Considering a Prepaid Car Maintenance Plan? Think Again. What You Need to Know.
Are you in the market for a new or used car? Did the salesperson offer you a prepaid car maintenance plan, or are you researching these plans on your own? Are there alternative offerings to prepaid car maintenance plans worth considering? Prepaid maintenance plans can be a confusing topic, so this post aims to provide some clarity.
Before we begin, let’s not confuse prepaid car maintenance with extended warranties or vehicle service contracts. The latter being an entirely different offering that covers specific components of a vehicle when encountering a mechanical breakdown.
Prepaid Car Maintenance Plan
First, let’s define what a prepaid car maintenance plan is. It’s a service contract where you pay an upfront fee ($$) to cover the cost of future routine maintenance services for your vehicle over a set time or mileage limit. Basic plans include oil changes, tire rotations, and multi-point inspections. More comprehensive plans will cover engine and cabin air filters, fluid replacements, and other general services. The specific terms and coverage can vary by plan and vehicle make.
The main selling point of these plans is that they’re supposed to save you money on maintenance costs and protect you from unexpected repair bills. However, the value you get is not always clear-cut. Prepaid plans have very specific limitations and exclusions that you need to closely review. See table below for a high-level summary of these limitations and exclusions.
So are prepaid maintenance plans worth it? Here are a few things to consider:
Alternatives to Prepaid Car Maintenance Plans
There are a couple alternatives worth looking into:
- Do-It-Yourself maintenance (DIY) – If you’re willing to get your hands dirty, you can save a lot by performing basic services like oil changes yourself. You’ll just need to familiarize yourself with your vehicle’s maintenance schedule. Then watch “how to” videos on youtube.com
- DIY / Do-it-for-Me (DIFM) – Familiarize yourself with your vehicle’s maintenance schedule. Find simple items that you can identify with, such as an oil change or a filter change. Call around and get pricing and availability from local mechanics that can perform the services required. You may pay retail pricing for your required services. It’s a time-consuming process, but your hands will be free of grease.
- Subscribe to Openbay+ – Let Openbay do all the work for you. Openbay+ is a subscription-based service that offers discounts on automotive repair and maintenance services. It connects car owners with a nationwide network of service centers, allowing owners to compare services, prices, reviews, and amenities before booking an appointment online. You get discounts on services without the upfront cost of a prepaid plan.
Comparing Prepaid Car Maintenance with Openbay+
The following table highlights Prepaid maintenance plans specific limitations and exclusions and then compares them to Openbay+.
Prepaid Car Maintenance (PPM) | Openbay+ | |
Services | Limited number of services covered: PPM typically follow manufacturers maintenance schedule (oil replacement, tire rotations, filter changes, fluid replacement) | Unlimited repair and maintenance services available to include auto body and car wash services. |
Parts | Does not cover mechanical and electrical malfunctioning parts, worn out or broken parts, and the labor associated with parts replacement. | All parts and labor included. |
Cost | Cost of a PPM depends on: vehicle year, make, & model, condition, mileage, and geographic location of the vehicle where state taxes may be applicable. The cost of a PPM can actually exceed the cost of the individual services performed. | Subscription pricing is a flat fee and not dependent on vehicle year, make, model, mileage, condition or location. Annual savings range from $300 - $500 depending upon vehicle type. Return on investment (ROI) exceeds 400%. |
Term | Limited term options: Fixed mileage intervals, or one-to-five-year term. | Flexible subscription terms: Monthly or annual |
Service Alignment | Manufacturers maintenance schedule may be misaligned with PPM service intervals and driver behavior. Some PPM allow one oil change after every 10,000 miles. Example: if a vehicle requires an oil change every 6,000 miles, vehicle is overdue for service by 4,000 miles which is no longer covered by the PPM. | Aligned with manufacturer maintenance schedule and driver behavior. Some drivers may live in areas of extreme weather conditions (cold, hot) and drive in heavy traffic areas where stops are frequent, therefore requiring additional services. |
Proximity | Some PPM are limited on where a consumer can take their vehicle for service. Example: Customer may be required to service their vehicle at the dealership that sold the PPM. A PPM has no value if a customer moves. | Multiple choices on where and who can service a customer vehicle |
Expectations / Lock in | Some PPM require the customer to get service at the same location where the PPM was purchased. If dealership service department is not meeting customer service expectations - customer is locked into a long term relationship with an unfavorable service partner. | Many types and brands of automotive service professionals; National and regional brands. Mobile mechanics. Local professionals. New and used car dealerships. All customer ratings and reviews are presented to customers prior to booking an appointment. |
Pricing & Discounts | In some cases, PPM may cost more than the actual cost of itemized services even when discounts are applied. Customers may be locked into paying high dealership hourly labor rates and paying for expensive OE parts (Original Equipment). | Openbay+ delivers multiple competitive price estimates with savings as much as 25% on itemized parts and labor. Customer gets to select from dealerships and independent auto service centers at national and local brands. |
Exclusions | Some PPM are based on vehicle year-make-model and mileage. If certain criteria is not met, vehicle is excluded from coverage. | All vehicles supported. No exclusions based on vehicle age or vehicle mileage. |
Transfer | PPM is tied to a vehicle and may not be transferred at the time of a vehicle sale. | Subscriptions can be transferred from one vehicle to another. |
Pay for what you need | PPM for modern vehicles (just outside the manufacturer warranty) may require minor services like oil and filter changes and tire rotations. Customers may be spending more on maintenance than necessary. | Openbay+ provides a services menu. Pay for what is required, nothing more. |
Other Services | PPM covers general vehicle maintenance services only. | Openbay+ includes discounts on auto body services and car washes. |