Are pre-paid car repair plans worth your money?

BALTIMORE - It's a question you may be asked the next time you buy a car: do you want a "pre paid maintenance plan"? These are not extended warranties. Instead these plans cover routine kinds of service to your car. But are they worth the money?

From oil changes to tire rotations, your car needs a lot of routine maintenance. As a result, you might think about pre-paying for the work you'll eventually need in a flat rate plan. Denise Karl bought one of those plans. She says, "I thought the idea of a pre paid maintenance plan, where I didn't have to worry whether or not I had money on my credit card, would be a great idea."

Karl bought a pre paid plan for two different cars. Her first plan cost $1500 and was added to the cost of her lease. She calculated and figured out the plan shaved down her maintenance costs by about $600. Karl explains, "It definitely was a money saver to have it pre paid."

But when she got this new car and bought a second plan for $800, she didn't realize it only covered oil changes. She was shocked to later see charges for other maintenance.

These plans are a hot item for dealers at closing, but the Better Business Bureau warns you need to understand what you're getting and don't let the pressure persuade you. Rodney Davis from the BBB says, “These kinds of plans are relatively new, so we've received about 100 complaints over the past couple of years, we've certainly seen an uptick in the numbers."

The BBB has seen complaints about plans being added to paperwork without approval and repair shops going out of business leaving car owners out of the cash they paid for the plan. So before you buy, experts say you need to read the agreements carefully to see how long they last and what's covered. And know that if you finance the plan with your car loan, you'll be paying interest on it, which will cost you more.