Q: Is it sensible to purchase an extended warranty when buying a new car?
A: This depends on several factors. First, it depends on how you use your vehicle. Do you put excessive stress on the engine, transmission, or other components (e.g., when towing a trailer)? How long do you plan on owning the vehicle? Most auto manufacturers give a minimum of a 3-year/36 mile bumper-to-bumper warranty. If you get a new car every 4 years or so, it is usually not worth it to purchase an extended warranty. Also, read consumer based ratings to determine the reliability of past models. If you buy a high quality automobile with good reliability records and maintain it as required, put the money you would spend on an extended warranty in a bank account and keep that for your own private insurance if something happens down the road. Be sure to read the fine print if you do decide to purchase an extended warranty.