Question: I’m buying my daughter a nearly new used car. Do I have to get the extended warranty?

Answer:
First, you should know that an “extended service contract” is always optional on any used car purchase; so don’t let anyone tell you that you have to buy one. The choice is yours. Second, when considering an extended service contract for my daughter’s first car, I asked myself these questions: How long will my daughter be driving this car, and how willing am I to pay for breakdown and repair expenses? If she is going to be driving the car well beyond the factory-warranty period and you don’t have a couple thousand dollars tucked away for when the air-conditioner compressor fails and the motor mounts break, then it’s a good idea to get the extended service contract. If, on the other hand, the car is only a year or two old and she is going to drive the car for a couple of years and then trade it for a new one, most of the problems that crop up will be covered by the original factory warranty. In this latter case there is no benefit to purchasing the extended service contract.

Extended service contracts can be lifesavers in the event of a major breakdown on a car that is beyond its original factory warranty period. For example, a transmission replacement will run more than $3000 for many cars, and an air conditioner compressor usually runs well over $1000. I don’t know about you, but I don’t keep that much “extra” cash in my wallet, and I would rather let the policy cover it and spend my hard earned money on gas! If your daughter is anything like mine, she would probably rather spend her money on iPod downloads and $30 t-shirts with someone else’s name on them than on a new powertrain control module for her car.