To help make a decision on an auto extended warranty consider the following:

* Does the warranty allow you the flexibility to choose a mechanic? Some warranties specify that repairs can only take place at the dealership where the warranty was purchased. This is fine if you live nearby or rarely travel. But the warranty offers no financial protection should the vehicle breakdown when away from home.

* What's the reliability record of the model you're purchasing? Repairs can't be predicted, but some models, for whatever reason, are more repair-prone. 

* Does the vehicle come with an existing auto warranty? If so, for how long? If the warranty is good for three years and you plan on only keeping the vehicle for three years, it makes no sense for you to purchase an extended warranty. However, if you expect to own the vehicle for many years to come, an extended warranty may be a good idea. 

* What does the warranty cover? This is important. Most warranties don't provide umbrella coverage. Some, for instance, only cover for wear-and-tear. Others only cover parts that break. 

* How does repair payment work? Some warranties, for instance, require you to pay up front and then wait for reimbursement, which can often take months. To avoid this, look for a warranty that pays the dealership directly. 

* Is the warranty transferable? A lesser point yes, but when you're selling a used car it becomes a major selling point with potential buyers.   

Before buying an extended warranty, treat it like car insurance and shop around. Look for a warranty that suits your situation best. Window shop on the Internet. Request quotes. This way you can decide with confidence.