A service contract can be paid in cash at the sale, or it can be added to a car loan. When it goes into the loan, the payment you watch hides several moving parts. The contract price, the interest charged on that price, and the length of the loan all change what you pay in total. Sort those out before you sign anything.
Ask for the cash price and the financed price
Ask the seller for the contract price with no financing, and then the price with financing added. Ask what interest rate applies to the contract portion and whether it is the same rate as the car. If the two are not shown separately, you cannot tell what the contract costs on its own.
Check how the loan length changes the contract
A contract added to a longer loan can cost more over time than the same contract paid up front, because interest runs for longer. Ask the seller to show the loan schedule with and without the contract. Look at how much of the total is interest. A shorter loan usually carries less interest, though its monthly payment will be higher.
Sort out the seller's share
A dealer that sells a contract may keep part of what the buyer pays for it, and that share is not always listed on the form. Ask whether the seller receives any part of the contract price. Ask whether the same contract is available from the provider directly, and on what terms. You are checking whether the price you are shown is the full price.
Refunds and the loan balance
If you cancel a financed contract, ask where the refund goes. Some refunds reduce the loan balance, and some are paid to you. Find out before you sign, because a refund that goes to the lender may not lower your monthly payment the way you expect.
Compare before you agree
Line up the contract's terms side by side before deciding whether to finance it. The table of companies compared term by term is on this page. Use it to check the wording, then take the financing questions to the seller.