Should I Buy a Lifetime Service Contract on My Chrysler/Jeep/Dodge?

(for search engine hits, this could be thought of as Should I buy an extended warranty on my car? even though, in a technical and legal sense of the word, a service contract isn't a warranty.  Another spin on this would be Should I buy a Maximum Care Service Contract?)

I get the occasional email/comment here from people asking about lifetime service contracts (aka "lifetime warranty," "unlimited warranty wrap") and feel compelled to write an over-riding article on the concept ...

(Although I'll be making reference to Chryslers here, the exact same ideas apply to all Chrysler Group LLC vehicles, namely Dodges and Jeeps.  In fact, their service contract prices and terms are identical to all Chryslers.)


Should you buy a lifetime service contract on your car?


Really, there's no cut-and-dried answer to this.  Only you can make the "right" choice, but I can give you enough questions, comments and ideas to lead you to a decision that'll make the most sense in your case ...

Before you ask yourself anything, be prepared to be ready to be brutally frank in with yourself in your answers.  In my wanderings through the world I've been struck, time and time again, by how few people are able to either be honest with themselves, or even focus on "larger truth."*

In the purist's sense of the word, by buying a lifetime service contract, you're making a bet against yourself ... You're saying you believe the car you're buying will suffer more repair problems over the period of time you own it than you'll pay up-front with a service contract.

Never forget the prime rule of service contracts: All companies make money on these contracts or they wouldn't offer them.  

My guess is the way they make the most is simply by pandering to the new American trend of fear.  In our collective lifetimes, Americans have become afraid of everything: terrorists, swine flu, illegal immigrants -- you name it.  In keeping with this, people fear their cars will break down and will buy a service contract.

Chrysler knows, full-well, that the average American owns a car for 5.1 years, but will own a Chrysler for 4.9 years.  If you fall into that category (and odds are good that you do), and you buy a lifetime service contract, Chrysler makes more money by default -- you could have bought a shorter (five, six or seven years; with 60,000 to 100,000 miles).

Looking at it this from any offering company's point of view, they make money on you buying a service contract if one of three broad things are true:

• You never have a problem
• You have a problem, but never make a claim
• You make a claim, but they are able to deny it

Of these three things, the second only happens if you just start neglecting the vehicle all together ...

The last is the one that is under contention and the one that you can work to influence.  Although I don't have any solid evidence from Chrysler, it's probably safe to assume that they'll do all they can to back out of paying out against a service contract.**  That means for you to get paid you'll have to follow everything in the contract to the letter.  (That also means you'll have to read and think ... God forbid.)

If you're dealing with a Jeep, Chrysler or Dodge, have a look-see at the hi-lighted version of the maximum care wrap service contract.  Speed read it and just look at the hi-lighting if you want -- those are the things that I think are of particular interest, sort of freakishly strange or flat-out gotchas.

(If you're thinking about some other vehicle, or contract you should read that first ... I'll wait for everyone right here until you come back.)

Howdy.  Now that you're more aware, you need to ask yourself seriously how long you plan on holding onto your car.  Be honest.  Here are some less-obvious things that could affect the term of your ownership:

• Your likelihood of a bad accident or hardcore vandalism (neither of which are covered)
• Gas being $7-$10/gallon (I'd say this is likely within a decade)
• Your life expectancy
• How easily you are "bored" by the car you drive

{Regardless of what spudnuts say on Internet fora, you can easily ignore how healthy Chrysler is as a company.  I believe a failing Chrysler is no reason to avoid a service contract ... As long as they don't declare Chapter 13 bankruptcy, whoever takes over their assets also has to take over their financial obligations.  This has already happened once -- it can always happen again.}


You should NOT buy a lifetime service contract if ANY of the following are true:

• You believe your car will experience fewer mechanical problems (in dollar amounts) than the price of your service contract
• You plan on modifying your vehicle (that can invalidate the contract)
• You won't religiously service your car in accordance with your owner's manual
• You live in an area that is several hundred miles removed from a reputable dealer
• You plan on holding onto your car less than seven years or 100,000 miles -- including passing the car along to relatives (other service contracts make more sense if these things are true)
• You have reason to believe you will live fewer than seven years
• You plan on moving your car outside the US
• You tend to get in a fair number of accidents (or a serious accident is likely)
• You believe that the vast majority of the problems in your car will come from the powertrain (this is already covered in your powertrain warranty if you're the first owner for 2007 - 2009.  you can get a powertrain only contract if this doesn't apply to you)
• You have a manual transmission and are most worried about clutch problems (clutches aren't covered)
• You're paranoid by nature and automatically assume Chrysler will renege on the contract
• You do your own car maintenance and can't keep track of receipts or records of your work
• You believe your car is at high risk for theft
• You have any off-road use that could be classified as "severe"
• Your car is likely to be caught in a flood

A lifetime service contract may make sense if you don't fit in any of the categories above and, especially, if one or more of the follow true:

• You put an excessive number of miles on your car
• You often drive in unusually hostile road environments (extremes in temperature, weather, extremely rough roads [but not off-road -- this is specifically excluded])
• You'd rather not worry about fixing your car
• You don't know where you'd get money for a major car repair
• You insist on having all your car maintenance done by a dealership
• You have reason to believe your car may be prone to failure
• Your over-arching plan is to never buy another internal combustion car
• Your car is fully loaded and/or has a top-of-the-line factory stereo
• Your car is a convertible -- especially if it's a hardtop convertible (the convertible motor is covered by the warranty, but a cloth top is not)
• Your car was manufactured in the US (I rented a Dodge Calibre that was US built and it was of a considerably worse construction than my Mexican-built Cruiser)

With a little bit of thought and your best guesses about your personal situation, you should have a pretty good idea if a service contract is for you or not.  Good luck with your decision ... I hope your car breaks if you buy a service contract -- I hope it doesn't if you don't.

If you've read all the way through here, you might also be interested in my advice on ways to hedge your service contract buy ... could give you a chance to not shell out the money yet as you try to decide as a lifetime service contract makes sense.

*{An example that comes to mind immediately: I was working at Danger on the hiptop (ultimately known as the T-Mobile SideKick) and a tradeshow customer -- probably a high tech analyst -- asked what the durability of our device would be.  I hate people who give canned answers to questions so rather than be the typical corporate stooge and say that that had not yet been determined (the easy, safe and completely non-informing answer), I explained that although we hadn't gone beyond prototypes, I would expect publicly released final units to last a couple of years.

"A couple of years?  As in two?"

"We're not final yet, but that's what I'd expect."

"And you think that's acceptable?"

I un-corked on him.  "Yes, I think that's acceptable!  How long have you ever used a cell phone?"  He hemmed and hawed, acting like the poser that he was.  That only boiled me faster.  I pressed and pressed and pressed until he admitted he'd never used a cell phone for longer than four months.

In other words, any piece of crap would work for him and two years didn't actually make any difference ... So when I say honesty toward yourself, I mean don't be like that guy.}

**{note that as of March, 2013, I've had five service contract repairs (paying $500 out of my pocket for roughly $2400 worth of work.  To this point in time, Chrylser has never even acted as thought they wouldn't pay or honor a claim ... So this original comment may be over-paranoid.}