The Ultimate Guide to Car Service Plans: What You Need to Know

27 Jan 2025

When purchasing a car—new or used—you’ll likely be offered a car service plan as part of the deal. This plan covers the cost of scheduled services over a specific period or mileage.

But should you sign up for one? Before making a decision, read this guide to understand what car service plans cover, how they work, and whether they’re right for you.

What Is a Car Service Plan?
A car service plan is a prepayment program that covers routine maintenance for your vehicle over a set time or mileage. Payment can be made upfront or through monthly installments, depending on the provider.

What Does It Cover?
Service plans typically include standard servicing tasks, such as oil changes, filter replacements, and vehicle inspections. However, coverage can vary widely:

Basic plans cover only scheduled maintenance.
More comprehensive plans may include repairs and replacement parts.
Tip: Always confirm what’s included. Components like brakes and tires are often excluded as they’re classified as wear-and-tear items.

How Do Car Service Plans Work?
When you sign up for a car service plan:

Payment: You agree to pay either upfront or monthly.
Coverage Period: The plan covers a set number of services, usually defined by time (e.g., three years) or mileage (e.g., 30,000 miles).
Service Locations: You’ll need to visit an approved service center to use the plan.
Unlike credit agreements, car service plans don’t require a credit check. You can often cancel the plan or transfer unused funds if your situation changes.

How Much Do Car Service Plans Cost?
Prices depend on factors like the make and model of your car, the length of the plan, and the level of coverage. For example:

Basic service plans for standard vehicles are more affordable.
Luxury car plans with additional coverage cost significantly more.
Are Service Plans Cheaper Than Pay-As-You-Go?
Service plans often offer discounts compared to paying for each service individually. They also protect you from price increases on oil, parts, and labor. Over time, this can save you money—especially if you stick to regular servicing.

Pros of Car Service Plans
1. Budget-Friendly Maintenance
Spread the cost of servicing over time, avoiding large, unexpected expenses.

2. Peace of Mind
Knowing your car’s maintenance is covered allows you to focus on driving stress-free.

3. Prevent Major Repairs
Regular servicing helps identify minor issues early, preventing costly repairs down the line.

4. Boost Resale Value
A car with a full service history is more appealing to buyers, potentially increasing your resale price.

Cons of Car Service Plans
1. Upfront Cost
Paying upfront can strain your budget, especially when added to other car purchase expenses.

2. Limited Flexibility
Plans may be inflexible if your circumstances change or if you sell the car early.

3. Exclusions
Some plans only cover basic services, excluding repairs and parts like brakes or tires.

Pro Tip: Look for plans that offer cancellation, refunds, or the ability to transfer unused balances to another car.

How Often Should You Service Your Car?
Most manufacturers recommend servicing your car every 12,000 miles or 12 months, whichever comes first. However, this varies by make and model, so check your owner’s manual for specific guidance.

Regular servicing ensures your car remains roadworthy and prevents small issues from escalating into major problems.

FAQs About Car Service Plans
1. Can I Cancel My Service Plan?
Yes, most service plans allow cancellations, with refunds for unused funds.

2. Are Service Plans National?
Check whether the service centers in your plan are nationwide, especially if you purchased the car online or live far from the dealership.

3. What Happens If I Don’t Use All My Services?
Ask whether unused services roll over or if you’re eligible for a refund at the end of the plan.

4. Are Service Plans Regulated?
Service plans are not regulated by the Financial Conduct Authority (FCA), as they aren’t credit agreements.

Selling Your Car With a Full Service History
A full service history can make your car more attractive to potential buyers. It demonstrates that the vehicle has been well-maintained, increasing its value.

Tip: Read our Car Selling Guide to learn how to maximize your car’s resale price and get a free valuation.

Conclusion
A car service plan can save you money and provide peace of mind, but it’s essential to understand the terms and coverage before signing up. Evaluate your needs, ask the right questions, and compare plans to find the best fit.

Whether you’re buying a car or looking to maintain one, a car service plan could be a smart investment—just make sure it works for your budget and lifestyle.

Editorial Disclaimer: Opinions expressed here are the author’s alone, and not those of any bank, credit card issuer or any other company. This article has not been reviewed, approved or otherwise endorsed by any of these organisations. NB: The information on this page does not constitute financial advice, please do your own research to ensure that the product / service is right for your individual circumstances.