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Auto Service Contracts: What You Need to Know  
by Cat Tobin

During the car buying process, your dealer may try to talk you into additional extras and services. One, in particular, is an auto service contract. Though they aren't necessarily required, many car buyers feel enticed into buying one in order to protect themselves against unforeseen circumstances, such as expensive car repairs.

In general, auto service contracts pledge that the responsible agency, usually the car dealer, will provide the necessary services or repairs that the contract holder is entitled to.

When it comes time to make a decision about an auto service contract, these are the factors you need to consider:

1. Be aware of the terms and conditions stipulated in the auto service contract. Make sure you're clear as to what services and repairs are included, and which are not.

2. You should know exactly who will be performing the required services. Will the car dealership be making the repairs or performing all services onsite? Or, do they outsource it to a third party?

3. You should find out the reputation of the company repairing or servicing your vehicle. How long have they been in business? Have any complaints been filed against them?

Finally, the most important thing to consider is the cost of the auto service contract. Will it be money well spent?

If it's a brand new car, or one still under the manufacturer's warranty, is the added expense really economical?

Would it be cheaper to pay for any mechanical problems yourself should they come up before the warranty expires? Or, would it be cheaper to have regular maintenance performed by your regular mechanic?

These are important factors that should be taken into consideration before purchasing any auto service contract.

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