Factory-backed protection plans vs. third-party service contracts: What you need to know

The differences between factory-backed protection plans and third-party service contracts

When you want to protect your vehicle beyond the warranty that it originally came with, you have a lot of options. When you’re deciding how to protect your investment, it’s helpful to break your options into two major categories: factory-backed protection plans and third-party service contracts.

As the name implies, a factory-backed protection plan is provided by and administered through the original equipment manufacturer. A third-party service contract is provided by and administered through a vendor unrelated to the brand of vehicle you own.

The benefits of a factory-backed plan become immediately evident when you investigate what it actually provides:

Manufacturer backing

Simply put, they know your vehicle. The original equipment manufacturer built the vehicle you’re driving, so naturally, you’d like the same company to stand behind the product and provide you peace of mind years down the road.

Genuine parts

This is one of the major advantages of a factory-backed plan: the parts used are made for your specific brand of vehicle. When you choose a third-party service plan, there’s no guarantee that your car is going to be serviced using factory parts. Those parts can come from anywhere, and the chances are good that they’re coming from the lowest bidder.

Genuine parts used in a factory-backed plan are designed for use on your vehicle, and have been tested and proven by the manufacturer.

Service throughout the dealer network

One “advantage” that third-party service plans tout is the ability to have your vehicle serviced at a network of “authorized repair facilities” throughout the United States. That may sound great initially, but who knows what steps those facilities have to take in order to be “authorized”? Is your car going to be serviced at a dealership that has no experience working on your brand of vehicle? Can any gas station be “authorized” to provide service? It’s tough to tell as a consumer.

With a factory-backed plan, your vehicle will be serviced by dealerships with a franchise agreement with the manufacturer. They know your car, they have factory training, they have access to tools and software specific to your vehicle, and they’re represented from coast-to-coast, no matter where you find yourself.

Certified technicians

Consumers may not realize this, but vehicle manufacturers like Fiat Chrysler Automobiles (FCA) heavily invest in training their service staff at all franchised dealerships.

For students who want to become Mopar technicians, FCA operates a program called the Mopar Career Automotive Program (MCAP) that provides future technicians with advanced classroom instruction, along with hands-on experience at the dealership. Students in these programs study for a total of 20 months and earn 80 credits both in classroom instruction and in the shop.

And that’s just a start to supply Mopar dealerships with a constant feed of well-trained incoming technicians. From there, FCA provides training that ramps retailer service technicians from Level 0 (essentially an incoming employee with limited experience) to Level 1 and 2 (complex training on Engine Repair and Performance, Automatic Transmission Service, Driveline, Chassis Systems, Electrical and Body Systems, A/C and Heating, Diesel) to Level 3 (the highest level of training provided by the FCA Performance Institute).

With a third-party service contract, there’s simply no guarantee who’s going to be working on your car, and what kind of training they’ve been provided.

Factory-backed service contracts are simply the better choice for your specific brand of vehicle.

Chrysler Warranty Direct was started to help current owners of Chrysler, Dodge, Jeep and Ram brand vehicles find the right extended, factory-backed service contracts at the absolute lowest cost without compromising quality. For more information or to get a free instant quote on your vehicle, visit our website.

Why Vehicle Protection Plans Can Bring You Peace of Mind

What’s covered in a vehicle protection plan?

When you purchase a vehicle — whether it’s new, certified pre-owned or used — you’re making both an emotional and a rational decision. Your emotions are telling you how nice it’s going to be to slip behind the wheel of your newly purchased vehicle, and enjoy all of the features that your old car didn’t have. On the rational side, you’re making an investment, hoping to avoid costly maintenance that can add up to huge costs when the years and miles start to rack up the car.

Save money in the future

When you’re making an investment in a new car, why make an even further investment in a vehicle protection plan? Because that additional investment is likely to save you money in the future.

If you went back 25 years ago, cars were essentially similar to what they were in the 1960s and 1970s. They had on-board computers and electronic fuel injection and some had anti-lock brakes, but for the most part, they were relatively unsophisticated and fairly simple to maintain.

Sophisticated Computer Network

Today’s vehicles are an incredibly sophisticated computer network that just happens to have four wheels. Consider just one advance: Adaptive Cruise Control with Stop & Go (ACC+) that’s available on several Chrysler vehicles including the Pacifica minivan: using a network of radar and sensors to monitor the Pacifica and traffic in front of the vehicle, the vehicle can be slowed automatically, maintaining a safe following distance. When traffic begins moving again, the system applies the throttle and follows safely until it reaches a preset speed.

This system requires advanced computing power, a radar system and sensors to operate. If any of it fails and your vehicle is out of its original three-year, 36,000 mile warranty, you’d be on the hook for the cost of replacement.

Peace of Mind

Vehicle protection plans — especially those backed by the manufacturer — extend that peace of mind well beyond the original warranty. With a nominal deductible, a plan like Chrysler Warranty Direct’s Added Care Plus plan can extend your warranty up to eight years and unlimited mileage, and covers more than 800 components. That provides a lot of peace of mind for the major systems at work getting your vehicle down the road.

A step up to a vehicle protection plan like Maximum Care means that you’ve got bumper-to-bumper care, stretching all the way out to eight years and 125,000 miles, covering over 5,000 components: not only the major systems that make the car go, stop and steer, but the sophisticated sensors and networks that made advanced safety features work, too.

When you’re making the decision to purchase a vehicle protection plan, it’s important to understand not only the parts and labor covered, but who is providing the coverage. A service plan backed by the original equipment manufacturer and usable at any one of its thousands of franchised dealers across the country is your ticket to years of reliable service.

Tips for Selecting an Extended Warranty for your Vehicle

6 things to look for in a vehicle service plan

There are a lot of options when choosing a vehicle service plan and it’s important to understand that price is only one consideration. When you invest in protecting your vehicle for the long run, there are specific things that place one service plan over another.

Covered components

The very first consideration when comparing one vehicle service plan over another should be “What does this plan actually cover?” Service plans — even from the same company — may offer different tiers of protection that cover fewer items at a lower price.

In general, a less expensive plan can either have a higher deductible, or can cover fewer items than a full bumper-to-bumper plan. Make sure you understand exactly what a plan covers before you pull the trigger.

Term flexibility

Service plans that offer flexibility in the term of protection can be especially beneficial. Imagine you only plan to keep your new car until it’s six years old. A plan that offers a flexible term, allowing you to protect your vehicle for an additional three years over the original warranty’s three years or 36,000 miles, could be a perfect solution.

Similarly, if you’re planning on keeping your next new car for eight years and you drive 18,000 mile per year, a service plan that adds those years of protection without regard to the amount of miles you pile on can be a significant cost savings over time.

Factory protection

The biggest consideration in a service plan should be whether it’s backed by the original equipment manufacturer. There are any number of third party service plans that may or may not be acceptable at retailers around the country. Service plans that are backed by the manufacturer are acceptable at any of that brand’s dealerships anywhere in the United States, and also use original manufacturer parts to perform any repairs. That’s a major advantage over other service plans.


What if you’ve purchased an eight-year, unlimited mileage service plan and you decide to buy a new car after five years? A plan that offers a transfer of ownership for a nominal paperwork fee is not only protection for the next buyer, but it’s also a selling point if you decide to sell the car privately.

Towing, roadside assistance and rental

Do you pay for a towing and roadside assistance plan with an auto club? If you select the right vehicle service plan, you can save that annual fee because towing and roadside assistance are part of the service plan. If you’ve locked your keys in your car, run out of gas or had a flat tire, the service plan will send help, and if your vehicle needs to be towed, they’ll tow it to the nearest authorized dealership, getting you safely off the road.

It’s also a good idea to select a plan that offers rental assistance. Look for a plan that covers the first day rental allowance, and then provides additional days of rental allowance should your vehicle need to be at the shop for an extended period.

Trip interruption protection

A breakdown on the way to work is bad enough. What if your vehicle breaks down on your vacation? Look for a vehicle service plan that offers trip interruption protection that can pay for up to $1,000 worth of lodging, meals and transportation expenses should your vehicle break down when you’re 100 miles or more from home.

All of these items should be a part of your overall service plan, and can pay for themselves in one mechanical breakdown.