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What is a Vehicle Service Contract and Is It For You?

CarShield Team

Posted in:
Research & Savings

Vehicle Service Contract available for Ford F150.
Caleb White via Unsplash

According to Car and, the average age of cars on the road today is nearly 12 years old. That means that most drivers are no longer protected by their car’s original manufacturer’s warranty..

If you are driving a car that is out of its factory warranty period you might be looking at expensive auto repair bills at some point in the future.

This probably has you looking for options to safeguard you and your wallet from those costs. If that’s the case then you’ve probably heard about vehicle service contracts, but you may be wondering what they are.

In this comprehensive post we will cover the following:

  • What is a vehicle service contract?
  • Doesn’t my regular insurance cover that?
  • But what if my car already has a warranty?
  • Auto Service Contract vs. Extended Auto Warranty?
  • What does a Vehicle Service Contract cover?
  • How much does a Vehicle Service Contract cost?
  • When should I buy a Service Contract for my car?
  • Where can I purchase a Vehicle Service Contract?
  • Is it transferable?
  • It's an Investement
  • What is a Vehicle Service Contract?

    A vehicle service contract is a type of contract that protects consumers from paying the expenses for certain services for vehicle repairs and maintenance, after their manufacturer warranty has expired.

    Doesn’t my regular car insurance cover that?

    While many people feel that they are adequately protected by their car insurance, which nearly all states require to license a vehicle, it does not protect consumers in all situations.

    Allstate explains that car insurance covers against damage to the car from accidents, fire, etc., but it will not protect drivers from the cost of repairing or replacing parts on their vehicle that have suffered damage from mechanical failure.

    But what if my car already has a warranty?

    This is a great question. It’s very common to see a car commercial and hear about the warranty that covers the vehicle in case something happens. The best commercials boast “10 years and 100,000 miles!”

    It’s true that all new cars are required to include a manufacturer warranty to safeguard the vehicle in case parts break or wear out too soon.

    However, those warranties do have limits and often are diminished in length if the vehicle changes owners.

    Edmunds has an extensive breakdown of the most popular car manufacturers and the warranties that they provide.

    After reading, it’s clear that not all manufacturers' warranties are created equal and your vehicle may not have the protection that you thought it did.

    Auto Service Contract vs. Extended Auto Warranty?

    It’s pretty common to hear the phrase “Extended Warranty” used interchangeably with “auto service contract”. However, there is a key difference between the two that consumers should be aware of when looking to purchase vehicle protection.

    An extended warranty is often sold by the manufacturer or at the dealership, most commonly for used vehicles. It is an extension on the original warranty, hence the name, that must be purchased within a specified period of time or amount of mileage.

    A service contract for cars is sold by a third party, has its own eligibility guidelines, and can be tailored to fit a consumer's needs and budget.

    For an in-depth look at the differences between vehicle service contracts and extended warranties check out our informative post here.

    What does a Vehicle Service Contract cover?

    A service contract for vehicles covers a vast number of components on a motor vehicle. Essentially anything that is covered by a manufacturer’s warranty can be covered by a vehicle service contract.

    It’s most common for a auto service contract to protect major parts of the vehicle’s powertrain such as the:

  • Engine
  • Transmission
  • Driveshaft
  • Drive Axle
  • That’s not all. Vehicle service contracts may also cover much more of a car, including high-tech components like navigation systems, power steering, and even the power window motors.

    The best service contracts are nearly identical to the original manufacturer's warranty.

    “Wear and Tear” items are generally not covered.

    Things that routinely wear out like tires brake pads, clutches, and windshield wiper blades are not covered under vehicle service contracts. This isn’t unusual as those types of things are never covered, even by the manufacturer’s warranty. You should also see the contract’s list of exclusions for further information.

    How much does a Vehicle Service Contract cost?

    Vehicle Service Contracts vary in price depending on a multitude of factors such as:

  • Age of the vehicle
  • How many miles are on the vehicle
  • Vehicle make & model
  • How the vehicle is used
  • The state you reside in
  • Modifications to the vehicle
  • Commercial or Rideshare usage
  • All of these things determine how much a vehicle service contract will cost to cover a specific vehicle.

    Generally, a newer vehicle with fewer miles will have the lowest cost with a higher level of protection. However, an older vehicle with higher mileage can still qualify for a service contract that has a great level of protection and a budget-friendly price.

    When should you buy a Vehicle Service Contract?

    The ideal time to purchase a car service contract is before the manufacturer’s warranty expires.

    By doing so, consumers ensure that they are protected from many car repair costs and never experience a lapse in coverage that could leave them vulnerable to expensive repairs.

    Also, while the vehicle is still relatively new and has lower miles, they will get the best possible level of coverage from their service contract at an affordable price.

    It’s a win-win.

    Where can you buy a Vehicle Service Contract?

    Consumers have many options when it comes to selecting a vehicle service contract.

    Fortunately, America's #1 auto protection company has made purchasing a service contract simple, affordable, and convenient.

    Many providers offer vehicle service contracts with terms based on years and mileage. For example, a typical contract may be for 3 years or 36,000 miles.

    CarShield offers vehicle service contracts with unique terms. This is because CarShield provides consumers with a month-to-month option.

    A month-to-month service contract from CarShield is essentially unlimited in time or mileage. The contract renews every month and that means you get the same level of coverage for as long a you want to keep the vehicle protected.

    To take advantage of this opportunity, simply go to Enter a few quick details about your vehicle and a specialist will help find the right option for you, your vehicle, and your budget.

    Now that you know what a vehicle service contract is, you have all the information you need to decide if one is right for you.

    Is It Transferable?

    In most circumstances, a vehicle service contract is transferable to a new owner for a small fee, so if you are planning to dish out money for one and you know you are going to sell it in the future, make sure you buy a warranty that can be transferred.

    In some cases, a vehicle service contract provides other, more useful benefits, like towing, car rental discounts, lockout services and trip-interruption benefits to help ease costs if something goes wrong with your car. Pick the best warranty for you and your needs.

    There are plans for all types of budgets and lifestyles. Different vehicle service contracts have different deductibles and requirements. Some require that you pay for the repairs upfront and then submit a receipt for repayment, which can defeat the purpose of a vehicle service contract altogether if you are out the money for an extended period. Others require that you meet a certain deductible before they will pay for anything. Be sure to shop around and get the best plan for you and your car’s needs.

    Look at the reliability of your vehicle. Read online reviews and see where other owners are having trouble. If you have a generally reliable used car, option for the vehicle service contract that has a higher deductible that may require submitting receipts. In all likelihood, you would probably never need to use it, but it is a nice way to guarantee peace of mind. An unreliable car could cost thousands to repair and keep on the road, so buy accordingly. You want a plan to save you money, not cost you more.

    Look at It as an Investment

    There are many good reasons for buying a vehicle service contract for your used car. Not only can it help with the financial burden of repairing on older vehicle, but also benefits like roadside assistance and an increased resale value are things that should not be over looked. Buying a vehicle service contract is an investment to not only save you money, but also keep your car on the road for years to come. Be sure to get a free quote from CarShield today for a great vehicle service contract you keep your vehicle protected for years to come.

    CarShield customer, Don, saved over $4,300 in auto repairs.
    CarShield customer, Don, saved over $4,300 in auto repairs.

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