What is a vehicle service contract?

A vehicle service contract is an optional agreement, sold for an extra price, that promises to pay for specific repairs or services for a set time or mileage. It is often marketed as an extended warranty. It can be offered by the automaker, the dealer or an independent company. The FTC advises reading the contract closely: check what is covered and excluded, the deductible, whether you must use certain shops, how claims are paid, and whether it can be canceled for a refund.