Top 10 Myths About Service Contracts

Top 10 Myths About Service Contracts – And the Truth Behind Them

When it comes to service contracts, there’s a lot of misinformation out there. Some people think they’re unnecessary, while others believe they’re just a way for dealerships to make extra money. The reality? A service contract can be one of the smartest investments you make for your vehicle. Let’s break down the top 10 myths about service contracts and uncover the truth.

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1. Myth: “Service Contracts Are Just a Waste of Money.”

Reality: Many people assume they’ll never need a service contract—until they do. A single unexpected repair can cost more than the entire contract. For example, replacing a transmission can cost upwards of $5,000. Instead of being hit with an unexpected expense, a service contract ensures you have predictable, manageable costs.  It’s not about  if something will happen—it’s about when.

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2. Myth: “New Cars Don’t Need a Service Contract.”

Reality: While new cars are less likely to break down immediately, they’re not immune to mechanical or electrical issues. Plus, modern vehicles are packed with high-tech features that can be expensive to fix.

Even something as simple as an infotainment system repair can cost over $2,000. A service contract helps you stay covered as your car ages and factory warranties expire.

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3. Myth: “I’ll Just Pay for Repairs When They Happen.”

Reality: This approach sounds reasonable—until you’re faced with a massive repair bill . Modern cars are more complex than ever, and repairs are unpredictable. Would you rather pay a small , manageable amount each month or risk an unexpected $3,500 bill for a transmission failure? A service contract provides financial security and peace of mind.

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4. Myth: “My Manufacturer’s Warranty Covers Everything.”

Reality: Manufacturer warranties are great, but they don’t last forever. Most cover a set number of years or miles, leaving you vulnerable once they expire. Additional y, many warranties exclude wear-and-tear components and certain repairs. A service contract picks up where the factory warranty leaves off, ensuring you stay protected for the long haul.

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5. Myth: “Service Contracts Don’t Cover What Really Matters.”

Reality: A reputable service contract covers key components like the engine, transmission, electrical systems, and even high-tech features like sensors and infotainment systems.

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6. Myth: “If I Sell My Car, the Contract Is Wasted.”

Reality: Most service contracts are transferable, which means the new owner can take advantage of the coverage. Plus, service contracts offer a refund on unused portions if you sell your car early.

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7. Myth: “Dealerships Push These Just to Make More Money.”

Reality: While dealerships do profit from service contracts, they also provide real value to customers.

Dealers know how expensive repairs can be and offer service contracts to help customers avoid unexpected costs.

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8. Myth: “I’ve Never Had a Major Repair, So I Don’t Need It.”

Reality: Just because you haven’t had a major repair yet doesn’t mean you won’t in the future. As your car ages, the likelihood of needing costly repairs increases. Even routine wear-and-tear can lead to expensive fixes, making a service contract a smart safety net.

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9. Myth: “Service Contracts Are Hard to Use—They Won’t Pay for Repairs.”

Reality: A good service contract is designed to make the claims process easy. Many al ow you to choose your repair shop, including dealership service centers and certified mechanics. Reputable providers work directly with repair facilities to cover approved repairs, minimizing hassle and out-of-pocket costs for you.

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10. Myth: “Extended Warranties and Service Contracts Are the Same Thing.”

Reality: Many people confuse manufacturer-backed extended warranties with service contracts. While both provide protection, a service contract typically covers a wider range of components, offers flexible terms, and may provide additional benefits like roadside assistance and rental coverage. Unlike manufacturer warranties, service contracts can also be customized to suit your needs.

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The Bottom Line: Service Contracts Provide Real Value

At the end of the day, a service contract isn’t just an added expense—it’s an investment in your peace of mind. Whether you drive a brand-new car or one with a few years on it, having coverage ensures you’re prepared for unexpected repairs. With today’s complex, high-tech vehicles, repair costs are higher than ever. A service contract helps protect you from financial surprises, so you can enjoy the road ahead with confidence.

If you’re considering a service contract, be sure to choose a reputable provider and review the terms careful y. The right plan can save you thousands and keep your car running smoothly for years to come.

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