Arizona Attorney General

Mark Brnovich

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Service Contracts And Extended Warranties

Service contracts or extended warranties provide for the repair of certain parts or problems. These contracts are offered by manufacturers, dealers or independent companies.

When deciding whether to purchase a service contract or extended warranty, consider the following questions:

  • Who is the provider of the coverage?  Is it a manufacturer’s policy or offered by a private company that may be unreliable or go out of business? 
  • Used car service contracts may count the mileage or time period from the time the car was new—for example, the purchase of a 75,000 mile extended warranty on a used vehicle with 40,000 miles is only in effect for the remaining 35,000 miles.  Pay careful attention to the fine print concerning the time and mileage period covered.
  • What is the difference between the coverage under the manufacturer’s warranty for the vehicle and the coverage under the service contract or extended warranty? Most new vehicles already come with at least a 3-year or 36,000-mile warranty. 
  • Should I purchase this coverage now, or can I wait until later when I can comparison shop and put some time into reviewing the offer?
  • What repairs are covered?  Routine maintenance and wear and tear are probably excluded.
  • Who pays for labor? Who pays for parts?
  • Who performs the repairs? Can repairs be made elsewhere or only at the dealership where you made the purchase?
  • Most of these policies can be cancelled for a pro-rated refund.  You should cancel as soon as possible if you decide the purchase of the policy was unwise or overpriced. 
  • If the cost of the policy was financed, cancelling the policy may not lower your monthly payments, although it can reduce the total amount of money you owe and shorten the term of your loan.