The Profit Machine
Dealers often make more on extended warranties than on the car itself. That should tell you something.
When They Make Sense
A used luxury car with high repair costs, or a model with known expensive failure points. Manufacturer-backed plans are far better than third-party ones.
When They're a Bad Deal
Reliable models with strong track records (Camry, Accord, CR-V) rarely justify the cost. A high deductible on a cheap repair is also a poor trade.
The Self-Insurance Alternative
Put the warranty premium - usually $1,500-3,000 - into a dedicated savings account instead. If you need repairs, the money is there. If you don't, it's still your money.