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Is capped price servicing really better for your budget?

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The new car smell has only just worn off and you're already driving to the dealer-owned service centre for your first check-up. Chances are you know what it's going to cost.

This is because you've likely entered a capped price servicing program when you bought the new car. If your dealer didn't explain it to you, capped price servicing is where the dealer (through the manufacturer) locks in the future price on your services over a nominated time - either by years or by kilometres and, in some cases, over a lifetime.

Most mainstream car brands and dealerships offer capped price servicing nowadays, although some call it by a slightly different name.

hyundai capped price servicing
Many car manufacturers including Hyundai offer both pre-paid and lifetime service plans.

One of the bigger benefits of the program is that it has stopped dealerships offering inconsistent pricing and profiting from ridiculous margins.

There are car manufacturers also offering a service where, once capped price servicing finishes, you enter your car's VIN number and they'll quote you the service price. Alternatively, brands that don't offer capped price programs may offer pre-paid servicing, where you pay for your servicing years in advance at the time of purchase.

These capped price and pre-paid services aren't by any means perfect, but they're convenient. They generally lock you in to have the car serviced at a brand-owned garage for the term of your warranty or nominated service time frame.

The Australian Automotive Aftermarket Association has long advocated that car dealerships and workshops should be better at detailing what capped price servicing entails.

In 2017 it produced a list of questions you should ask before entering into a capped price agreement.

These include:
- Is the service price capped or can it be increased?
- Does it include a full safety check, or is this an additional charge?
- Will additional parts and services be required to maintain the new car warranty and, if so, at what cost?
- Is the capped price servicing built into the purchase price of the car? If so, do I have the option of taking this as a discount off the sale price?
- Does the capped price include all parts and lubricants? If not, how do I know these will not be supplied at an inflated cost?
- How long am I locked into a dealer-only service under the program and are there any penalties if I miss a scheduled service?

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Darren Snyder was the managing editor of Money magazine from March 2019 to November 2020. Prior to that he was editor of Financial Standard.
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