Should You Get a Prepaid Car Maintenance Plan?

• A prepaid maintenance plan covers basic maintenance costs upfront, potentially saving money and adding convenience.

• Plans usually include routine services like oil changes and tire rotations. 

• It may be worth considering a plan if it offers savings, convenience, and aligns with your car usage patterns, but may not be ideal if you have a trusted mechanic or prefer flexibility.

A prepaid maintenance plan represents a contract between you and a dealership that locks in vehicle service costs for basic maintenance required on your new vehicle to protect its longevity. Rather than paying for maintenance as you go, you can opt for a prepaid maintenance plan to front-load those costs and gain a few benefits. If you incorporate a prepaid maintenance plan as part of your vehicle purchase, you can fold that cost into your financed amount to reduce upfront financial commitments. 

When you purchase a prepaid maintenance plan, the dealership remains responsible for scheduling maintenance intervals based on what’s outlined in the prepaid plan. As those appointments arise, you’ll receive reminders to prompt you to come in for the scheduled service. This procedure continues until your plan expires or you sell the vehicle, whichever comes first. 

Prepaid maintenance plans can help you maintain your vehicle without worrying about requesting and comparing quotes from independent shops and scheduling services yourself. Some prepaid maintenance plans can even increase the value of your car. However, you may be restricted to a single dealership or network for repairs. The service intervals laid out in the prepaid maintenance plan may or may not also coincide with the manufacturer’s recommended maintenance schedule. 

The following maintenance procedures often appear as covered services by prepaid maintenance plans: 

• Engine oil and oil filter changes 
• Engine and cabin air filter changes
• Replacement of fluids such as brakes, power steering, coolant 
• Tire rotations

Many prepaid maintenance plans incorporate exclusions that limit coverage of specific components. For instance, this type of plan doesn’t cover malfunctioning or broken components. Replacement of windshield wiper blades, brake pads, and tires are also often excluded. If you want these benefits, you’re better off looking into an extended or limited warranty. 

One of the advantages of buying a used car is that prepaid maintenance plans can help solidify your car maintenance budget for a predetermined amount of time. If you purchase a plan that lasts for three years, you know how much you’ll spend on maintenance such as oil changes. This feature is handy for used cars versus new ones because used cars tend to require more when it comes to unexpected repairs. 

Prepaid maintenance plans can also help reduce potentially high costs of maintaining electric vehicles (EVs) for the first few years. One of the double-edged swords inherent in the pros and cons of hybrid cars is that there are fewer components to fail, but those components that do give out tend to cost more to fix. With a prepaid maintenance plan, EV owners know the maintenance cost within the first few years and can even bundle it into their finance deal. Any battery failure (perhaps the most significant cost of EV ownership) typically falls under the manufacturer’s warranty, giving EV owners peace of mind regarding maintenance. 

The key to determining if a prepaid maintenance plan is worth it is to weigh the advantages and disadvantages. Below are the pros and cons associated with prepaid maintenance plans: 

Figuring out if a prepaid maintenance plan suits your needs may require sitting down and listing how these plans can affect you individually. If you’d rather avoid having to compare quotes from several repair shops for basic maintenance, a prepaid plan can simplify your decision. However, if you’ve already established a relationship with a local mechanic, paying the dealership for prepaid maintenance may not make sense. 

Prepaid maintenance plans vary as much as hourly labor rates and service fees between automotive manufacturers. For example, maintenance plans from Ford or Hyundai tend to cost less than those of luxury brands like Volvo or Cadillac. However, you can often negotiate the cost of these prepaid maintenance plans to stretch your savings further and increase your return on investment. 

Prepaid maintenance plans can be worth it if: 

• You can negotiate a discounted price
• You want the dealership to handle scheduled maintenance 
• The cost of repairs done somewhere else exceeds the cost of the coverage plan
• You want to minimize maintenance costs for the first few years of ownership
• You’re leasing and want to increase the car’s residual value
  
  

However, you might reconsider purchasing one if: 

• The cost of repairs done at an independent repair shop is lower than the cost of the prepaid maintenance plan 
• You perform your own maintenance 
• You want to choose where you take your vehicle for service
• You already have an existing relationship with a trusted mechanic 
• You don’t want to pay for maintenance upfront or finance and pay interest on the purchase

Calculating the cost of prepaid maintenance plans 

Deciding if prepaid maintenance plans are worth it depends on how you approach car maintenance costs of ownership. Many prepaid plans allow you to choose a time frame or mileage limit that suits your needs, with several extending to 150,000 miles. Selecting the best terms can require some calculations. 

Consider the maintenance costs associated with owning a Volkswagen Jetta, per RepairPal, for the first 20,000 miles: 

• 5,000-mile service: $139 to $147
• 7,500-mile service: $291 to $317
• 10,000-mile service: $264 to $302
• 15,000-mile service: $559 to $661
• 20,000-mile service: $375 to $438  

It would cost you between $1,628 and $1,865 to own a VW Jetta for the first 20,000 miles if you paid for maintenance services out of your pocket. If you could purchase a prepaid maintenance plan for $1,200, or even $1,500, you’d still come out ahead. However, if you financed the plan and ended up paying $2,000 all said and done, you’d have lost money in prepaying for repairs. 

Perform calculations like those above to see if a prepaid maintenance plan fits your lifestyle. Otherwise, set aside funds to cover unexpected and routine maintenance costs to avoid premature wear and tear.