Most people start thinking about a service contract when someone puts one in front of them at the sales desk. Slow down and ask a plainer question first: how long will you actually drive this car? That answer changes almost everything else about whether a contract makes sense.
Why the holding period matters
A service contract is a bet on the years when a car is most likely to need expensive work and least likely to be covered by its maker's warranty. If you expect to sell or trade the car soon, you may pay for coverage that ends before the risky stretch arrives. If you expect to keep the car through that stretch, the same contract may do useful work. Before you think about anything else, picture when you will sell, trade, or hand the car down to someone else.
How to tell whether you have the problem
You have a real problem to solve when three things line up. The car is likely to stay in your household past the point where the factory warranty ends. A single major repair would strain your household budget, not just annoy you. And you have no savings set aside for it. If one of those is missing, the contract is solving a different problem, usually a feeling of safety that a savings plan might also give you.
Find the date and mileage where your factory coverage ends. Write it down next to your planned keeping period. The gap between those two points is the stretch a contract would actually have to fill.
Questions to ask yourself before you decide
When will I sell, trade, or give away this car? When does the factory warranty end, by time and by mileage? What would one unexpected repair do to my household this month? Do I have money set aside that could cover it without borrowing? Would I be able to cancel the contract early if I sell sooner than planned?
What to check in our tables
Our published figures show how providers handle cancellation. Compare the money-back periods in our money-back period list against your own planned keeping period. The full comparison on our home page sets out the published terms side by side, so you can read them rather than rely on what a seller tells you at the desk.