Ways to Hedge Your Lifetime Service Contract Bet

If you've read what I've said about buying a lifetime service contract and think you might want one, but aren't sure, there is a way to hedge your bet ...

If your car is new to you, it's covered by a 3 month/36,000 mile warranty and a wrap at this point in your car's lifetime is really just superfluous.  By waiting, if you get rid of your car (i.e. sell or crash it), you haven't lost any extra money on the wrap if your car were to suddenly "go away."  Waiting also gives you a chance to see if you're going to modify your ride (which, depending on what you do, can also nullify the contract).

It also gives you three years to decide if you want to keep your car a long time.  Do note, however, that you must buy your lifetime service contract before four years/48,000 miles -- after that, the option isn't available to you as a buyer.

From a game theory point of view, waiting has three possible snags:

Chrysler drops your ability to purchase a lifetime wrap
I thought this was possible and is why I bought one almost immediately after they were offered.  To be honest with you, I'm surprised they're still offering them.  But at the point in time of this re-write (March 2013), they've been offering them for five years and for sure the possibility of buying a contract would be gone if it was a corporate money loser.  The opportunity to buy them well stick around indefinitely.

You pay more money
If I had waited, I would have paid $366 more than at the point where I bought it; which is to say it would have been 21% more than the original price.  Yes, it's true I lost the use of that money -- including possibly investing it -- but let's be honest, I wasn't going to do that and neither are you.

You forget to buy one
You have to purchase a contract in the first four years/48,000 miles.  If you miss those magic numbers, you can't buy a service contract.  (Pushing up against this deadline also gives you less of a chance to find the lowest price.)


Buying a service contract immediately gives you a couple small advantages:

Free rental car when you take your car in for service
Dealerships will try to keep you from doing this so they don't have to fork over the money/do the paperwork.  That's the bad news.  The up-side is you'll probably get your oil changed first of all the people in the waiting room.


Roadside assistance
Think: something that is AAA-like.  This is only good for the first seven years/100,000 miles.  Unless you perpetually run out of gas, get flats you don't feel like changing or continually lock yourself out of your cars, this isn't a big deal.

Concierge service
You talk on the phone with people who can't use Google as well as you can.  I list it only for completeness -- not to suggest it's actually worth a damn.


If you do buy a lifetime service contract, I strongly recommend that you buy a one with a $100 deductible (the highest amount possible).  By doing this you're paying the lowest possible premium for your contract.  Eventually you will get rid of the car (or you'll die and the car gets rid of you); the instant that happens, you didn't need the extra coverage in the contract anyway.  Thanks to inflation, $100 will seem to be less-and-less (relatively speaking) in the future anyway, so even the deductible hit to your pocketbook won't be that strong.

Let's look at a real-life example: mine.  At $0 deductible my contract was $1270 more than what I paid.  In the service sense of the word, I would have to make 13 trips to the dealer before it would be "cheaper" for me to have bought a $0 deductible (and in this case, yes, I have invested that money to cover the difference).  Right now the continual car is at 57,000 miles and I've made no service contract trips to the dealer yet (although my air conditioning has failed and as of this second I do need one).

So let's be overly pessimistic and say I'll need a service every 50k miles.  In order to make 13 trips, my car would have to go 600,000 miles.  Assuming I continue to drive 20,000 miles a year, that would be 30 years from now -- and I'd be at a questionable driving age.

Remember, that's making a lot of abusive assumptions.  If you assume I'll need less service, or I start driving less, those numbers become much smaller.

To keep a stupid story short, my advice is if you decide to buy a lifetime service contract on a Chrysler, Jeep or Dodge, you should get the $100 deductible.  If you aren't likely to modify, crash or sell your ride, you should buy the contract immediately.  If you think any of those three things are likely to happen, you should wait until right before you cross out of the 3 year/36,000 bumper-to-bumper that comes with a new vehicle.

(And don't be afraid to buy one online instead of from a dealer.  It's the exact same policy and it's good at all Chrysler, Jeep, Dodge dealers.  Look at chrysler.com if you have any doubt as to whether or not a dealer is "real.")