A service contract sold alongside a car loan rarely shows up as its own line. It gets folded into the amount you borrow, and the monthly payment absorbs it so quietly that the contract can end up costing more than it first seemed to. Before you agree to anything, separate the contract from the loan and price each one on its own.
Find the cash price first
Ask for the cash price of the contract as a stand-alone item, written on its own line. That is what the contract would cost if you paid for it outright. Anything above that figure is the cost of financing it, and you cannot judge the offer until you can see both numbers side by side.
Read the loan disclosure, not the payment
Lending disclosures are generally required to show the finance charge, the annual percentage rate, the amount financed, and the total of payments. Find those lines on the loan paper and check whether the amount financed includes the contract. If it does, the total of payments is the figure that tells you what the contract really costs over the life of the loan. A lower monthly payment usually means the loan runs longer, carries more interest, or both.
Ask where a cancellation refund goes
Contracts often describe a refund if you cancel, but the refund does not always go to you. If the contract was financed, the refund may be sent to the lender and applied against the loan balance. Ask in writing who receives it, how the calculation is done, and whether the loan balance will drop by the same amount. Keep that answer with the rest of your paperwork.
Check whether the loan depends on the contract
Read the loan paper for any line that ties the loan terms to a service contract, such as a condition of approval, a rate that changes, or a clause that treats cancellation as a default. If you find one, ask the lender to explain it in plain words and to point to the paragraph that says so. Do not assume the contract is optional because someone at the desk said it was. Get the answer on paper.
Compare the financed version with a cash version
Once you have the cash price and the total of payments, you can see the gap. If the gap is large compared with what the contract actually promises, ask what else that money could do, including keeping it in reserve for repairs. Some buyers decide to skip the contract and hold the money instead. That is a legitimate choice, and it is worth weighing before the signing pages are printed.
What to keep
Keep a copy of the cash price line, the loan disclosure, the cancellation terms, and any written answer about refunds. The published tables on this site list providers by the terms they print, including money-back and waiting periods, so you can check a financed offer against the same terms you would use for a cash purchase. The methodology page explains how those figures are gathered and added up, and the index carries the full comparison.