Vehicle Service Contracts and Their Benefits
Sign Up to get great deals for cars!
Subscribe to our blog that will make you look like an expert dealer.
Owning a car comes with many perks like utility, convenience, and comfort. More than anything, a vehicle gives you reliable transportation to go where you need to and take care of daily responsibilities.
But what about when you run into mechanical issues? While today's vehicles' build quality is better than ever, they're not perfect, and things can go wrong.
Though every new vehicle leaves the factory with a manufacturer's warranty, what if you own a used car? Is there still a way to be protected from a mechanical breakdown on the road?
That's where vehicle service contracts come in. But what is a service contract on a car?
Let's look at the details of extended service contracts and how they can keep you protected from significant repair costs.
The basics of a car warranty
Every new vehicle comes with a bumper-to-bumper factory warranty provided by the manufacturer. In addition to bumper-to-bumper coverage, other particular warranties cover different parts of a car, like a powertrain, emissions system, and bodywork.
The factory bumper-to-bumper limited warranty provides extensive protection from manufacturer's defects or mechanical problems for several years after purchase. Terms vary from company to company, but usually, bumper-to-bumper warranties last for three years or 36,000 miles, whichever comes first.
Next is the powertrain warranty, which protects the components that make a car go, like its engine, transmission, transfer case, and driveline. Typically, powertrain warranties cover more years and miles than the bumper-to-bumper warranty, with standard terms about five years or 50,000 miles.
The sheet metal on a new car comes protected with a rust and perforation warranty that guarantees its durability for a specific period, which differs depending on the manufacturer.
Due to federal rules requiring warranty protection, a vehicle's emissions system receives warranty coverage for two areas: performance and design and defect. Typically, emissions system coverage lasts for two years or 24,000 miles. But some companies cover the emissions system as part of their bumper-to-bumper warranty, like Toyota.
Buying a used vehicle is a wise financial decision. But after you decide on the car you want, how can you ensure it keeps running strong year after year? Shift offers best-in-industry extended service contracts to protect you from the unexpected and help your vehicle stand the test of time. Shift Vehicle Protection Plans provide comprehensive coverage for mechanical and electrical problems, saving you from expensive repairs. And if you need an auto loan, Shift works with a network of trusted lenders who compete for your business, so you get the best deal on financing.
What is a service contract on a car?
Vehicle service contracts extend warranty protection on your vehicle after the original manufacturer's plan expires. So instead of being responsible for costly repairs should something go wrong, you only have to pay a deductible to get back on the road again.
Extended service contracts are available from manufacturers and third-party service contract providers and offer a range of covered repairs and exclusions, depending on your preference.
A manufacturer's extended car warranty usually begins the moment your bumper-to-bumper auto warranty expires and lasts for a period of miles or years, like the original.
A vehicle service contract purchased from a third-party provider offers additional flexibility, allowing you to sign on at any time, as long as your vehicle's under a specific mileage limit.
And just like those available from manufacturers, third-party extended service contracts last for a particular period.
Either route you decide to take, you have peace of mind mile after mile.
Shift Vehicle Protection Plans offer many benefits that allow you to drive anywhere, knowing help is just a phone call away. With a Shift Vehicle Protection Plan, not only are essential components like the engine and transmission covered, but you also receive roadside assistance in the event of unexpected trouble. Wherever you may be in the continental U.S., Alaska, Hawaii, or Canada, support is available via toll-free number, 24 hours a day, seven days a week, 365 days a year. Shift Vehicle Protection Plans are affordable and convenient, so convenient that if you happen to finance your new-to-you car with Shift, you can even add your plan to your monthly payments.
What does an extended service contract cover?
Standard vehicle service contracts offer extensive protection from various mechanical failures like the engine, transmission, suspension, and steering.
However, like the original manufacturer's warranty, an extended service contract doesn't cover normal wear and tear on tires and brake pads or routine maintenance like oil changes.
Less thorough vehicle service contracts only apply to essential components like the powertrain and offer lower pricing.
Besides covering the cost of restoring your vehicle to roadworthy condition, an extended service contract may provide other amenities like roadside assistance, towing services, and rental car reimbursement.
2015 Audi A4 Premium Plus (from $21,550)
What is a service contract fee when buying a car?
The price of vehicle service contracts depends on your choice of coverage options, as well as the deductible amount. Similar to the cost of auto insurance, the more comprehensive the protection, the higher the expense.
If you want protection that rivals your original manufacturer's warranty, a bumper-to-bumper auto service contract may be the best option.
Or, if you'd like to minimize your costs, a less expensive plan that covers only the powertrain could suit you better.
If something goes wrong with your vehicle during the term of an extended service contract, first, you pay a reasonable deductible before receiving reimbursement. Deductibles for vehicle service contracts range from $0 to several hundred dollars.
But with the average claim for transmission or an engine assembly costing $2,756 and $3,269, only being responsible for a small deductible is a relief.
Vehicle service contracts give you protection from the cost of car repairs. But purchasing a quality vehicle ensures you spend as little time as possible in the repair facility. At Shift, certified mechanics perform 150-point inspections on every car sold, and you get a free Carfax report for the ultimate in transparency. And you can buy any of Shift's cars directly online from the comfort of your home, know it has no hidden issues (from our 150-point inspection), and get a fair, up-front price. Interested in a Shift vehicle but want to take a test drive first? If you live in one of our many service areas, a concierge will drive to you, letting you get a feel for its performance before signing the papers.
2016 Lincoln MKC Reserve (from $20,200)
Vehicle service contracts in summary
When the manufacturer's warranty on your vehicle runs out, an extended service contract protects you from repair costs for the years and miles ahead.
With typical mechanical fixes costing hundreds and even thousands of dollars, paying a small deductible saves you from financial difficulty and keeps extra cash in your bank account.
Whether from a manufacturer or a third-party provider, vehicle service contracts give you peace of mind, no matter where you drive or how long of a trip. And in addition to helping pay for time spent in a repair shop, an extended service contract can provide additional perks like roadside assistance or rental car reimbursement.
2019 Chevrolet Corvette Grand Sport 2LT (from $67,950)
The views expressed in this article do not necessarily reflect the views of the author or Shift Technologies, Inc. Shift does not endorse or evaluate the accuracy of any claims made or data provided by third party sources referenced herein.
This article is for informational and educational purposes only and may contain copyrighted material, the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our effort to advance auto education. We believe this constitutes "fair use" of any such copyrighted materials as provided for in Section 107 of the US Copyright Law. The material in this [article/blog/website] is distributed without profit and only to those who have demonstrated an interest in receiving the included information for research or educational purposes.
All prices are based on vehicle availability and pricing as of
April 15, 2022
Pricing shown is not guaranteed and does not include taxes or other product fees.