What's a Prepaid Maintenance Plan?

And when does it make sense to buy?

Capital One | 

Sep 17, 2021 | 2 min read

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Prepaid maintenance plans cover the regularly scheduled vehicle maintenance listed in the owner's manual, such as oil changes and tire rotations. For example, if you purchase a three-year, 36,000-mile maintenance plan, you’re prepaying for regularly-scheduled maintenance for three years or 36,000 miles (whichever comes first). It's important to understand that a prepaid maintenance plan can provide some coverage included in an extended warranty. If it does not, you may also consider an extended warranty to cover wear items such as brakes.

Many dealers offer prepaid maintenance plans at a certain discount from the standard servicing costs to help you save money. It also helps the dealer ensure you’ll return to its service department for the next few years. Regardless, you must remember that if you’re financing the maintenance plan as part of the car purchase, you’ll be paying interest on the cost of that maintenance plan.

Here are some factors you may want to consider:

• Before purchasing a prepaid maintenance plan, try to estimate how much real-world value it has. You can ask the service manager of the dealership to give you a list of all the required maintenance and their respective prices. The sum of these prices will give you a very good idea of any estimated savings.
• It may seem obvious, but you should evaluate how likely you are to use the maintenance plan. Where is the servicing facility located? If it’s not easily accessible for routine maintenance, that’s an important factor to take into consideration. Also, you may not get the full use of your plan if you decide to sell or upgrade your vehicle before the maintenance plan expires.
• The amount of interest you’ll pay is another factor that may help you make your decision. If you finance the maintenance plan as part of the car purchase, you’ll pay interest on the cost of that plan and could end up paying more than you originally anticipated.

If you’re interested in purchasing a prepaid maintenance plan, you should take the time to do some research and ensure you understand exactly what you’re purchasing.

Capital One

Banking should leave you with the same great feeling you get when you drive casually on a weekend afternoon. And that’s how I feel when writing helpful tips and reviews – passionate about cars and passionate about financing and everything in between when buying a new ride.