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An extended warranty, sometimes called a service agreement, a service contract, or a maintenance agreement, is a prolonged warranty offered to consumers in addition to the standard warranty on new items. The extended warranty may be offered by the warranty administrator, the retailer or the manufacturer.

Whether you should buy an extended car warranty is a personal decision. While many drivers never use a warranty, others are glad to have the extra coverage. If you drive a reliable car and could afford to pay for unexpected repairs out-of-pocket, an extended car warranty might not be worth the cost to you.

Warranties provided by the manufacturer as part of the vehicle cost typically cover only certain problems with the vehicle. Extended warranties or service contracts sold for an additional charge typically cover problems with mechanical and electrical parts not covered by the manufacturers' warranty.

For some drivers, an extended warranty offers peace of mind. If you feel more comfortable on the road having a warranty, it's worth it. Maybe knowing you have access to free repairs could give you the freedom to take road trips you wouldn't take otherwise, for example.

Verify with the manufacturer if you receive a letter, postcard, or phone call informing you that your car's express warranty is soon to expire. It could be a fraud involving a car warranty. Do not call the number on any letter or postcard you receive, even if it appears to be from the manufacturer.

For a brand-new car that comes with a manufacturer's warranty, an extended warranty might not make sense. But it could be a good choice if you're buying a used car with a questionable vehicle history and want to offset the risk of big out-of-pocket expenses.

Not All Repairs are Covered: Just like with the initial warranty, not everything is covered with the extended warranty. Routine wear and tear, including tires, aren't a part of the deal so check carefully to see what is and isn't covered.

An extended warranty is coverage for electrical or mechanical breakdown. It may or may not cover peripheral items, wear and tear, damage by computer viruses, re-gassing, normal maintenance, accidental damage, or any consequential loss.