Is it worth buying a car service plan?
With the popularity of car sales via finance deals, the need for resale value-supporting maintenance records created service plans — but they go beyond including a couple of oil changes with a new car.
- Pre-paid bundles of services for a fixed period or mileage
- Pay monthly for services in advance
- Service plans can as part of the finance deal
When you buy a new or nearly-new car from a main dealer there’s every likelihood that the salesperson will try and persuade you to buy a service plan for your new vehicle. So what exactly is a service plan and should you bother spending money on one?
Essentially a service plan is a convenient bundle of required maintenance appointments over either a fixed number of years or up to a chosen mileage limit. The theory is that you pay for it once when buying the car and simply return to the dealer for its servicing work knowing you've settled the bill in advance.
The service plan was created to address Personal Contract Purchase (PCP) and Personal Contract Hire (PCH) financed cars being handed back with no maintenance records. A full service history will not only help your car hold its resale value, it's essential when returning a car at the end of its finance agreement. Bring it back without proof of services being undertake and you’ll pay a penalty. Plus the car will be worth less and won’t qualify for approved used schemes when the dealer re-sells it.
To encourage customers to ensure their cars are maintained on schedule, service plans at main dealers aim to offer better value and more convenience than can typically be found with independent garages or even buying the parts and doing it yourself. They’re intended to run alongside the manufacturers' warranty schemes where you have to visit the same dealer facilities anyway.
There’s now a new category of service plan offered by used car dealers and garage networks. Without the backup of a warranty for big bills on an older car, they don't offer the same peace of mind levels even when their marketing sells a similar kind of convenience.
How do you pay for a service plan?
There are two ways a service plan can be arranged. The most common scheme is paying a one-off cost — up-front and in full — to cover a number of services that tally with the specifics of your finance deal and the model of car you've chosen.
As servicing schedules are based on a time period or mileage covered basis, triggered by whichever occurs first, the number of services in your bundle will depend upon how much you drive each year. Lots of long-distance journeys will require a greater number of service appointments, increasing the cost of your plan.
You will usually need to take the car to a main dealer, though a list of approved garages will be available if there are no franchises nearby. Many upmarket brands provide a facility where one of their dealer's representatives will collect your car for you and return it once the service is complete.
You will not need to pay anything when you get the car serviced but if additional work is required that isn't covered by the warranty then you will likely be charged for that. If you sell the car with an active manufacturer service plan, it can usually be transferred with the car to the next owner.
The second method is paying monthly for a service plan as an additional fee on top of your PCH or PCP deal. This is also offered for used cars by some car retail groups and third-party garages. You’re still paying in advance for the services under the scheme but if you don’t pay it in full you won’t get the full package of servicing.
Paying monthly is also essentially how a maintained lease deal works. The additional costs are worth comparing with fixed-price deals or just buying a service plan directly, though if a company is paying for it on your behalf — just enjoy the peace of mind and convenience.
Manufacturer service plans
With most new cars you can buy a package of services to cover scheduled maintenance over the same duration as the finance agreement or warranty. These can be good value because the car is unlikely to need much extra costly work to keep it in tip-top condition.
It’s important to check your car’s service schedule as you won’t be able to claim extra servicing. Even if you pay for three services over three years based on mileage, if your car’s interval specifies a two-year interval below the mileage you’ve covered you’ll only get one service out of that plan. If you’ve been a driver for a few years you might notice that the service schedules are rather less frequent on newer cars.
Service plans like this usually only cover the basic maintenance requirements of fluid and filter changes. They do not cover the cost of consumables such as tyres, brake components, clutches, bulbs or wiper blades.
They may not cover the body inspection part of scheduled servicing which is needed for extended anti-perforation cover on most new cars.
What's included in different types of service?
- Minor services are usually just the engine oil and filter, plus an inspection
- Major services may include brake fluid, transmission fluid and air filters
- Fuel filters, gearbox oil and coolant changes are rarely covered by routine services
Most cars will have a programme of regular maintenance required by the manufacturer that is dependent on mileage covered and time intervals. There will also be a set of operations that apply to vehicles that are used near the limit of their ability. This can include taxi work, towing or continued high speed operation and may also apply to particularly dusty or cold environments.
Typical service schedules will include an annual minor service, followed by a major service at intervals specific to the car. Not all major services are the same — there are usually big operations due at five years and ten years, or at particularly high mileages. These may be timing belt changes, coolant flushing or automatic gearbox oil changes — it's rare that they’re covered by a service plan.
Check the details of what a service package includes against the manufacturer service schedule, particularly if you are running the car from three to seven years old or over 40,000 miles. For example, Peugeot’s three-year package for cars under nine months old does include brake fluid and spark plug changes, theoretically saving £500 over the fixed-price services for that period.
Except the servicing required during that time is a 20,000-mile interval for diesel — even though modern diesels, with the risk of oil contamination raised during DPF regeneration, really should have more frequent changes. For electric cars little more than a checkup is needed in the first year.
For a Puretech 1.2-litre petrol engine, Peugeot officially only changes the oil and oil filter at 12,500-16,000 miles or one year, depending on the model, while the air filter isn’t changed for four years or 40,000 miles. This is one example and it’s worth noting that Peugeot also charges a premium for using genuine rather than approved parts.
Are aftermarket service plans worth it?
Large dealers and warranty companies now offer service plans for used cars. For example you can buy a service plan for two years from Arnold Clark for £369 (for cars with up to 2.0-litre engines) or £399 (for those up to a 4.0-litre capacity).
The plans cover MOT tests during the period but do not cover repair work or replacement parts — including components which are usually part of manufacturers' service schedule such as spark plugs, fuel filters, timing belts, diesel particulate filters (DPFs) and water pumps. Of course, the first you’re aware of such parts being needed for your car, it's already in the workshop.
This method of operating isn’t just limited to car dealer groups as other chains, such as Mr Clutch and Halfords, also offer alternatives to manufacturers' service plans. When you look closely at the level of cover provided by their basic plans, they usually also fall short of manufacturers' requirements over the full term and are rarely good value at the higher levels that would cover those required operations.
We’d steer clear of such packages, as they only cover basic servicing which you can pay for when required, and tie you into taking your vehicle into a chain of garages that are actively looking for work, offering relatively poor value for repairs and maintenance.
Chances are you’ll get a btter deal overall from a manufacturer’s main dealer even if you have an older yet cared for car. Plus they have the expertise and parts backup so you know the job should have been done well.
For an even better deal for older, used car servicing, simply use a local independent or specialist garage as and when your car requires it.
Pay-monthly service plans
A number of manufacturers have introduced pay-monthly service plans, notably Peugeot where the servicing is split across the PCP payments in much the same way as optional extras are — you can see the figure before buying the car.
In most cases, the costs are the same as the up-front service package but split over multiple payments. This may mean you may pay interest on the package, particularly if it’s wrapped up in your PCP agreement.
It’s worth noting that most manufacturers charge more for hybrid and electric car service plans even though the maintenance requirements are lower for many such models.
Basic pay-monthly schemes start from around £11 per month but that usually assumes a two-year service interval — so you’d end up paying £264 for a service that costs £199 on the fixed-price menu.
Are used car service plans good value?
You can buy service plans for most brands and models but as the cars age those packages may not represent the best value. For example, Mercedes offers some of the most flexible service plans, allowing for cars up to 18 years old and/or which have covered fewer than 156,000 miles. Mercedes has always offered competitive fixed-price servicing and parts prices so this isn’t a surprise.
However for a Mercedes C-Class at three years old, covering 10,000 miles a year and already on 45,000 miles, you will pay £45 per month for a four-year service plan — buy it in one go and it will cost £2160.
Covering 45,000 to 85,000 miles, that C-Class would need two A services, two B services (that's four oil and oil filter changes), a gearbox fluid change and two brake fluid changes. It would also require two cabin filter changes, one spark plug or diesel filter change and grease for features such as an opening panoramic roof.
Compared with fixed-price servicing from a typical independent garage, the Mercedes service plan is good value. The costs are almost the same but you have the backup of Mercedes’ customer service and brand reputation.
You'll still need to replace brake pads and discs, tyres and other consumables at extra cost. Brands vary but with Mercedes it is worth asking for a quote as there may be promotions that make the replacement parts competitive.
Are buy now, pay later schemes a good deal?
Some dealer networks are offering payment plans for single services. If these are offered as a 0% interest deal and the price for the work is competitive, that’s a good offer. Chances are you’ll find dealers offering this have high labour rates and are multi-brand chains, so make sure you’re getting genuine rather than approved parts.
Many independent garages and mechanics will offer payment terms for known customers if their car runs up a big bill.
If you're getting expensive work done and want to break the payments up, we'd recommend using a credit card over a garage finance offer — even if you do pay interest for some or all of the payment period. Section 75 protection applicable to credit card purchases can be very useful if the work is not carried out correctly. Most credit cards will not charge interest if you pay the transaction off in full before the next statement.
Can you still service your car yourself?
Yes, if you’re keeping the car long-term and aren’t happy with the service intervals such as two-year gaps for oil and filter changes, you can service the car yourself and it won’t invalidate the service plan. On newer cars we would recommend still buying genuine oil filters and sticking to the manufacturers' preferred oil specifications.
Some brands offer two service schedules, for long-life and more frequent servicing, with different oil grades for each. If your car is on long-life servicing but you book it in for a service between recommended intervals, make sure you get what you paid for. It’s not uncommon for a car with long-life oil to be filled with the regular type but still charged for long-life, if the mechanic sees a one-year service being performed on that model.
How can a service plan help me maintain my car?
The best approach for vehicle maintenance is to know your car’s condition and stay ahead of problems but in the real world that can be a chore that few people have time for. The service plan takes away some of the anxiety of visiting the dealer since the costs are paid in advance — because it’s something you’re entitled to you’re more likely to want to claim your services.
It’s a really sensible approach when running a newer car under warranty as it’ll keep the terms intact. You’ll usually get reminders that an annual service is due if you haven’t reached the mileage and main dealers are usually good at making life easy such as offering pickup and drop-off services, or a courtesy car. It’s a good feeling, getting the clean showroom, free coffee and wifi and polite, professional staff experience over loitering about in a cold industrial unit.
Third-party service plans are less convincing. There’s no guarantee of genuine parts, no assurance that the work is carried out by manufacturer-trained technicians and many of these plans are offered by networks that have a vested interest in selling repairs. Main dealers are more likely to want to sell you a new car and preserve the resale value of the one you have now rather than encourage you unknowingly towards unnecessary work.
What are complete maintenance packages?
The complete maintenance package is what most buyers really want out of a new car — comparable to running a company car on a maintained lease, services and wear-and-tear items are included. This means that your tyres, brakes, exhaust — even the clutch and diesel particulate filter (DPF) — should be covered if the scheme runs to high enough mileages.
Schemes like this have been offered to fleets for years but more manufacturers are adding private customer versions such as Stellantis’s FlexCare. This is applicable to new cars, transferable to the next owner (if already paid in full) and covers wear and tear consumables such as tyres and clutches but not damage to trim or bodywork. It also can’t be used for cars that are used for delivery or taxi work.
Generally maintenance packages act as an insurance or warranty, with a claim limit and the need to pay for repairs, then claim eligible items back. This is different to a service plan where you have paid for services up-front and do not need to pay then reclaim.
Getting a service plan included with a new car
When buying new, ex-demonstrator or nearly-new pre-registered cars from a main dealer, it’s worth negotiating to have a service plan included with it. It may be offered as part of a promotion for free or at a lower rate. You have little to lose by taking such offers as you’ll get those services even if labour and parts prices go up.
If you want the best service plan with a new car, then buy a Ferrari.
No, seriously. The reputedly fragile supercar manufacturer includes seven years of maintenance with its new cars, alongside an extended warranty that can be renewed until it's 15 years old — though the service plan and warranty is not cheap to keep it ongoing.
Ferrari Power15 is a unique package in the industry for an uncommonly expensive and exotic range of cars. The aim is the same though — Ferrari wants to keep well-documented and cared for used cars within its dealer network. So do Volkswagen Group, Stellantis and all the other manufacturers with strong approved-used operations.
