Thursday, September 15, 2011

Does Prepaid Car Maintenance Save Money?

Picture of non-black 1927 Model T at Greenfiel...Image via WikipediaNew car buyers are often asked whether or not they want to purchase a “prepaid maintenance plan.” These are not extended warranties but plans that cover routine kinds of service to your car. But are they worth the money?

A plan could cost as much as $1,500 and can be added to the cost of a lease or purchase. Reading the fine print to see what items are covered can keep you from making a big mistake. But when a neighbor of mine got a new car and a new plan for $800, she didn’t realize it only covered oil changes and no other maintenance.

They may be pretty good moneymakers for dealers but the Better Business Bureau warns consumers to crunch all the numbers and read all the fine print.

“These kinds of plans are relatively new, so we’ve received about 100 over the past couple of years, we’ve certainly seen an uptick in the numbers,” said Rodney Davis of the Better Business Bureau.

Some unhappy customers complain maintenance plans were added to their closing paperwork without their approval or they dropped their cars off for maintenance and the work was never done. Some angry customers say the required repair shops went out of business and they couldn’t get a refund. That’s why some consumer advocates say “buyer beware.”

“These prepaid maintenance plans are a source of profit for the dealership so they’re really going to try to steer you toward that,” according to Ron Montoya.

Since the plans vary, experts have a few recommendations:

  • Read the details carefully to see how long it lasts and what it covers, and calculate the expenses to make sure you see savings.
  • Once you buy a plan, remember, you’re stuck going to that dealer or repair shop.
  • If you finance the plan with your car loan that means you’re paying interest on it, costing you more.

If you’re tempted to buy a prepaid maintenance plan, here’s an inside secret to getting the best deal.

We’ve been told dealers mark them up, up to 50-percent, so you know to try out offering half the price and then they may counter the offer and you can meet somewhere in between.

Always remember to check out the plan closely and don’t be rushed into signing anything. offers a maintenance cost calculator that will estimate the scheduled maintenance costs for cars.

Some high-end car makers now offer free maintenance plans in the purchase price. If you plan on moving or selling your car before the plan is up, make sure it’s transferrable.


  1. I think a preventative maintenance plan is ok too. It includes technical examination and advance fixtures of parts that are worn, and may break at an inconvenient moment. Other long term benefits may include decrease in replacement costs, higher equipment reliability, decreased computer downtime and better inventory management. Would you think?

  2. Prepaid car repair is a hard sell to many people. I believe the experience people have with extended warranties that are never used or forgotten about have left a bad taste ii peoples mouths. Besides many people can not spare the money in today's economy.


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