A fixed price service plan to pay for future maintenance is becoming one of the most popular extras pushed enthusiastically towards car buyers, much like service plans for new boilers.
The concept is simple. Starting before the first service and running for two or three years, you either pay a lump sum or monthly interest-free instalments. Car makers promote convenience, peace of mind, a discount on paying at the time and protection against rises in oil and labour costs during the time of the plan.
Depending on the plan or the provider, you may be tied into a particular garage for servicing, or you may be able to use any franchised service centre from that manufacturer.
If you’re running a new or near-new car for the usual three years of a standard warranty period (or a PCP agrement), most people prefer to go back to the dealership they bought it from – or one of the same brand elsewhere – once every year for a service and check. The pros and cons if having the same car serviced by an independent garage are covered here.
Do many people take service plans?
People really do seem to like service plans. Cheshire-based firm EMaC administers new and used car service plans for 16 manufacturers including Vauxhall, BMW and Jaguar Land Rover, plus most large UK dealer groups and some non-dealer service suppliers such as Halfords. It’s currently running 2.2 million live contracts and a further half a million are sold each year. It provides and runs the software tailored for each client, deals with the customer paperwork and provides call centre support from around 100 staff.
For the dealer/manufacturer, the appeal of service plans is fixed future service revenue and retaining customers who may have shopped around for the next service. They are guaranteed to see you once a year and, with any luck, tempt you with another car at some point. Customers use the plans as a budgeting tool in the way that they pay monthly by direct debit for many other things and won’t get hit with a large bill.
“It’s important for customers to ask whether the plan requires them to go back to the dealer they bought the car from – which may not be local – or whether it’s a national plan.” Says Liam Finney, director of commercial partnerships at EMaC.
A like-for-like comparison of new car service plan prices isn’t useful because the parts and labour rates differ by manufacturer and the model of car. It’s also difficult for internet shoppers as while some carmakers publish an upfront price on their main websites, others ask you to supply details of your specific car and mileage for an individual quote. However, you can divide them into two types: freestanding and attached to finance.
What sort of money are we talking?
Let’s take a few examples. Until 31 December 2021 a Ford Protect two year/20,000-mile service plan is available from £15.42 per month with a new Ford Focus (Excluding the performance Focus ST). Promoted as being at 0% APR, 24 monthly payments of £15.42 come to £365. The same service package is available for Focus & Kuga (excluding ST models) for a lump sum of £370.
Renault is offering three years and 30,000 miles for £499 or monthly payments of £9.99. Dacia, owned by Renault, is offering £399 for any model for the same time and mileage and £9.99. You may have worked out that in both cases you add up the monthly option you get £359, so you make a saving. However, the £9.99 per month is for customers who finance their vehicle with Renault/Dacia Finance (RCI) it’s an offer that can only be applied for at point of signing the agreement and cannot be added retrospectively.
Until the end of 2021, a £599 three-year Easy Care service plan is being discounted to £299 on new Fiat 500X models. This too is conditional on taking out the associated PCP finance deal.
We’re largely talking about petrol, diesel and hybrid cars here as they still make up the bulk of sales. Electric cars are easier and cheaper to service because there is no oil to change, drive belts to replace or antifreeze to top up and come with their own service plans. To return to Renault for an upfront cost example, a three year/30,000-mile plan for a Zoe is £299 rather than £399, and £4.99 a month (£179).
Will it save me money?
Overall, yes if you assume prices are going to go up and the savings/discounts are clear based on individual standard service costs published at the time you take the plan out. There are still differences in the hourly labour rates charged in different parts of the UK. They can be higher within the London area surrounded by the M25. Service plans even that differential out with the same upfront cost for all. For example, a BMW will cost the same to service in Mayfair as it does in Inverness.
However, service plans are primarily about convenience and avoiding a surprise big bill. Don’t let a plan be a deal-breaker, see it more as a nice add-on. If you’re bold, ask for it to be thrown in for free. The amount you pay to service a mainstream new car over three years is tiny compared to the unseen thousands it will lose in depreciation or the interest payments on a PCP.
Are service plans credit agreements?
Service plans are NOT credit agreements, so not regulated by the Financial Conduct Authority (FCA). You won’t be asked to undergo a credit check and you can cancel a plan and get a refund of unspent money at any point. If sold alongside a PCP the service plan direct debit will run separately, not be rolled in.
What is and isn’t included?
On a fixed service schedule (usually published on manufacturer websites) certain parts are always replaced at each annual service. The prime examples are the oil and oil filter and cabin pollen filter. Then every two years there may be a brake fluid and fuel filter change.
Service plans cover these costs because they will be the same for the same type of car at the same interval. But you could still have to pay extra for wear and tear items such as tyres, brake pads and discs and windscreen wipers. This is usually made clear in the terms and conditions.
What if I have flexible servicing?
All the service plans we’ve mentioned so far work with services that have annual or fixed mileage intervals. This traditional type of servicing is aimed at private buyers, but some makes which are often sold to high-mileage business drivers have for a long time offered flexible, or condition-based servicing.
Modern engine oils in cars covering steady daily motorway miles (where the engine is fully warmed up and under less strain) don’t need an annual change. As an example, an Audi on a flexible servicing schedule only needs to be serviced a minimum of every 18,600 miles or every two years. The other Volkswagen Group cars – Volkswagen, SEAT and Skoda – also offer flexible service intervals.
BMW’s long-established condition-based servicing (CBS) will vary the times when the car tells you it needs an oil change or components such as brake discs and pads, depending on usage. The same applies to Minis. The BMW service plan can accommodate customers coming in earlier than planned when the cost may not yet have been covered by adjusting the subsequent payments in the way energy bill are adjusted.
What happens to the plan if I change my car?
You should be able to cancel a plan and have the balance returned to you at any time. If you change cars, you can cancel the plan or have the balance transferred to another car of the same make/dealer chain. Should you decide to sell privately, most plans allow transfer with the vehicle to another owner but it’s best to check the small print.
Some plans are wholly given by the manufacturer/dealer chain, so the customer pays nothing, but of course won’t get anything back when they change cars.
Can you get plans for used cars?
Yes, you can absolutely buy a service plans for a used car. Most franchised dealers have offers in place for their used car customers, so you can purchase a service plan either when you’re buying a used car or at some point afterwards.
Franchised dealers usually lose customers to independent garages when their cars were out of warranty but are now actively targeting older cars (three years or more) at the point where owners have tended to go to independent garages with service plans which provide cover similar to younger cars, with servicing, a warranty and roadside assistance included.
For example, Volkswagen claims its All-in package (two years’ warranty, service, breakdown and two MOTs) saves on average £833 over two years for £33.45 a month. Vauxhall Care, for cars over 11 months old provides three years’ Vauxhall servicing, two years’ roadside assistance (an extension of the standard first year cover) and first MOT for 35 monthly payments of £19 for petrol and hybrid cars.