November 10, 2019 is a daily online magazine covering small business news. We help entrepreneurs transform ideas and innovations into greatness.

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Vehicle Service Contracts

Buying a vehicle service contract can be a smart move for business owners that have company cars or company trucks. However, it's critical that you understand what you are buying before you sign on the dotted line.

As a business owner, you may have one or more company cars.
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While many businesses take pride in purchasing newer-model vehicles, the vast majority of company vehicles tend to be older vehicles.

When the company car or company truck gets old, business owners may want to consider purchasing a vehicle service contract.

Vehicle service contracts allow an individual or company to purchase a contract that will protect them from unexpected vehicle repairs. After all, small businesses that have tight cash flow don't like unexpected expenses, so the ability to prevent an unexpected vehicle repair expense is pretty nice.

As with many purchases made by small businesses, the key in buying a vehicle service contract is to do your homework before you purchase a vehicle service contract.

In researching vehicle service contracts, we found a very good resource for business owners who want to learn more about vehicle service contracts. The Vehicle Protection Association (VPA) was formed to address "extended warranty scams". Extended warranties are a common way that people refer to vehicle service contracts. Technically, it's not the right terminology because a warranty is what you get from the manufacturer. A third-party company cannot literally extend a warranty because it's not theirs to extend.

In any case, the vehicle service contracts industry suffered from the actions of a few bad actors in the 2008-2009 timeframe and that led to the formation of the VPA. They've got tons of information on vehicle service contracts. For example, here's their list of frequently asked questions about vehicle service contracts:

The questions above are a great primer on vehicle service contracts. Remember, this can be a great investment for a business that has company cars or company trucks, but you absolutely need to do your homework before you choose a provider to work with.

Related Articles

Want to learn more about this topic? If so, you will enjoy these articles:

Lease a Business Car or Buy a Business Car?
Hiring Dependable Drivers For Your Company Trucks

Conversation Board

What's your take on vehicle service contracts? We welcome your comments, questions and suggestions.

Rachelle Allouche 12/7/2009

Good article about Vehicle Service Contracts. We have a small business with a company car, so this was very helpful. I did some research recently and found a Kiplinger article that talked about vehicle service contracts and extended warranty scams. They said that vehicle service contracts are worth buying but you need to make sure you work with a reputable vendor. I'm sure you can still find the article at Thanks for the helpful information on vehicle service contracts!

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