• BREAKING NEWS ABC shows live and on-demand -- Download the WATCH ABC app!

Pre-paid maintenance plans may not save money

October 10, 2011 12:00:00 AM PDT
Think about all the times your car needs a tire rotation, an oil change and other scheduled preventative maintenance. You can pre-pay for these expenses with a flat-rate plan, but are they worth the money?

"I thought the idea of a pre-paid maintenance plan, where I didn't have to worry whether or not I had money on my credit card, would be a great idea," said Denise Karl.

Karl bought a pre-paid plan for two different cars. Her first plan cost $1,500 and was added to the cost of her lease, allowing her to spread out the expense. She calculated the plan saved her about $600 on maintenance.

"It definitely was a money saver to have it pre-paid," she said.

But when she got a new car and bought a second plan for $800, she didn't realize it only covered oil changes and was shocked when she was charged for other maintenance.

"I was very disappointed," Karl said.

What each plan covers varies, but usually you can pre-pay for the scheduled maintenance that's listed in your owner's manual. These are things not covered by the manufacturer's warranty.

But the Better Business Bureau warns they are getting complaints that include:

  • Maintenance plans were added to their closing paperwork without their approval.
  • They dropped off their cars for maintenance, but the work was not done.
  • Repair shops went out of business, and the car owner was out the money they paid.

Experts at Edmunds.com say when you sign up for a pre-paid maintenance plan, be careful.

"These pre-paid maintenance plans are a source of profit for the dealership, so they're really going to try to steer you toward that," said Ron Montoya of Edmunds.com.

So before you buy, read the details carefully to see how long it lasts and what it covers, and calculate the expenses to make sure you see savings.

Once you buy a plan, you're stuck going to that dealer or repair shop. If you finance the plan with your car loan, it means you're paying interest on it, costing you more.

If you're tempted to buy one, here's one insider secret to getting a good deal:

"We've been told that the dealers will mark them up, up to 50 percent, so try out offering half the price, and then they may counter the offer, and you can meet somewhere in between," Montoya said.

Be sure to check out the business, you're considering buying a plan from to see if it has complaints, and if you plan on moving or selling your car before the plan is up, make sure it's transferrable.

Load Comments