Extended car warranties: when to say no

I would never buy an extended warranty for a new car. But if someone else asked whether they should buy one, I'd have a different answer: It depends.

Over the years I have talked to hundreds of car buyers and found that the decision to buy an extended car warranty is highly personal and rather emotional. Many are chasing peace of mind, and a warranty can provide that.

But it's peace of mind for the dealer, too — another chance to make a fat profit.

Either way, it's a good idea to make your decision before you enter the sales office at the dealership and get the hard sell. Here's how to get there.

Is an extended warranty for you? How long will you keep the car?

Nearly all new cars come with at least a three-year, 36,000-mile bumper-to-bumper warranty. For many brands, the warranty is even longer.

If you keep or lease your car for less than the length of your factory coverage, you do not — repeat, do not — need an extended warranty.

Will you actually use the extended warranty?

Remember, the warranty covers only things that break on your car.

Warranties don't cover oil changes, brake jobs, tires or other "wear items," meaning things that are subject to wear. A veteran car dealer recently told me that only 1 in 10 people who buy extended warranties winds up using it.

Most cars come with a powertrain warranty that kicks in after the bumper-to-bumper warranty expires. For example, Chevy has a powertrain warranty that lasts for five years or 60,000 miles. If anything goes wrong with the car's powertrain — those parts that move the car down the road — it's covered. Gratis.

But if the door handle breaks or the window won't go up, you have to pay to fix it.

Buying the warranty when you buy the car is easier, sure; you can roll the cost into your monthly payment. And most warranties are transferable if you decide to sell.

But why pay interest on something you won't use for years?

Consider waiving the extended warranty at the time of purchase. Then, as your car approaches its third birthday, look into the extended warranty. You will know two things by then that you didn't when you bought the car new: how much you like it and how troublesome it has been.

Plus, you can shop around for the best price from the comfort of your home.