Vehicle Service Contracts (VSC)
A Vehicle Service Contract (VSC) is an optional protection plan that helps cover the cost of certain mechanical repairs and breakdowns after a vehicle’s factory warranty expires. VSCs provide financial predictability and peace of mind for borrowers by reducing their exposure to unexpected repair bills—enhancing your lender’s service offerings and strengthening trust.
What VSC Coverage Can Include
VSCs are sometimes called extended warranties, but they are distinct contractual coverage agreements rather than traditional warranties under federal law.
Mechanical Breakdown Protection
VSCs are designed to assist with repair costs for covered systems and components like the engine, transmission, electrical systems, drivetrain and more, depending on the plan chosen.
Flexible Coverage Levels
Contracts can be tailored from basic powertrain coverage to more comprehensive plans resembling bumper-to-bumper protection—letting lenders offer choice and value to borrowers.
Cost Predictability and Peace of Mind
By helping manage potential high repair costs, VSCs offer borrowers budget stability and reduce the likelihood of large out-of-pocket expenses for covered repairs.
Additional Benefits
Many contracts include perks such as 24/7 roadside assistance, rental car reimbursement, and trip interruption coverage—helping support borrowers beyond mechanical failures.
Custom Program Design
We work with your institution to develop VSC offerings that align with your loan products and regulatory requirements while delivering measurable borrower value.
Why Vehicle Service Contracts Matter for Lenders
Reduce Borrower Repair Risk
Borrowers with VSC coverage face lower risk of costly repair bills, helping support repayment ability and customer satisfaction.
Enhance Borrower Confidence
Offering VSCs demonstrates a comprehensive approach to protection, giving borrowers confidence in their purchase and financing decisions.
support loan performance
By minimizing disruption caused by major mechanical failures, VSCs support more consistent loan performance over the life of the loan
Frequently Asked Questions
What is a Vehicle Service Contract (VSC)?
A VSC is a contractual agreement that covers the cost of specified mechanical repairs after the original manufacturer warranty expires. It pays for covered breakdown repairs under the terms of the contract rather than accident or collision damage.
Is a VSC the same as an extended warranty?
While often called an extended warranty in everyday language, a Vehicle Service Contract is technically distinct—agreements are paid contracts that help cover repair costs but are not a continuation of the original manufacturer’s warranty.
Does a VSC replace auto insurance?
No. Auto insurance covers damage from accidents, theft, and other perils. A VSC covers mechanical breakdowns and repairs unrelated to collision or comprehensive events.
When should a borrower consider a VSC?
A VSC is typically most valuable when the factory warranty expires and the borrower wants protection against potentially high repair costs over time—especially with higher mileage or older vehicles.
Are VSC benefits transferable?
Many VSCs are transferable to a new owner, which can help increase the resale value of the vehicle—though terms vary by contract.
