Assuming that you’re asking about an extended service contract rather than an agreement that covers routine maintenance, this would be a contract that provides specific repairs and other benefits for mechanical problems that are not covered by a vehicle’s warranty. You pay X amount of dollars for the contract, and an insurance company agrees to cover certain repairs over a specified number of miles and time period.


Such agreements are sold under various names, including extended warranties, vehicle service agreements, mechanical breakdown insurance and others. Their cost and what they cover can vary widely (they are available on new and used vehicles), plus we don’t know your driving regimen, so we cannot say whether it is a good idea to buy one.

However, they usually provide little or no benefit while factory warranties remain in effect, and the prices are generally negotiable. You can learn more about this in the Advice section in our discussion of what to expect in the finance and insurance stage of buying a vehicle, here.

Moreover, a Consumer Reports survey published a few years ago found that most vehicle owners spent more on extended service contracts than they received in benefits. Vehicles have become more reliable, and many come with 100,000-mile powertrain warranties (GM, Chrysler, Hyundai and Kia, for example), so we suggest you think carefully before you plunk down $1,000 or more for an extended contract.

Learn more

Answered by Rick Popely on December 25, 2012 in How Does That Work? | Permalink

Search Results Search Results for


See if your question has already been asked and answered

Thank You!

Your question has been successfully submitted to It will now be reviewed by our editors and we'll answer it soon if we think it's a useful question. You will be notified via e-mail when the answer is posted. tackles your questions about new cars and the car-buying process. Unfortunately we can't answer questions regarding:

  • Used cars.
  • Most aftermarket products.
  • Mechanical issues. You can visit our friends at Car Talk to discuss your mechanical problems.
Thanks for your interest.


Have our experts answer any of your questions about new cars.

Email us at

Maintenance Advice
Get answers from the
Car Talk Community