Why is an Extended Warranty a good idea now?

With a recession in full force and people holding off on buying cars, buying some protection for your car might be a better idea than buying a newer one.  If you feel that going deeper in debt is not something that you need to do, then an extended warranty might be a good idea to insure you against a potential catastrophic loss.  With cars losing value and people owing too much on their car to trade in,  an extended warranty on your car or truck might be the smartest investment you can make.  Let's face it we all have to go to work and a breakdown, when money and credit is tight, could throw some families into a tailspin.   A warranty with good coverage options could save you in the short term and since most coverages include rental car coverage for a covered repair, you wouldn't have to worry about down time, you just take car in and get your rent car.    There are a lot of companies selling extended warranties out there, you just want to make sure it's a reputable company with a long history.  They are usually the ones that have figured out the risk models and have adjusted to the market conditions using their experience and expertise.  They also are reinsured by a reinsurance company.  That's usually one of the insurance giants like Chubb or Lloyds of London.    Coverages vary widely, so make sure you know what kind of coverage your buying.  You will spend some money, but with cars increasingly expensive due to extensive electronics, the repairs, when they are needed, will be expensive.  One reason is many electronics are not fixable, they just have to be replaced altogether.   Many replacement computer chips can easily top $1200 to $1500.    Bottom line is nobody knows what the future holds and protecting yourself now can make a huge difference later.  The worst that can happen is the economy comes back, car values go up and your able to buy again in a few years.   If that was the case and you had some warranty left that you purchased, then you can either cancel it and get your pro-rated money back or sell it with the car and do a simple transfer to the new owner.