Buying a car? You also may be encouraged to buy an auto service contract to help protect against unexpected, costly repairs. While it may sound like a good idea, don't buy in until you understand both the terms of the contract and who is responsible for providing the coverage.

The Auto Service Contract

A service contract is a promise to perform (or pay for) certain repairs or services. Sometimes called an "extended warranty," a service contract is not a warranty as defined by federal law. A service contract may be arranged at any time and always costs extra; a warranty comes with a new car and is included in the original price.
The separate and additional cost distinguishes a service contract from a warranty.

Article Contents

The Terms

Does the service contract duplicate any warranty coverage?

Who backs the service contract?

How much does the auto service contract cost?

What is covered and not covered?

How are claims handled?

Are new or reconditioned ("like") parts authorized for use in covered repairs?

What are your responsibilities?

What is the length of the service contract?

Used Cars: Warranty Protection

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