Extended Service Contract (ESC)
Category: finance
A protection plan that covers the cost of vehicle repairs after the manufacturer’s standard warranty expires.
The ESC is the main profit driver for F&I offices. They are often "third-party" contracts, meaning they are not backed by the car manufacturer. Always read the fine print regarding "exclusions," as they often do not cover wear-and-tear items or complex electronic system failures.
Common Examples
- We negotiated the cost of the extended service contract down by fifty percent before finalizing the purchase agreement.
- Before buying an extended service contract, verify if it is a "manufacturer-backed" plan or a third-party contract, as the coverage differences are massive.