Service Contracts -- worth the money?



I’m getting a new Subaru Wagon. My last Subaru is over 200,000, and in general has been a great car. But with the increase in computer gadgetry and costly repairs for new cars, I’m wondering if their contract might be worth it. 7yr/100000 mile for $1300. Covers such things as CV boots, struts and what they call “wear and tear”.

What do folks think?


We get this same question with increasing frequency, perhaps once a week now. Do a search on extended warranty to read similar responses.

The regular members of this forum appear unaminous in advising AGAINST purchasing such insurance policies. Yes, that’s what they are. And they are tricky. Most people who buy them never recover their purchase price.


Well any car can have major expensive repairs.

The profit to the salesman and company is usually over 50%. So for every $1,000 you spend the insurance company has less than $500 to pay for repairs or they will loose money, something insurance companies do not do. Some peop;le will get nothing back and some will get a lot more than they pay.  Most will get far less. In addition you need to keep in mind that the insurer has worded it to eliminate as many expensive things as they can.

Remember that the seller is out to make money and they get to write the rules and set the price.  They are not going to sell them at a loss so one way or another they are going to have you pay more than they will pay out.  

Would you gamble with a car dealer who gets to set all the rules and knows all the odds?   

Your decision has to do with the value of the piece of mind it gives you. If that is worth the $500 then buy it. Don't expect it to cover everything however, most are written to keep cost down and exempt what they know will cost them money. 

Good Luck


Simple answer from someone who used to sell cars, extended warranties, service contracts, etc: JUST SAY “NO.” These things are profit generators for the seller, and nearly worthless for the buyer.

The factory warranty is all you need.

Don’t pay extra for undercoating, paint protection, fabric protection, or any other “protection” packages they try to sell you, either. Worthless, all it.


Its really a personal choice if the piece of mind is worth $xxxx dollar. Remember though you have to have at least $1300 repairs in that period before you are ahead. Not a common occurrence.

Just a major hint the price is very negotiable, see how low they will go and then decide. There is major markup in these contracts. Lastly only get it if its backed by Subaru not some third party that will likely go out of business.


I think you will be money ahead if you stick the cash into a seperate account to be used as a repair fund for the car. The weak faulty items that can go bad usually will be replaced during the regular warranty period. By keeping up the maintenance on the vehicle you may get more than 200k out of this car without much trouble or repair costs.