Should I Buy an Extended Auto Warranty?
Is an Extended Auto Warranty Right for Me?

In reality, an extended auto warranty is a service contract, a safeguard against unexpected, expensive repairs. An extended auto warranty is not right for everyone.

Many people believe that extended auto warranties are not worth the money. And, in some cases, this is absolutely true. However, it is important to look at every case individually. As with anything else that you pay for, you need to look at what you are getting and for what price—the right coverage, at the right price.

You can sit down and add up the average costs of some typical repairs and see if they are more than the price of the auto warranty. If they add up to more, then you have your answer. Anyone who has owned a car knows that at some point every car needs work. Some people can afford a reasonable monthly payment for an auto warranty but would struggle to come up with a few thousand dollars for an engine repair.

Think of an extended auto warranty the same way you think about health insurance. You wouldn't buy coverage for yourself before asking questions and finding out everything you need to know. Don't buy coverage for your car without doing the same thing. Here are some basic questions you should answer to determine if an auto warranty is right for you:

Is your vehicle currently under warranty? How long do you plan on owning it?
Look at the factory auto warranty that came with your car. If that auto warranty covers your car for the same amount of time, or longer, than you expect to own it, it doesn't make sense to buy another auto warranty. However, if you are going to keep your car for longer than the extended auto warranty, it definitely does make sense.

If you are buying a used car from a dealership they sometimes offer an auto warranty; however, it is often for a short as a month. It is also possible that the car's original warranty is still in effect. Look into each of these possibilities before you purchase a new extended auto warranty. Some dealers have "certified used" programs; these programs extend original factory auto warranty terms on pre-owned vehicles.

Does your car model have a history of breaking down?
Some cars have troubled histories. For example, Chrysler's are known to have electrical problems. Jeep, Land Rover, Audi and Jaguars are all known to have issues. If you own or are buying a model of car that has a history of problems you should seriously consider buying an auto warranty as soon as you buy the car.

Can you afford surprise repairs?
Besides normal maintenance costs, most repairs are unexpected. Do you have money to cover the costs if something goes wrong with your car? Do you have a mechanic that you trust? An extended auto warranty can make sure that an unexpected service issue is taken care of quickly and easily.

What about the costs of parts?
Some cars are more expensive than others. If you own a higher end model of car, such as an Audi, Lexus, Infiniti, Mercedes-Benz, Jaguar or other luxury vehicle, than parts are probably pretty pricey. These cars all most likely benefit from owning an extended auto warranty.

Does you car have a lot of bells and whistles?
The more "extras" or "options" your car has the more opportunity there is for problems. Cars today have really sophisticated electronics that can be expensive to repair. While options are nice (those heated seats really are great during the winter) the more you have the more money repairs may be. When you purchase your extended auto warranty make sure that you get the right coverage for everything that you need.

Do you tend to worry?
This may seem like an odd question but part of having an extended auto warranty is the peace of mind that comes with it. Once you purchase an extended auto warranty you don't have to worry about affording repairs or finding a mechanic who won't rip you off. If you are a worrier then the cost of security might be well worth it indeed.