Extended warranties on used cars make companies and dealerships a tidy profit - and can cost a car buyer thousands of dollars. If you are buying a car, a dealer or finance manager may make it appear that an extended warranty is necessary to protect you from financial loss down the line, but this is not true. In fact, you should never take the first extended warranty offered on your used car. As with most aspects of buying a car, extended warranties should be carefully researched ahead of time. In many cases, even used cars still have some warranties on them, since many manufacturers allow warranties to be transferred in used cars. In many cases, this warranty is enough and even if you require more coverage this basic warranty gives you the breathing room to carefully consider all your options. Even if your used car has no warranty, you should take the time to consider extended warranties before simply signing one.

What Are Extended Warranties?

Extended warranties cover repairs and car problems that may crop up after a car's factory warranty lapses. Common sense dictates that if something goes wrong with your car, you will have to pay less if you have an extended warranty. However, you need to consider exactly what the warranty covers, how much it costs and how many repairs you can expect on your used car. In some cases, simply placing some extra money in a savings account each month is enough to cover any repairs that may come up - all at a lower cost than most extended warranties.

When Do I Not Need Extended Warranties?

You may not even need extended warranties for your used car. If you have bought a used car that is certified by the car's manufacturer, you should check your paperwork carefully - many such used cars come with some warranty coverage. If your car comes with any warranties and if you do not expect to keep your car for a very long time, it may not make much sense to pay money for some of the more expensive extended warranties available. Looking at sites such as Autobytel.com, Autoweb.com, CarSmart.com, Edmunds.com, Cars.com and Autos.yahoo.com may give you more information about the car you are interested in buying. The comments about cars and user reviews of your car model may give you some idea of how much maintenance your car may need in the future.

When Do I Need Extended Warranties?

If you will worry unduly without extended warranties or if emergency repairs could jeopardize your budget, extended warranties may be for you. This type of service warranty may be a boon to those who rely on a car but who are on restricted budgets. There are two types of extended warranties for cars: Those backed by auto manufacturer and those offered by private companies. Extended warranties backed by a car's manufacturer tend to be far more expensive but cover a wider array of services and repairs. Getting repairs seen to is as simple as taking your used car to your nearest dealership. Extended warranties from private companies are often attractive because they are far less expensive. However, different independent companies offer different levels of service. If you choose this option, you will have to research companies carefully. The money you invest in extended warranties will not be returned to you if you resell your car or if the company who sells you the service contract ceases to exist. You should read all extended warranty contracts carefully - some are very restrictive regarding when and where you can get your car serviced.

Go to WarrantyDirect.com for more information on warranties for used vehicles.