You've been there for hours. You've thoroughly studied every picture in the dealer's office. You're feeling numb from long negotiations. You are ready to just give in and get your new car so that you can drive home fast.

This is when the real hard sell begins. 

The finance manager will suggest that you purchase an extended warranty. The extended warranty is actually an extended service contract that covers the costs of repairs and problems after the original warranty expires.

Don't feel pressured into making a split second decision. You might not need an extended warranty.

If you buy and trade cars frequently, say every three or four years, you won't need an extended warranty. The vehicle will still be under the original warranty when you trade it in.

But if you are keeping the car for a long time, you should ask a few questions:

 Are you able to handle surprise expenses?
 
Will the cost of replacing parts bust your budget or your emergency money?
 
How long will you keep the car after the warranty expires?

Would you be less stressed knowing that major repairs are covered under an extended warranty? Or would you rather just risk it?

Think about the car in question. New cars are pretty reliable, but when repair costs are necessary they can be quite high due to the computers and technology required to diagnose and repair new cars.

If you do plan on keeping the car, you might want to buy an extended service contract. But you don't have to buy it right then - you can buy it at any time.

The price isn't set in stone either. Feel free to negotiate. Ask at several dealerships, they all charge different prices. You will receive the lowest price if you purchase the warranty within the first year of ownership of the vehicle.

Don't forget that an extended warranty starts the day you purchase it, not the day the old warranty expires. You don't need to have double warranty protection. So, it may actually pay off to wait.

There are two types of extended warranties: those backed by the manufacturer and those offered by independent companies.

An extended service contract backed by the manufacturer is the best choice. This type of contract will cover a wide range of repairs and services. The repairs can be done at any authorized dealership. You don't pay for the repairs unless your contract includes a deductible.

An extended warranty from an independent company, also called an aftermarket warranty, is often cheaper by as much as 50%. But what you are getting varies widely from company to company. Shop around and ask questions. Find out what the repair network is - what garages are authorized to do repairs and where they are throughout the country.

Aftermarket warranties require that you pay for the repair upfront and then they will reimburse you. This could take weeks. Make sure that you ask about the process before you sign any paperwork.

There are a lot of bad extended warranties out there. Be wary of unsolicited offers. Do business with reputable companies that you know and trust. Often you can look to your local credit union for an extended warranty.

Some dealers will try to sell you a dealer warranty. This isn't the same as a manufacture's warranty. Often, the repairs and services must be done at the dealership you buy your vehicle from. If you break down out of town, you are out of luck. If the warranty does not cover expenses when you are traveling, steer clear.