A vehicle service contract, also known as an extended warranty or auto service contract, is an optional service that covers certain vehicle problems or repairs after the dealer or manufacturer warranty expires. It is a paid plan that helps cover costly car repairs and takes effect once the new vehicle warranty has expired. Vehicle service contracts can be purchased for both new and used cars, though the likelihood of repairs increases as the vehicle begins to age.

Vehicle service contracts are offered by manufacturers, dealerships, and private companies. They cover unexpected or costly repairs that are not covered by the manufacturers warranty or insurance. Auto service contracts usually kick in when the manufacturers warranty expires. They can cover regular scheduled maintenance like oil changes and system inspections, but it is important to read the details of the plan to know what is actually covered.

If a car needs repairs and it is covered under the contract, the owner will submit a claim to the provider, who will then send payment directly to the repair shop. However, there may be more steps to submitting and verifying a claim, depending on the provider.

Vehicle service contracts can be sold by dealers, automakers, insurance companies, and independent firms with administrators. Prices and coverage vary widely, and it is important to manage expectations by reading the details of the plan and knowing what it actually covers and to what degree.

In summary, a vehicle service contract is an optional service that covers certain vehicle problems or repairs after the dealer or manufacturer warranty expires. It can be purchased for both new and used cars and is offered by manufacturers, dealerships, and private companies. Vehicle service contracts cover unexpected or costly repairs that are not covered by the manufacturers warranty or insurance.