Before you sign that auto service contract

by admin | Posted on Tuesday, July 21st, 2015

Buying a car can be intimidating.  You’ll have lots of terms and lingo thrown at you that you may not necessarily understand.  One such example is when a car salesman may try to talk you into purchasing an additional auto service contract.  Many people are entice to purchase the contract because they dread the idea of going into an auto shop for repairs.  That’s just as intimidating!  Generally, auto service contracts hold the car dealer responsible for the cost of any repairs to the vehicle you are buying, for a specified period of time.  But are auto service contracts really necessary?

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Before you sign on the dotted line and fork over the extra dough for a service contract, there are a few things to keep in mind:

  1. What does the contract actually cover?  What are the terms and conditions?  Always make sure you know exactly what you’re paying for – what’s included and, even more importantly, what’s not.
  2. Who will be performing the services included in your contract?  Will the repairs be performed right onsite at the dealership or will the job be outsourced? Knowing who exactly will be performing the work is important so there is no ambiguity about who should be held accountable if there are any issues.
  3. Is the entity who would be servicing your vehicle reputable?  It’s important to do your research to ensure you would be handing your vehicle over to the care of a company who is reputable.  Ensure they have been in business for a respectable amount of time and that they do not have any complaints filed against them.  Also, ask trusted family and friends if they have had any experiences with the company, for better or worse.
  4. Most importantly, consider the cost.  Will the price of the contract pay for itself?  In some cases, the answer will be no.  For example, if you are purchasing a brand new car, it’s not likely to need much in the way of auto repair Mississauga residents.  What’s more, even if there were to be a problem, your car will still be under the manufacturer’s warranty, which could cover the cost anyway.  In some cases, it may be cheaper to pay for problems yourself if issues arise before the warranty expires than it would cost to pay for the service contract.

If you are considering buying a car, be aware that the sales associate may suggest that you purchase a service contract.  Before you agree to this extra expense on top of an already-expensive purchase, it’s important that you take the time to consider all the facts.  Be sure you are clear on what’s included, what’s excluded, who would be doing the work, etc.  This will help you to determine whether it’s a good idea to purchase the service contract or not.  In some cases it may be, in others, maybe not.

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