Are prepaid maintenance plans worth it?

What are prepaid maintenance plans?

A prepaid maintenance plan is a type of contract that covers a set of routine maintenance services. Car owners can usually pay for a maintenance package up front, roll it into their vehicle financing or pay for it across regular monthly payments.

What do prepaid maintenance plans cover?

Prepaid maintenance plans cover the services performed at regular intervals according to your manufacturer’s recommendation. These services may include:

• Oil and filter changes
• Battery testing and replacement
• Brake pad replacement
• Regular inspections
• Tire rotations
• Windshield wiper blade replacements

Prepaid maintenance plans vs. warranties

Prepaid maintenance plans offer a different type of coverage than warranties do. While maintenance packages cover routine services that are performed on a schedule, extended car warranties (also known as vehicle protection plans) cover the cost of unexpected mechanical repairs. In fact, most warranties explicitly exclude maintenance services and wear-and-tear items from coverage.

However, prepaid maintenance plans can work as supplemental coverage with a warranty. Warranty contracts typically require all regular maintenance services to be performed according to a schedule for the coverage to remain valid. A maintenance package can help ensure you don’t miss a service because of cost.

Where can I buy a prepaid maintenance plan?

You can buy a prepaid maintenance plan from many car manufacturers. These plans are typically offered when you purchase a new or used vehicle at a dealership. Manufacturer maintenance packages usually only cover services performed at a dealership.

Another option is to buy a prepaid maintenance package from a third-party extended car warranty provider. These third-party plans aren’t tied to a specific dealership and typically allow you to have services performed at one of thousands of shops certified by the National Institute for Automotive Service Excellence (ASE) around the country.

Are prepaid maintenance plans a good deal?

In many cases, a prepaid maintenance plan can be a good deal for car owners, although not always. There are two key ways in which a maintenance package can provide good value:

• Cost savings: Prepaid maintenance packages can be cheaper than paying for services individually, lowering the overall cost of required upkeep.
• Budgeting help: Some people may prefer to prepay for maintenance services or finance the cost of a maintenance plan instead of worrying about having the money to pay for routine services when they’re needed. Knowing the services that keep your vehicle healthy are covered can provide peace of mind.

Hidden costs of prepaid maintenance plans

While prepaid maintenance plans don’t usually come with too many hidden costs, there are a few expenses you’ll want to watch out for, such as:

• Finance costs: If you finance your maintenance plan, you’ll have to pay interest costs on top of the price of the contract.
• Unnecessary services: Some maintenance contracts may include services beyond what your manufacturer suggests to pad the bill. Make sure to compare the service package with the service schedule in your owner’s manual.
• Related costs: Being without access to your vehicle can have a real financial impact for some people. Consider the average wait time for service appointments at your dealership before opting into a manufacturer maintenance package.

Who should consider a prepaid maintenance plan?

Whether a maintenance plan is worth it depends on your driving habits and preferences. You may want to consider buying one if:

• You’re offered a good discount on services. Some prepaid maintenance plans cost significantly less than paying for the same services individually.
• You put a lot of miles on your car. If you have a long commute or spend a lot of time on the road, having a maintenance package ensures you can get routine services done as often as you need them.
• You prefer to take care of things ahead of time. Some people would rather pay for a maintenance plan up front and not have to worry about those expenses again for a few years.

Do prepaid maintenance plans increase resale value?

Most prepaid maintenance plans are transferable, meaning they can be handed over to a new owner if the vehicle is sold. While having coverage that comes with the vehicle may be a selling point, it probably won’t increase the resale value by very much.

However, getting a maintenance plan can increase the resale value of your vehicle in an indirect way. Performing routine maintenance services on time is the best way to limit depreciation of your vehicle and keep it in good condition. Having a prepaid maintenance plan can help ensure you stick to the service schedule and maintain the value of your car.

When might prepaid maintenance plans not be worth it?

In some cases, a prepaid maintenance package may not be worth what you spend on it. It can be a poor value if:

• You have to finance the plan. If you have to get financing to pay for your maintenance package, you could easily end up paying substantially more for services after factoring in the cost of interest.
• You’ve got a healthy emergency fund. Prepaid maintenance plans don’t typically offer a lot of budgeting benefit to people who don’t have trouble coming up with a few hundred dollars to pay for a scheduled service.
• You don’t get a discount. If a maintenance plan costs about the same as paying for services individually, you’re better off putting the money in an interest-bearing account and paying for appointments as they come up.
• You have a mechanic you like. Manufacturer maintenance plans require you to have services done at a dealership, not your neighborhood mechanic. If you prefer to stick with a mechanic you trust, see if they’ll accept third-party maintenance coverage or pay for services when needed. No matter what anyone tells you, getting maintenance services done outside of your dealership won’t void your warranty.

How to evaluate and choose a prepaid maintenance plan

The value of a prepaid maintenance plan is both practical and personal. Before deciding whether to buy a plan, there are a few steps you can take to assess its value to you:

• Research the cost of routine maintenance services at your closest dealership and at a local mechanic. Check your owner’s manual for the manufacturer’s recommended maintenance schedule, then call to get price quotes for those services.
• Get prices for prepaid maintenance plans. Ask your closest dealership for prices on the plans they offer, but also call around to other dealerships. Pricing may vary. You can also check with third-party providers to get a quote on a maintenance package.
• See how the prices in the quotes you got compare to the maintenance costs you calculated.
• Consider whether you can rely on having a few hundred dollars to spare for service appointments on short notice, or if prepaying for maintenance would offer you security. If none of the quotes offer a significant discount, it’s still worth considering if paying extra to finance your maintenance package or use a payment plan provides value for you.
• Think about the logistics of using your coverage. Look up or ask about standard wait times for appointments at your dealership. Consider the time it takes to drive to and from the dealership and how long you can afford to be without your car.

Before you buy

Compare the cost of a prepaid plan with your car’s recommended maintenance schedule before buying. This helps ensure you’re actually saving money.

» MORE: Top-ranked extended auto warranties

Plan terms and conditions

The details in the fine print of a maintenance plan contract can impact how you can use the coverage and the value it offers you.

There are a few things you should check for in the terms and conditions, including:

• Expiration date: Maintenance plan coverage may not last as long as it takes to reach the covered service intervals. If you don’t put a lot of miles on your car regularly or plan to be away from home for a significant amount of time, make sure you can get enough miles on your car within the duration of the contract to get what you pay for.
• Causes to void: Contracts will typically list things you can do that would void your service plan. Your provider may void your plan if you do things like make unapproved modifications to your vehicle or damage it by misusing it.
• Waiting periods: Your maintenance plan may require you to wait a certain amount of time between appointments, even if you reach the next mileage interval. Look for set waiting periods in the fine print if you put a lot of miles on your car.
• Cancellation policy: Some providers have a more generous refund policy than others if you cancel your plan. Check for the details of the cancellation policy to see what you’ll lose if you change your mind.

Check the fine print

Some plans expire before you can use all the services. Make sure the contract length matches your driving habits.

» MORE: Tips for spotting car warranty scams

Bottom line: Are prepaid maintenance plans worth it?

Prepaid maintenance plans can make sense if you get a real discount on services and want the convenience of budgeting ahead. They’re especially useful if you drive a lot, stick to dealership service centers or like to pay for expenses up front. But if the plan costs as much as paying out of pocket, or if you prefer using a trusted mechanic, it probably isn’t worth it.