Before a salesperson shows you a contract, the car may already carry protection you have not counted. New vehicles usually leave the factory with a manufacturer's warranty that runs for a set number of years or miles, whichever comes first. Some used vehicles still have part of that original warranty left. Some cars also come with extra coverage sold through a dealer program, and some credit cards include a benefit that extends a manufacturer's warranty. Each of these can overlap with a service contract. Paying for overlap is one of the easiest ways to spend money on protection you do not need.
Tell whether the repair is already covered
A service contract is sold as a fix for a repair bill you cannot absorb. Your first job is to see whether the factory is still responsible for that repair. Pull the original warranty booklet from the glovebox or the paperwork folder, or look it up in the owner's manual. Note the time limit and the mileage limit, and which parts the warranty names. A basic warranty and a powertrain warranty often cover different parts for different lengths of time, so read each line separately instead of assuming one term covers everything.
Then compare those limits to the car you drive today. Count from the in-service date printed on the warranty, not from the day you bought the car or the day you signed the sales paperwork. If the factory coverage is close to ending, a contract will start to look urgent. That timing is worth noticing, because urgency is the usual selling point, and it does not tell you what the contract adds.
Check the other sources of coverage
Ask the seller for every coverage document that came with the car. Some dealers sell their own extended protection, and that may be a separate agreement with its own terms, its own administrator, and its own exclusions. Check your credit card's guide to benefits for any extended warranty language. Such a benefit may depend on the manufacturer's warranty first paying or denying a claim, and it may exclude the same parts a service contract would cover. Read the exclusions section of each document, not the summary on the first page.
Questions to ask before you sign
Ask the seller to put the overlap in writing. Good questions include: Which parts does this contract cover that the factory warranty does not? Does coverage begin on the day I buy, or when the factory warranty ends? If another document also covers a part, which one pays first? Who administers the contract, and who is responsible for paying a claim? If I cancel early, how is the refund calculated, and is the calculation written in the contract?
If you cannot get a straight answer, that is information. A seller who cannot name which parts overlap has not finished the sale. Take the question home and read the signed form before you commit.
Where this site fits
This site publishes the terms each company prints, so you can check the overlap line by line instead of relying on a verbal summary. Companies that post a sample contract you can read first make the overlap question easier to answer before you pay. For cancellation terms, the money-back period list shows how the published windows compare. The scoring method explains how we read each printed term.