When you buy a car, it is often the second biggest investment most people make, after buying a home. When there is such a major outlay of cash, it is very important that you think a lot before committing to such a huge investment and buy an extended warranty. One should think about how to protect one's investment wisely. With so many things that can go wrong with an automobile, there is an understandable pressure to go for extended warranty coverage.

There are many things that need to be considered about the extra cost of warranties and before you sign on the dotted line you should consider the current situation, the merits, demerits of the auto warranty and the expense.

After you have properly inspected the new purchase and you are totally satisfied with the report, it is your decision to purchase the car extended warranty or not. Most new cars are built for lasting reliability with a minimum of maintenance. Frequent oil changes, annual coolant system flushing and factory recommended transmission servicing would usually keep most cars on the highway for a few thousand miles.

But sadly, no auto extended warranty covers all these items as they wear out constantly. Tires, hoses, belts, brakes, batteries, light bulbs are very normally replaced parts of a car. They seldom come under a car warranty or an auto warranty coverage. You might check whether they are covered by their own automotive warranty.

You'll get more services in exchange for a higher premium with extended warranties. Basic auto warranty plans should include coverage for items like engine, transmission, wheel drive components and basic electrical devices like starters and alternators, etc. A more deluxe package of auto warranty or car warranty would cover power and convenience options like smaller electrical and mechanical components and even basic body repairs due to premature corrosion. This might be covered in the automotive warranty. You need to check.

Most do not cover soft items like vinyl tops or interior upholstery items in their car warranty or extended warranty contracts.

You should be well aware of the various limitations of the auto warranty. You should know where and who would take care if the repairs, if any. Never take a salesman's words on these terms. Ask him to write the terms out and give them to you. There may be many restrictions limiting you from repairing your car with your favorite mechanic! Make sure that you know who is financially responsible for getting the car to the shop if it needs a tow!

Call customer service to determine if the covered parts in the auto extended warranty need prior authorization, the authorization is a simple process and customer service personnel are available 24/7. Be aware where your money is going and who the financial provider is for the auto warranty you just signed. There are scores of people not getting their claims just because some companies went bust and were declared bankrupt! The dealer might be taking the order. He might also be the one who is actually administering the auto warranty and backing up the policy.

To compare extended warranties, visit WarrantyDirect.com.