What is a Vehicle Service Contract? With Examples

A Vehicle Service Contract (VSC) is an agreement between a contract provider and a vehicle owner that covers specific car repair expenses in exchange for payment. Often mistaken for an extended warranty, a VSC is not a warranty as defined by federal law, but rather a promise to perform (or pay for) certain repairs or services.

While a warranty comes with a new car and is included in the original price, a VSC is sold separately and represents an additional cost.

Johan Müller

Blog Author - B2B SaaS Content Writer

Like any other writer, his path crossed with the SaaS industry. For over three years, he has been combining his SEO and writing skills to create informative listicles, comparisons, and tutorial posts.

To form a Vehicle Service Contract, several key elements must be present. These elements ensure that the contract is enforceable by law and that the parties involved are protected under legal principles.

1. Contract Date: 

• Space to specify the date when the contract is executed.

2. Service Provider Information:

• Company Name: Service provider's name.
  
  
• Address: Service provider's address.
  
  
• Contact Number: Service provider's contact number.
  
  

3. Customer Information:

• Name: Customer's name.
  
  
• Address: Customer's address.
  
  
• Vehicle Information: Includes details like the make, model, year, and Vehicle Identification Number (VIN) of the vehicle.
  
  

4. Terms and Conditions:

• Scope of Service: Description of the services to be provided, including any specific components that will be serviced or replaced.
  
  
• Duration: Specifies the duration of the contract, from the start date to the expiration date.
  
  
• Cost: Details the total cost and payment terms, including down payment and installment payments if applicable.
  
  
• Warranty: Clarification of any warranties on parts or services provided.
  
  
• Exclusions: Specifies what is not covered by the service contract.
  
  
• Termination: Outlines the conditions under which either party can terminate the contract and any associated penalties.
  
  

5. Acknowledgment:

• Space for the service provider's signature and printed name, acknowledging the terms of the contract.
  
  

Download Vehicle Service Contract Template

Our Vehicle Service Contract PDF Template helps businesses establish clear and mutually agreed-upon terms for their service agreements.

Designed to address both general and specific needs, this template offers a structured format to detail rights, responsibilities, pricing, and service terms, promoting transparency and trust between the parties.

Free Download

Ready to get started with our PDF editor? Download the latest version of PDF Reader Pro for Windows or Mac down below:

Get Started with PDF Reader Pro Today!

Free Download Free Download

Types of Vehicle Service Contracts

Vehicle service contracts, often referred to as extended warranties, are agreements that cover certain repair costs after the manufacturer's warranty expires. These contracts can vary widely depending on the provider, the level of coverage, and the specific needs of the vehicle owner. Below are the main types of vehicle service contracts:

1. Powertrain Coverage

• Description: Covers the essential components of the vehicle's powertrain, including the engine, transmission, and drivetrain.
  
  
• Commonly Included: Engine parts, transmission, driveshaft, differential, and associated components.
  
  
• Ideal For: Owners of older vehicles or those looking for basic, essential coverage.

2. Bumper-to-Bumper Coverage

• Description: Offers the most comprehensive coverage, similar to the original manufacturer's warranty, covering most vehicle components.
  
  
• Commonly Included: Electrical systems, air conditioning, suspension, steering, brakes, and more.
  
  
• Exclusions: Typically excludes regular maintenance items like tires, brakes, and oil changes.
  
  
• Ideal For: Owners seeking extensive protection for nearly all vehicle parts.

3. Stated Component Coverage

• Description: Covers only the specific parts listed in the contract, often more extensive than powertrain coverage but less comprehensive than bumper-to-bumper.
  
  
• Commonly Included: Typically includes the major systems like engine, transmission, and sometimes additional systems like the air conditioning.
  
  
• Ideal For: Owners who want coverage for specific, expensive components without paying for a full bumper-to-bumper plan.

4. High-Tech/Advanced Coverage

• Description: Focuses on the high-tech components of modern vehicles, such as navigation systems, advanced driver assistance systems (ADAS), and onboard computers.
  
  
• Commonly Included: Sensors, infotainment systems, backup cameras, and other electronics.
  
  
• Ideal For: Owners of newer, technology-heavy vehicles who want to protect expensive electronic systems.

5. Wrap Coverage

• Description: Complements existing powertrain warranties by covering almost everything else in the vehicle, creating a full bumper-to-bumper type of coverage.
  
  
• Commonly Included: Components not covered by the powertrain warranty, such as electrical systems, air conditioning, and other non-powertrain parts.
  
  
• Ideal For: Owners who still have a powertrain warranty and want to extend coverage to other parts of the vehicle.

6. Roadside Assistance and Additional Services

• Description: Provides additional services such as towing, rental car reimbursement, trip interruption coverage, and roadside assistance.
  
  
• Commonly Included: Towing services, flat tire changes, lockout assistance, fuel delivery, and emergency repairs.
  
  
• Ideal For: Owners who travel frequently or want peace of mind in case of breakdowns.

7. Exclusionary Coverage

• Description: Lists only the items not covered, making it easier to understand what's protected. Essentially, it covers everything except what's specifically excluded.
  
  
• Commonly Excluded: Regular maintenance items, wear-and-tear parts like brake pads, tires, and cosmetic items.
  
  
• Ideal For: Owners seeking maximum coverage with clear terms on what is not covered.

8. Certified Pre-Owned (CPO) Coverage

• Description: Offered by manufacturers or dealers for certified pre-owned vehicles, often including additional coverage beyond the original factory warranty.
  
  
• Commonly Included: Similar to bumper-to-bumper coverage but for CPO vehicles, often with additional perks like roadside assistance.
  
  
• Ideal For: Buyers of certified pre-owned vehicles who want extended coverage directly from the manufacturer.

"A car is one of the most important purchases you’ll make. Protecting it with a service contract is a smart move."

Elon Musk

CEO of Tesla Motors

Each type of vehicle service contract offers different levels of protection, so it's essential for vehicle owners to carefully review what is and isn't covered to choose the best option for their needs.

Examples of Vehicle Service Contracts

Case Study 1: Manufacturer-Backed Contract

Real-life Example: Toyota Extended Vehicle Service Contract

• Coverage:

  • Toyota's extended service contracts, known as Toyota Vehicle Service Agreements (VSAs), offer various levels of coverage including Powertrain, Gold, and Platinum plans.
  • The Platinum plan, for example, provides comprehensive coverage, similar to the original bumper-to-bumper warranty. It covers almost all mechanical and electrical components, excluding routine maintenance and wear-and-tear items.
    
    

• Cost:

  • The cost of Toyota's extended service contracts varies based on the model, age, and mileage of the vehicle, as well as the selected plan and deductible. For example, a Platinum plan for a new Toyota vehicle might range from $1,200 to $2,500, depending on the terms chosen.
  • Customers can choose from different term lengths, typically ranging from 3 years/36,000 miles to 10 years/125,000 miles.
    
    

• Customer Satisfaction:

  • Customers generally report high satisfaction with manufacturer-backed contracts due to the trust and reliability associated with the brand. The ease of service at authorized dealerships and the inclusion of genuine parts are significant advantages.
  • Some customers, however, find the cost to be higher compared to third-party options, though they appreciate the peace of mind and convenience provided by the manufacturer-backed coverage.

Analysis:

• Manufacturer-backed contracts like Toyota's VSA offer extensive coverage and seamless service through authorized dealerships, often with perks such as roadside assistance and rental car reimbursement.
  
  
• The cost can be higher, but the inclusion of genuine parts and the trust in the manufacturer's warranty process contribute to overall positive customer experiences.

Case Study 2: Third-Party Service Contract

Example: CarShield Vehicle Service Contract

• Coverage:

  • CarShield offers a range of service contracts, from basic Powertrain to more comprehensive Diamond plans, covering most vehicle components including high-tech electronics, air conditioning, and suspension.
  • The Diamond plan is comparable to a bumper-to-bumper warranty, excluding only routine maintenance and wear items like tires and brake pads.
    
    

• Value:

  • CarShield's contracts are generally more affordable than manufacturer-backed options, with monthly payment plans available. Costs range from $100 to $150 per month, depending on the coverage and vehicle details.
  • CarShield provides flexibility in coverage options and allows service at a wide network of mechanics, not limited to dealerships.
    
    

• Comparison with Manufacturer-Backed Contracts:

  • Third-party contracts like CarShield's offer more flexible and often more affordable payment options. However, they might not include the same level of trust and seamless service as manufacturer-backed contracts.
  • Some customers express concerns about claims being denied or difficulties in getting repairs approved, which is less common with manufacturer-backed contracts.

Analysis:

• Third-party service contracts provide an attractive option for budget-conscious consumers or those with older vehicles no longer covered by manufacturer warranties.
  
  
• While the lower cost and flexibility are appealing, potential issues with claim approvals and the lack of brand trust are factors to consider.

Case Study 3: Dealership Service Contract

Example: Ford Dealership Service Contract

• Coverage:

  • Many Ford dealerships offer their own service contracts, which can vary in coverage. A typical dealership contract might offer powertrain, basic, and comprehensive plans similar to manufacturer or third-party options.
  • Dealership contracts often include additional perks like free oil changes, tire rotations, and discounts on future vehicle purchases.
    
    

• Unique Features:

  • Dealership contracts may offer unique incentives like loyalty discounts, priority service, or even guaranteed trade-in value.
  • Some contracts may be transferable to another owner, adding value if the vehicle is sold before the contract expires.
    
    

• Pros and Cons Based on Customer Feedback:

  • Pros: Customers often appreciate the personalized service and additional perks offered by dealerships. The ability to have all services performed at a familiar location with known mechanics is a comfort for many.
  • Cons: However, dealership contracts can sometimes be more expensive, and coverage may not be as extensive or flexible as manufacturer-backed or third-party options. Some customers also feel pressured to purchase these contracts during the vehicle buying process.

Analysis:

• Dealership service contracts can provide convenience and added benefits that appeal to loyal customers, but they may come at a higher cost with potentially less comprehensive coverage.
  
  
• The value of these contracts often lies in the additional perks and the relationship with the dealership, rather than the coverage itself.

"Investing in a vehicle service contract is like buying insurance for your peace of mind on the road."

Henry Ford

American industrialist and business magnate

These case studies highlight the diverse options available in vehicle service contracts, each with its own set of benefits and potential drawbacks. The choice between manufacturer-backed, third-party, and dealership service contracts depends on individual needs, preferences, and budget considerations.