Are Prepaid Car Maintenance Plans Worth The Money?
BOSTON (CBS) - It is a question you may be asked the next time you buy a car: Do you want a prepaid maintenance plan?
These are not extended warranties. They cover routine service to your car. But are they worth the money?
Think about all the times your car needs a tire rotation, an oil change, and other scheduled maintenance. Did you know you may be able to prepay for these expenses in a flat rate plan?
WBZ-TV's Paula Ebben reports
"I thought the idea of a prepaid maintenance plan, where I didn't have to worry whether or not I had money on my credit card, would be a great idea," said car customer Denise Karl.
Karl bought a prepaid plan for two different cars. Her first plan cost $1,500 and was added to the cost of her lease, allowing her to spread out the expense.
She calculated the plan saved her about $600 on maintenance.
"It definitely was a money saver to have it prepaid," she said.
But when she got another new car and bought a second plan for $800, she didn't realize it only covered oil changes. She was shocked when she was charged for other maintenance.
What each plan covers varies, but usually you can prepay for the scheduled maintenance that's listed in your owner's manual -- items not covered by the manufacturer's warranty. Some may even offer these prepaid repairs at a discount from the regular rate.
The plans are a hot item for dealers to offer at closing, but the Better Business Bureau warns customers not to let the pressure persuade them.
"These kinds of plans are relatively new, so we've received about 100 (complaints) over the past couple of years. We've certainly seen an uptick in the numbers," said Rodney Davis of the Better Business Bureau.
Some of the complaints include people claiming:
- Maintenance plans were added to their closing paperwork without their approval.
- They dropped their cars off for maintenance, but the work was not done.
- Repair shops went out of business and the car owner was out the money they paid.
The reality is when you sign up for a prepaid maintenance plan, you're literally fronting dealers and repair shops your cash, so be careful.
"These prepaid maintenance plans are a source of profit for the dealership, so they're really going to try to steer you toward that," said Roy Montoya of Edmunds.com.
If you're tempted to buy one, Montoya has an important tip.
"We've been told dealers mark them up -- up to 50 percent -- so you know try out offering half the price and then they may counter the offer and you can meet somewhere in between," he said.
Before you buy a prepaid maintenance plan, experts say read the details carefully to see how long it lasts and what it covers, and calculate the expenses to make sure you see savings.
And be sure to check out the business you are considering buying a plan from to see if it has complaints. If you plan on moving or selling your car before the plan is up, make sure it is transferable.
