My mechanic mentioned a service contract, what Is that?

Many vehicle dealers and others sell optional service contracts. Vehicle manufacturers or independent companies issue these contracts. Not all service contracts are the same; prices vary and usually are negotiable. To help decide whether to purchase a service contract, consider:

  1. The cost.
  2. The repairs to be covered.
  3. Whether coverage overlaps coverage provided by any other warranty.
  4. Where the repairs are to be performed.
  5. Procedures required for filing a claim, such as prior authorization for specific repairs or meeting required vehicle maintenance schedules.
  6. Whether repair costs are paid directly by the company to the repair shop or whether you will have to pay first and get reimbursed, and
  7. The reputation of the service contract company. This can be found by checking with your state Attorney General`s office or local consumer protection agency.

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