Service contracts are sometimes called an “extended warranty,” but they're not a warranty as defined by federal law. They're sold by car manufacturers, dealers, and independent companies, you can buy them anytime, and prices and coverage vary widely.
What is a service contract plan?
A vehicle service contract is a paid plan that helps cover costly car repairs and takes effect once the manufacturer's warranty has expired. Often called an extended car warranty, a vehicle service contracts can cover both new or used cars, but as the car ages, the likelihood of it needing repairs rises.2020-02-11
What is a service contract fee when buying a car?
Sometimes referred to as an extended warranty plan (though not officially a warranty by legal definition), a vehicle service contract is a paid plan that helps cover the costs of any repairs needed once the limited warranty has expired.2014-04-12
Is a service contract a good idea?
If you're buying a new or used car, the salesperson might try to sell you an auto service contract to help protect against unexpected or expensive repairs. While a service contract might sound like a good idea, it could duplicate coverage you have through your manufacturer's warranty.
What does a service contract require?
Most often, Service Contracts include details such as deadlines and payment agreements. Contracts also usually define the work to be performed and what process needs to take place if changes need to be made. These are legal agreements and can be challenged if needed.
How much do service contracts cost?
The price of a service contract is usually based on the car's make, model, condition, as well as the contract's coverage and length. The initial price can range from several hundred dollars to more than $1,000. In addition, you may be required to pay a deductible each time your car is serviced or repaired.
Do you pay for a service contract?
The price of a service contract is usually based on the car's make, model, condition, as well as the contract's coverage and length. The initial price can range from several hundred dollars to more than $1,000. In addition, you may be required to pay a deductible each time your car is serviced or repaired.
Can I cancel service contract?
A service agreement can be canceled at anytime. The party who cancels the agreement will be liable for all costs associated with the cancellation. The cancellation must be executed in accordance with the terms of the contract or it can be considered a broken contract or breach of contract.
What is the difference between a warranty and a service contract?
Warranties are included in the price of the product. ... A service contract is sometimes called an “extended warranty,” but service contracts are not warranties. A service contract can help you fix or maintain your product for a specific time — like a warranty. But, unlike a warranty, service contracts cost extra.2015-01-15
Can you cancel service contract on a new car?
You have 60 days to cancel a service contract for a new vehicle without penalty. ... On a used vehicle, you can cancel a service contract within 30 days without penalty. After 30 days, you can cancel and receive a partial refund. To cancel, write a letter to the dealer and the warranty company.
What are the two types of vehicle service contracts?
There are two main types of vehicle service contracts: a powertrain warranty and a bumper-to-bumper warranty. A powertrain warranty covers the components that make your vehicle move: the engine, transmission, transfer case, drive axles, and other related components.