If a $2,000 engine or transmission repair would be a financial disaster, paying a smaller, fixed amount for a warranty functions like an insurance policy. When to Skip It
For many consumers, the cost of the warranty exceeds the likely cost of repairs. However, it can provide significant "peace of mind" for those who cannot afford a sudden, large repair bill. should you buy extended warranty
Read the fine print; many warranties exclude "wear and tear" items or require high deductibles that make small repairs not worth claiming. If a $2,000 engine or transmission repair would
Many credit cards (like those from American Express or Chase ) automatically extend manufacturer warranties by a year or more for no extra charge. Read the fine print; many warranties exclude "wear
Avoid buying the warranty at the moment of purchase for new cars. You won't use it for several years while the manufacturer's warranty is active, and you can usually buy it later. The "Self-Insurance" Alternative