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What are vehicle service contracts How it is different from extended car warranty

What are vehicle service contracts: How it is different from extended car warranty

In this article, we will discuss the difference between an extended car warranty and a vehicle service contract. A vehicle service contract is not officially considered an extended warranty plan. One of the most important differences between the two is that an extended warranty is provided by the automaker absolutely free of cost, while for a vehicle service contract, you have to pay a stipulated amount for the period of coverage.

What do they do for you

An extended warranty coverage and a vehicle service contract protect you from sudden expenses that – at times – you cannot afford. Sudden breakdown of your automobile, and the inconvenience of getting it to a service station, and the charges involved can be heavy on your pocket. You should know which coverage is right for you.

The difference between a vehicle service contract and an extended car warranty

As mentioned earlier, the major difference between them is that the vehicle service contract requires you to pay an amount to get coverage. Meanwhile, an extended warranty coverage is provided free of cost by the automaker.

A car warranty and what it does for you

  • A car warranty is a guaranteed agreement in which the automaker is responsible to provide you with car repair service, if you face an issue during a specified time period or mileage made.
  • Such warranties do not cover every part of the car
  • The manufacturer’s warranty is included in the cost of the car
  • An original warranty will be only for the car you bought from the manufacturer
  • These warranties are only for new cars

Vehicle service contracts

  • Vehicle service contracts are meant to protect certain parts of the car or the whole car
  • Vehicle service contracts can be made out during the period your original warranty is still valid, or after the original warranty expires
  • A vehicle service contract is acquired after the car is bought. These are third-party companies that offer such contracts and are not connected to the manufacturer of the car. These contracts do not include a car’s cost.
  • Unlike original warranties that last for a specified time period. These contracts can be bought or renewed or dropped. Or changes in the contracts can be easily implemented. For instance, if you wanted to have full body coverage, but now you only want the powertrain and transmission section to be covered, you can opt for the same. There is no such provision in original warranties
  • Vehicle service contracts last as long as you want them to last. As long as the car is operational a contract can be made out
  • You can deal directly with any one contractor of your choice

Any manufacturer’s warranty and a vehicle service deal will cover the major components of the car, the labor charges and any taxes in the situation the car breaks down.  Some original warranties even provide roadside assistance and vehicle services for your conveniences. So does a service contract as specified according to your needs. After all, you are paying for the contract and you can get anything with a vehicle service contract deal. But it depends on how much you can afford. The more you are ready to pay, the more facilities you get.

With an original warranty, you are only entitled to get what is stated in the agreement. If you tick-off some benefits from the warranty, it might reduce the price of the car. Not all manufacturers do this as they already have a prearranged warranty set-up. And they do not want to up-set the calculations now.

The manufacturers also offer extended car warranty coverage. They work like middle men for vehicle service contractors.

The pros and cons of even the best of the best contractors

The pros

  • With the passage of time, a vehicle is susceptible to breakdowns and malfunctioning. Having a valid extended warranty often helps you in critical times
  • Reputed vehicle service contractors use manufacturer parts and they make sure the best mechanics work on your car. You do not have to worry about car repairs
  • The contract is transferable. They can be both reimbursed or prorated too if you decide to trade the car in for another
  • People take into account how much a car will cost them down the years. Vehicle service contracts help people keep their budgets. Mechanics can charge more, or replacement parts can become more expensive. A sudden increase your car-related expenses will not affect your budget. The contract provides you the coverage under budget

The cons

  • If you maintain the car well, you may not face any issue in your car. Thus, paying monthly for a contract would be a waste of money
  • If you do not drive your car frequently, then the chances of a sudden breakdown are not so likely. Again, a contract is just a waste of money
  • Many contracts come with deductible expenses, so you still have to pay some amount. Deductibles are charges that are not covered in the contact. Some of the parts that are vulnerable to wear and tear, like nuts and bolts, wires and fuses or bulbs are considered as deductible expenses. You have to pay for their replacement or repair


It depends on your budget and your needs. If you drive your car frequently, we suggest you opt for a vehicle service contract. Otherwise, if you have a tight budget, or want coverage for important parts of the car, you can opt for extended warranty coverage.

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