Car Dealer Service Agreements

Service Agreements that are offered by the dealer are a discounted package of pre-paid scheduled services.

They are a profit center for the dealer if they include more services than are required by the manufacturer. For example, if a customer buys a new Subaru, he will have a scheduled service every 7,500 miles.

However, the “F&I” manager can sell the customer a service agreement that would pay for services every 3,500 miles; this will, in effect, pre-sell these unscheduled services. If you normally change your oil with greater frequency than the minimum factory requirements, this is a great deal.However, if you traditionally stick to scheduled factory maintenance, it is a waste of money.

It is very easy to verify the pricing of the service agreement. Simply add all the scheduled maintenance costs and see if the service agreement is less than that total. Keep in mind that some service agreements may be valid only at the selling dealership. Therefore, if you buy a vehicle and then move across the country, the agreement will be invalid.

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