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Should I get a prepaid car maintenance plan?

Auto mechanic inspecting a car
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Dealerships will offer prepaid car maintenance plans alongside other extras like extended warranties, credit insurance and anti-theft devices while at the showroom. They are not necessarily a bad deal. But the best way to decide if a prepaid maintenance plan is the right choice is to research expected maintenance costs — then compare these with the price you’re offered.  

If you plan to add the prepaid maintenance plan to your auto loan, it may make more sense to keep a savings account for expected maintenance costs where you earn, rather than pay, interest. 

What is a prepaid car maintenance plan?

Prepaid car maintenance plans are contracts that cover scheduled and expected maintenance. Unlike extended warranties, they only pay for preventative maintenance, like tire rotations and oil changes. Unexpected repairs will still be covered by the manufacturer warranty or extended warranty. 

A prepaid maintenance plan may enter the discussion when you’re buying a new vehicle that doesn’t have scheduled car maintenance built into the retail price or when purchasing a used car that’s no longer covered by the manufacturer. 

Several manufacturers — such as Jaguar, Toyota, BMW, Volvo, MINI and Land Rover — offer prepaid maintenance plans. Some of these factory plans also include wear-and-tear items, such as windshield wiper blades and brake pads, but some don’t, which is why it’s critical to do your research before heading to the showroom. 

Are prepaid maintenance plans worth the cost?

As with most aspects of the car-buying process, doing the math before sitting down with the dealer is the key to saving money. Compare the price of the plan with the estimated cost of the scheduled or out-of-pocket costs during the covered period.  

Your owner’s manual should list the maintenance you’ll need and when you’ll need it. Call the dealer service manager and ask for a breakdown of scheduled maintenance costs. Edmunds also offers a maintenance cost calculator and a cost-to-own calculator that can help you determine the scheduled maintenance costs for specific models at typical service intervals. 

If the estimated cost for scheduled maintenance of your new car for its first 30,000 miles is $400 and you pay $800 for the plan, a prepaid car maintenance plan is ultimately not worth it. If you pay $250 for the plan, you save money. You can strike a balance, but remember: If you include the prepaid maintenance plan as part of your loan, calculate how much you’ll pay in interest alongside the flat cost of maintenance to get an idea of the full cost. 

Pros and cons of prepaid car maintenance plans

Don’t just agree to a prepaid maintenance plan. Before you set foot in a dealership, know the expected maintenance costs for the vehicles you’re interested in. And keep these pros and cons in mind when you negotiate. 

Pros

  • Prices for covered services are locked in and not increased by inflation. 
  • You may be able to transfer the plan when you sell the vehicle. 
  • Residual value on leased vehicles may increase with a prepaid maintenance plan. 
  • Prepaid costs may be discounted compared to normal maintenance costs. 
  • Manufacturer-backed plans are generally covered by affiliated dealerships, regardless of location. 

Cons

  • Service intervals may not match those listed in the owner’s manual. 
  • Prepaid maintenance plans may cost more than the actual cost of maintenance. 
  • In some cases, service must be performed at the dealership where you purchased the car. 
  • Common wear-and-tear items are generally not covered. 

The bottom line

Prepaid maintenance plans are negotiable — so don’t just agree to the price offered by the dealership’s finance office. If you know the potential cost of regular maintenance, you can avoid future headaches by cutting out the decision on when and where to take your vehicle.  

However, it’s not the best choice if you already have a trusted mechanic or body shop. You’ll be locked in to where covered maintenance can be done. And if you wrap a prepaid maintenance plan into your auto loan, you could pay more in interest than the maintenance is worth.

To determine whether a prepaid maintenance plan will benefit you, take the time to research expected costs and compare it to what the dealership offers. 

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Written by
Rebecca Betterton
Auto Loans Reporter
Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers in navigating the ins and outs of securely borrowing money to purchase a car.
Edited by
Student loans editor