If you’re in the market for a new vehicle, part of negotiating your contract at the dealership might include a discussion about whether or not you want to purchase an extended service plan. That’s why it’s a great idea to familiarize yourself with exactly what these plans are and what they cover before heading in. Join us for a look into extended service plans, including what they do (and don’t) offer and whether springing for one is the best choice for you.
What Is an Extended Service Plan?
When you purchase a new vehicle, it has a form of coverage called a manufacturer’s warranty built into the vehicle’s price. A warranty is designed to cover repairs or replacements due to large-scale issues or malfunctions that occur within a certain period of time or up to a specific number of miles driven from the time you bought the vehicle.
Vehicle warranties often cover things like manufacturing defects resulting from the car’s design or an installation error that happened in the factory. They’re essentially a guarantee that the manufacturer will pay for repairs resulting from an error the manufacturer made in designing or building the car. They don’t cover damage you cause to the vehicle; that’s what your auto insurance policy is for. Once the warranty period ends or you drive more than the allowable number of miles stipulated in the warranty, you’ll be responsible for all major repair costs.
That’s where an extended service offer comes in. You can purchase an extended warranty either through your vehicle dealership or through your choice of third-party providers. Extended service plans are meant to act as insurance policies that help cover repairs on the vehicle’s major parts.
One of the perks of extended service plans is that they tend to be a lot more customizable, whereas manufacturer warranties aren’t. What the plan covers and how much it might cost you will depend on the level of coverage you choose and whether you opt for add-ons like roadside assistance. Other factors, such as the age, make, model and mileage of the vehicle, will likely go into factoring out the cost of your plan as well. You can purchase plans that last for various lengths of time after your manufacturer warranty has expired, with some offering coverage for up to 10 years.