The Difference Between a Service Contract and a Warranty, Explained

 

When you purchase a vehicle, it is nice to know that you have some coverage. If something happens shortly after you make the purchase, and expensive repairs are needed, it would be great if you had protection. Two types of protection offered on vehicle purchases are service contracts and warranties. While both can be useful, they are not the same thing. In this post, we’ll highlight the differences between the two, so you know exactly what you are getting.?Once you are ready to make a vehicle purchase, and you want to work with the best used car dealers Greensboro, NC has to offer, stop by Green Lincoln. 


What is a Warranty? 

You are probably most familiar with the concept of a warranty, so let’s start quickly with that side of the equation. A warranty is essentially a contract that offers the consumer some degree of protection if unforeseen problems come up with the vehicle. It’s important to understand the limitations and restrictions of any warranty before you make a purchase. All warranties have details with regard to what they cover, how much coverage is offered, and for how long. Some warranties are extremely generous with their coverage, while others are quite restrictive.? 


What is a Service Contract? 

Usually, a service contract is sold in addition to the price of the vehicle, as added protection beyond what is available through the warranty. It is common for a service contract to be put into place after the period of the initial warranty is set to expire. So, for instance, if you have three years of coverage through your warranty, you may decide to buy a service contract for that fourth year and beyond. That way, you don’t have to drive around without any kind of coverage after the warranty has run out.? 


Another Form of Insurance 

Whether you are covered by a warranty or a service contract, you should understand that you are basically using insurance to cover your financial future. This is exactly what you do when purchasing insurance for anything else you own, whether it is a home, an expensive piece of electronics, or anything else. Having insurance in place – in this case, in the form of a warranty or service contract – can make things easier down the line should the need for a repair arise.? 


It’s All About the Terms 

If you decide to purchase a vehicle service contract to add on to what is covered by your warranty, you will want to carefully consider the terms when making your selection. You can spend only a little money on your contract for limited coverage, or you can buy a more comprehensive plan if you are willing to pay a higher rate. The decision is up to you, of course, as some people prefer to carry more coverage than others. No matter what type of service contract you select, do your homework and take the time to understand the coverage you are purchasing.

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