If your considering the purchase of a pre-owned vehicle the car dealer should include an auto service contract to help protect your investment.  The Better Business Bureau recommends that in order to protect yourself, you first get all the facts about the service contract provider that is being offered to you.

Auto service contracts are sold by car dealerships but may be backed by an auto manufacturer, an insurance company, an independent service provider or the dealer.  Although an auto service contract may be referred to as an"extended warranty" it is not.  A warranty comes with a new car and is included in the original price.  A service contract may be arranged at the time of a vehicle sale and always costs extra.  Therefore you should carefully consider the price of the service contract in regards to the coverage provided.  

Mechanics' Choice does not sell service contracts directly to consumers.  We only place these contracts on vehicles sold through established dealers that are known to us, and they are available only at the time of the sale.  Our reasoning behind this policy is that most states regulate the condition of a vehicle at the time of sale by a dealer.  This gives us a reasonable assurance that the vehicle is in good, insurable condition.    

Consumers considering a service contract should carefully evaulate the company offering to provide the coverage. 

Questions to be considered include:

- Is this company known for standing behind their contracts?

- Have any contract holders sued the company for not paying legitimate claims?

- Is the company under investigation by any state Attorney General?

We suggest that you do a websearch using the company's name along with the word(s) "defendant" or "attorney general."  The results will give you additional information about the reputation and legal standing of the company.

A service contract should state exactly what it covers or excludes from coverage and for what period of time.  If the contract has a deductible component, ask if the deductible is per covered item repaired/replaced, or per shop visit.  If it is per covered item repaired/replaced then know that your portion of the repair bill may frequently be more than just a single deductible.  If it is per shop visit, know that you will be paying the deductible amount every time your car goes to the shop. 

Service contracts can be very beneficial to car owners, but be sure to carefully consider the company providing the contract.  Contact your Better Business Bureau for more information about extended auto warranty companies.