You're buying a car that has a great reputation for reliability — and it even comes with a strong warranty to offset the cost of unexpected repairs. But just before you sign the contract, the dealer offers you a "prepaid maintenance plan." The way it's pitched, it sounds tempting. But is it a smart use of your money? Or is it another profit center for the dealer?First of all, it's important to understand that a prepaid maintenance plan is not an extended warranty. Typically, prepaid maintenance plans cover only the regularly scheduled maintenance listed in the owner's manual. If the prepaid maintenance plan you purchase is for 36,000 miles and 3 years, then you have prepaid for just what is listed in the plan's contract — usually comparable to the maintenance listed in the owner's manual.

Think of it this way: If you're prepaying, what exactly are you prepaying for? To answer that question, let's look at an average car's maintenance schedule. Or, more specifically, what is the maintenance that is called for in the first 36,000 miles of a new car's life?

The answer is, not much. Basically, most cars require only oil changes and tire rotations in the first 36,000 miles.

Some eagle-eyed readers might now be saying: but what about brake jobs? Brake jobs will usually be required during the first 36,000 miles of a car's use, but since brakes are considered a wear item, they are not covered under most prepaid maintenance plans.

Let's take a brief digression. If you are reading this article, and wondering what maintenance your car requires, there is a very easy way to find out. Check Edmunds.com's manufacturer's recommended maintenance schedule for your car. Edmunds has compiled this information in an easy-to-read format and also included estimated costs for various services. (When reviewing the information, keep in mind that you will be shown the "severe" maintenance schedule which calls for more frequent oil changes than is stipulated under the "normal" schedule.)

Now, back to the question of prepaid maintenance plans. Let's see what the service on a typical car costs during the first 36,000 miles of ownership. Say the normal maintenance schedule on your brand-new car requires an oil change every 7,500 miles and that each oil change costs $25. Throw in a tire rotation at 15,000 miles for about $50. And don't forget the more extensive 30,000-mile check-up, oil change and tire rotation (usually running about $250). Here's a breakdown of the service required and the related costs:Mileage Estimated Cost Service
7,500 $25.00 Oil & filter change
15,000 $75.00 Oil & filter change, tire rotation
22,500 $25.00 Oil & filter change
30,000 $250.00 Oil & filter change, tire rotation, Mechanical Checks

Total $375.00


The grand total is $375 for scheduled maintenance for the first 30,000 miles of your car's life. If you paid $900 for a prepaid maintenance plan that covers this work, you're probably not feeling very happy right now. If you paid $400, you're probably feeling OK.