A service contract sold with a payment plan carries two prices. The first is the price of the cover. The second is the cost of paying for it over time, which is a credit arrangement attached to the contract. The amount due on each payment is not the measure to compare. Read the total you will have paid by the end of the plan, and read it on the same paper as the contract terms.
What sets the state rules
Whether a seller may offer a payment plan, how any finance charge must be disclosed, and what happens to an unpaid balance if the contract ends early are set by the statute or program named for each state. The state page on this site gives the regulator and statute for that state, for example the Alabama page. This guide has not read every state's statute, so it does not say what any one state requires. Read the statute named on the state page before you rely on any rule described here.
What moves the total up or down
Several things move the cash total. The length of the plan sets how many charges accrue. The finance charge rate, if one is disclosed, sets the cost of holding the balance. Any fee charged at signing is part of the total whether or not the plan runs to the end. Add-ons bundled into the financed amount add to the balance that the finance charge applies to. A shorter plan usually means less total financing cost, and a larger down payment means a smaller balance to finance, but both trade against the cash you have to pay up front.
What to check on the paper
Ask for the amount financed, the finance charge as the statute's disclosure form states it, and the total of all payments. Ask whether a late charge applies and when it starts. Ask what happens to the unpaid balance if you cancel, and whether the contract stays in force while payments are late. If a lender other than the seller holds the plan, the lender's name must appear on the paper, and the contract should say whether cover depends on the plan staying current.
What to compare
Compare the total of all payments for each offer, with the same term and the same covered items on each. A lower payment on a longer term can carry a higher total. Put the total of payments on the same line for every offer before you compare anything else.