PHILADELPHIA (CBS) — It’s the latest question car buyers are being asked these days, do you want a “prepaid maintenance plan”? These are not extended warranties. Instead these plans cover routine kinds of service to your car. 3 On Your Side Consumer reporter Jim Donovan looks into whether they’re worth the money.

Need a tire rotation? An oil change and other scheduled preventative maintenance?

Well more and more car buyers are opting to “prepay” for these expenses in a flat rate plan.

“I thought the idea of a prepaid 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 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 prepaid,” said Karl.

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

“I was very disappointed,” said Karl.

What each plan covers varies, but usually you can prepay for the scheduled maintenance that’s listed in your owners manual. Some may even offer these prepaid repairs at a discount from the regular rate. The plans are a hot item for dealers to offer at closing.

“These prepaid 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 with

Before you buy, experts say, read the details carefully to see how long the plan lasts and what it covers, and calculate the expenses to make sure you see savings.

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

If you’re tempted to buy one, Montoya has an insider secret to getting a good deal.

“We’ve been told dealers mark them up, up to 50%. So you know, try out offering half the price and then they may counter the offer and you can meet somewhere in between,” said Montoya.

If you plan on moving or selling your car before the plan is up – make sure it’s transferrable.


Reported by Jim Donovan, CBS 3

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