaired down the line. They’ve got your back when it comes to long-term maintenance. However, you should check the specific repairs the contract covers.
Cons of Vehicle Service Contract:
Selective Coverage:
The main issue with getting these contracts is the exclusivity of coverage. A person can’t be sure they’ll face one specific issue, which proves to be a problem.
Vehicles can often end up with unexpected and costly expenses later in their life. Not having coverage for a specific issue makes the whole concept pointless. Because it only means you paid all those monthly bills for nothing.
Discussing the extent of coverage with the provider before buying the contract may save you the regrets later.
Extra Expenses:
Vehicle service contracts, albeit helpful, are costly to purchase as well. If analyzed properly, they may add up to be as expensive as the future repairs you’re avoiding. The initial investment and monthly payments are major points to thoroughly consider before getting the contract.
Partial Coverage of Repair:
These contracts often don’t give full coverage of the repairs. Which means the provider will give only a percentage of coverage. Or they could specify coverage of a certain aspect of the repair rather than the whole issue.
This renders contracts pointless. I would suggest asking for the exclusionary contract. This may give you clarity on the aspects of the repair not covered.
Limited Workshop Options:
The reimbursement companies make contracts with mechanics. They provide the customers and, in return, get waivers on the repair rates and overall costs. As good as this is for the company’s business, it might not be suitable for the customer.
Other mechanics often avoid third-party payer jobs. They pay less than the mechanic’s price and take longer to reimburse. Additionally, it’s harder to trust a new person to get the job done as well as your trusted mechanic.
Even though the companies hire well-trained professionals, there are limitations. Only a certain group of mechanics might be approved, which is problematic when you’re trying to change cities or aren’t in the respected area. It’s important to check the list of approved workshops in such a case. Especially considering the long-term impacts of the decision.
Hence, before buying a contract, you should be aware of the various pros and cons of all vehicle service contracts. You should consider your average vehicle usage. Selling the vehicle and emergency savings should also be investigated as an alternative. There is also the chance that you might never need the contract during the vehicle’s lifetime in the first place. I’d suggest weighing all these pros and cons before making a final decision on your purchase.
