Do you dread taking your car to the garage because the service or repairs might cost more than you can afford? Service and maintenance plans help you manage these costs. But are they worth it?
It’s really important to maintain your car to keep it safe on the road. But paying for regular servicing or unexpected breakdowns and repairs can be financially devastating. Car service and maintenance plans are a type of insurance designed to cover these costs, so you are not out of pocket or without transport when your car needs a check-up or repair. We take a look at how these plans work and if they’re worth it.
Warranties, service plans and maintenance plans
These are the different plans that cover the costs - or some of the costs - of repairs and maintenance to your car.
A warranty is the manufacturer’s guarantee that everything is in good working order. It covers the costs of any parts that are faulty or fail due to a manufacturing fault. All new cars come with a warranty, usually for three years.
Service plans cover the costs of servicing your car, including some parts and labour.
Maintenance plans cover the costs of replacing or repairing parts damaged by normal wear and tear.
Service and maintenance plans may be combined into one plan. They may be part of the purchase agreement, included in the vehicle finance contract, or you can buy them as separate insurance products.
Plus: there are insurance plans that cover the costs of repairs such as dents and scratches, new tyres and top-up plans. Top-up plans cover the difference between the insured value of your car and the amount owed on a vehicle finance contract.
We have a table below to show the key differences between these plans.
Comparing the cost of the plans to the costs of services and repairs
We looked at the prices of plans and of services for a 2019 VW Polo Vivo, one of SA’s top selling cars, using prices from dealers and insurance companies to see if the service and maintenance plans are worth it.
Combined maintenance and service plan cost: R166pm/R1 900 per year - R350 per month/R4 200 per year
Cost of minor service (at least once a year or at a specified mileage): R2 100
Cost of major service (at a specified mileage or time): R4 900
Additional costs: The cost of a service does not include all of the parts you may need, or the labour to replace or repair those parts. The cost of common replacement parts could range from R3 000 (for smaller parts including brake pads, spark plugs and oil filter) to R13 000 (for larger parts, including cam belt, fan belt, clutch plate and brake discs) according to the 2019 AA Kinsey report. Labour is around R1 000 an hour.
You’ll need to service your car at least once a year, so based on our figures the maintenance and service plan should be worth it. Of course, this will depend on exactly what is covered, and what goes wrong with the car.
This is the catch – there are many different plans and some of them are more comprehensive than others. So, when you buy a plan, make sure you know:
- What parts are covered
- What parts are not covered
- If labour costs are covered
- How claims are made and paid
- If there is a limit to the amount of any one claim or total claims
- If there is a limit to the number of claims each year
An alternative to service and maintenance plans
The alternative to service and maintenance plans is to have enough cash on hand so that if you need to service your car, replace or repair parts, you can use this cash to cover these costs.
The positive side to this is that you could invest this money in a savings or money market account and earn some interest. If your car runs smoothly for years and doesn’t need major repairs, you may end up with a lump sum saved you can use as a deposit on a new car.
This is an option to consider if you have the cash readily available to save and if you are sure you won’t use it for other emergencies. To estimate how much cash, you need to put away, find out the costs of a service and common replacement parts for your vehicle (for example, brake pads, spark plugs and so on). Don’t forget to increase this amount annually, as prices will go up.
So, is it worth it?
Is saving cash a better option than a service or maintenance plan? There’s no simple answer, as it depends on what costs you actually incur. However, consider:
- Service and maintenance plans give you peace of mind - you shouldn’t have to fork out a big sum for an unexpected repair bill.
- If you buy a new car, the warranty should cover all the expensive parts and repairs for the duration of the warranty. Maintenance costs should not be too high, so you might decide not to take a maintenance plan.
- Older model cars usually require more maintenance, so it makes sense to have a maintenance plan, especially if your warranty has expired.
- Driving and road conditions, and how far you drive, will have a significant effect, increasing wear and tear and general maintenance costs. If you drive on poor roads or for long distances, a plan will help you cover the higher repair costs.
The bottom line
It’s generally worth buying a plan unless you are sure that you have cash on hand or can save enough to cover services and any repairs. Take the time to find out about the different service and maintenance plans available, what they cover and how much they cost compared to the costs of servicing and repairs.