Service contracts that you may buy with a new car provide for the repair of certain parts or problems. These contracts are offered by manufacturers, dealers, or independent companies and may or may not provide coverage beyond the manufacturer’s warranty. The Federal Trade Commission recommends that before deciding to purchase a service contract, read it carefully and consider these questions:

  1. What’s the difference between the coverage under the warranty and the coverage under the service contract?
  2. What repairs are covered?
  3. Is routine maintenance covered?
  4. Who pays for the labor? The parts?
  5. Who performs the repairs? Can repairs be made elsewhere?
  6. How long does the service contract last?
  7. What are the cancellation and refund policies?