Is the Chrysler extended warranty coverage worth it?
I haven't looked at that warranty in detail, but generally speaking this should help. What is GAP insurance? In the case of a total loss/write off gap insurance covers the outstanding finance after your regular insurance pay out. The two won't match up usually because of the depreciation right after you buy the car. For example, if you take out $20,000 finance and buy a car, then write it off after six months, your insurance company may only value it at $16,000 but it's unlikely you will have cleared $4,000 from your finance. Gap insurance will pay out the difference and settle the debt. Will Chrysler change the engine, if it comes to bhore? Yes, unless they identify misuse or deliberate damage. For instance, if you do 1000 miles and the engine explodes, it's a mechanical fault that the warranty would cover. If they open up the engine/look at diagnostics and find it's been thrashed to within an inch of it's life, they may claim it was your driving which has destroyed the engine and you would have to prove it was an underlying fault and would have blown either way. Will car dents be covered with this bumper to bumper insurance? Not likely, as I mentioned in the last point, if it's your fault it wouldn't be covered. I think you may be confusing the terms insurance and warranty at this point. Insurance would cover your dents but a warranty only covers the manufacturer's faults, even in the case of extended warranties. What does basic mean in terms of warranty? Sounds obvious, but whatever Chrysler want it to mean! There's no legal definition of 'basic' so you would need to check the documents thoroughly or ask them to explain exactly what is and isn't covered. If they're reluctant, it's probably because 'basic' covers very little...
I respectfully disagree with @JohnFX's comment regarding new vs used.  (John knows what is talking about though; he gave an awesome answer on buying a car:  What are some tips for getting the upper hand in car price negotiations?) The answer to your question is based on whether or you not you can stand to have a small, loud, cheap but reliable car for the next 10 or 15 years. If you plan to keep your new car until it dies 20 years from now, then a new car can be a fine choice.  I just bought a car and the difference between my 2013 Hyundai and a comparable 2012 Hyundai wasn't much.  Furthermore, it was hard to even find a 2012 (which justifies the higher price from dealerships and the private market).  Doing math in my head told me the reduced usage I will get out of the car wasn't offset by the slightly lower price. Depending on the specific age, insurance on newer cars can be cheaper than insurance on older cars. (But you have to have carry more insurance, so consider that as well.)  There might not be a different between a 2010 and a 2012, but there will likely be for a 2005 and the 2013. New cars can be cheaper to operate.  Lower fuel costs, better safety and possibly pollution costs.  They are tuned up and you know everything about their history. Repairs and factory warranties might not be available on a used car, so if you car turns out to be a problem, your out of pocket is limited. These programs don't mean anything.  Get an independent certified mechanic to check out any used car you buy.  If the dealer won't let you get the car checked out, then they aren't worth your business.  Certified cars don't justify their cost according to consumer reports, they are more for marketing than reliability. Don't waste money on a third party warranty.  Either the car is good and doesn't need it, or it needs a warranty and you shouldn't buy it.  If you new car comes with a factory warranty, that is fine.  Radio host Clark Howard is indifferent if you want to purchase a factory warranty separately, but never a third party. Just out of college, you probably will be better off spending the least amount of money you can for a good used car. If for no other reason, this likely isn't going to be your car in the near future.  (Only you can answer that) If you have a feeling you won't keep your tiny car well into your 30s, then definitely don't buy a new car.   Also, my experience only applies to my make and model.  Certain models of cars keep their value and the difference between new and used isn't much for the most recent model years. But there are many more makes and models that don't pan out that way. "In regards to purchasing full coverage on your car even if you can afford to replace it, consider the hassle you have to deal with an accident that is not just the cost.  As an example, my sister's car was stolen and wrecked.  It was her problem to go recover the car on the other side of the state such that she would not be paying the storage ""fees"" imposed by the sheriff of the other county.  Had she had insurance they would have taken care of it call. Another story is that I rented a car and side swiped in the parking lot by a hit and run.  I was responsible for the minor damage.  I started down the path of paying out of pocket because it was small enough that I did not want to submit a claim.  The rental car agency started to pile on extra fees such that it was worth it to turn in a claim.  My insurance company was savvy enough to be able to dispute the extra charges.  After I submitted it to the insurance company I basically did nothing.  They took care of everything. So, in summary, when you buy full coverage on your car, it is not just a financial decision.  It is also about not having to deal with a hassle." As a rule, purchasing fairly priced (minus a spread) insurance on items you can afford to replace is a bad idea. However, in addition to the points mentioned in the previous answers, one should note that many types of insurance are UNDERpriced because on average people do not make claims even though they are entitled to them.  If you purchase something moderately priced at Best Buy and get the extended warranty and it breaks down a year later, you will be unlikely to even remember that you purchased the insurance much less go through the trouble of making a claim.  More likely you will just go buy a replacement or whatever the latest and greatest iteration is.  It's like homeowner's insurance--an amazing number of things is covered but no one ever makes claims, so it is cheap.  If you are a person who remembers and utilizes warranties and insurance, there are many types of insurance that will save you money in expectation.   The other thing is that you know more about your own riskiness than the insurer does.  I had a girlfriend who bought super comprehensive insurance on her crappy old car.  I was quite stern with her about it but could not change her mind.  She totaled it a few months later.  They bought her a replacement.  She got in a more serious accident with that car and got yet another one in addition to payment of her medical care, which did not even go to her health care insurance.  Yes, her rates went up, but not fast enough to deal with how risky she was.  Another example: I used to carry an e-book reader around in my shirt pocket and read it any time I had a chance.  Cheap item and not that delicate, but since I had it with me all the time and used it constantly, it was a big risk for the store.  The extended warranty would have been a great idea. In short, avoid extended warranties and insurance on things you can afford to lose unless you know that you are high risk or are otherwise more likely than average to make a claim. Don't confuse a home warranty with homeowner's insurance.  Insurance will cover disasters.  Warranty will cover lesser repairs that insurance doesn't cover. You can warranty your own home with a liquidity fund.  Stash 1-3 months of salary in a savings account that you can tap out at any time.  Water heater blows?  Just call a plumber.  Leaking roof?  Call a roofer.  No need to argue with a warranty company for reimbursement. Chances are, you will spend less on warrantable repairs than the cost of the warranty itself.  If you're handy, it'll be even cheaper. "Paperwork prevails.  What you have is a dealer who get a kickback for sending financing to that institution. And the dealer pretty much said ""We only get paid our kickback at two levels of loan life, 6 and 12 months."" You just didn't quite read between the lines.  This is very similar to the Variable Annuity salespeople who tell their clients, ""The best feature about this product is that the huge commissions I get from the sale fund my kid's college tuition and my own retirement. You, on the other hand, don't really do so well.""  Car salesmen and VA sellers." "Here's what you do without, on the negative side, just for balance: A bill: When I last had comprehensive insurance, it cost something like 3-4% of the value of the car per annum.  (Obviously ymmv enormously but I think that's somewhere near the middle of the range and I'm not especially risky.)  So, compared to the total depreciation and running costs of the car, it's actually fairly substantial.  Over the say 10 years I might keep that car, it adds up to a fair slice of what it will take to buy a replacement. Financial crisis costs: I don't know about you, but my insurance went up something like 30% in recent years, despite the value-insured and the risk going down, said by the insurer to be due to market turmoil.  So, at least hundreds of dollars is just kind of frictional loss, and I'd rather not pay it. Wrangling with the insurer: if you have insurance and a loss, you have to persuade them to pay out, perhaps document the original conditions or the fault, perhaps argue about whether their payment is fair.  I've done this for small (non-automotive) claims, and it added up to more hassle than the incident itself.  Obviously all insurers will claim they're friendly to deal with but until you actually have a big claim you never know. Moral hazard: I know I'm solely responsible for not having my car crashed or stolen.  Somehow that just feels better. Free riders: I've seen people ""fudge"" their insurance claims so that things that shouldn't have been covered were claimed to be.  You might have too.  Buy insurance and you're paying for them. Choice: Insurers are typically going to make the decision for you about whether a claim is repairable or not, and in my experience are reluctant or refuse to just give you the cash amount of the claim. (See also, moral hazard.)  Do it yourself and you can choose whether to live with it, make a smaller or larger repair, or replace the whole vehicle with a second hand one or a brand new one, or indeed perhaps do without a vehicle. A distraction: Hopefully by the time you've been working for a while, a vehicle is not a really large fraction of your net worth.  If you lose 10% of your net worth it's not really nice but - well, you could easily have lost that off the value of your house or your retirement portfolio in recent years.  What you actually need to insure is genuinely serious risks that would seriously change your life if they were lost, such as your ability to work.  For about the same cost as insuring a $x car, you can insure against $x income every year for the rest of your life, and I think it's far more important. If I have a write-off accident but walk away I'll be perfectly happy. And, obviously, liability insurance is important, because being hit for $millions of liabilities could also have a serious impact.   Coverage for mechanical failures: If your 8yo car needs a new transmission, insurance isn't going to help, yet it may cost more than the typical minor collision.  Save the money yourself and you can manage those costs out of the same bucket. Flexibility: If you save up to replace your car, but some other crisis occurs, you can choose to put the money towards that.  If you have car insurance but you have a family medical thing it's no help. I think the bottom line is: insure against costs you couldn't cope with by yourself.  There are people who need a car but can just barely afford it, but if you're fortunate enough not to be in that case you don't really need comprehensive insurance." The answer is very simple. Part of the luxury is having the cutting edge technology with the very latest features. The price premium is not just from increased build quality; it's simply a perception. Additionally, 10 years takes its toll on a car. The smooth suspension gets rougher over time, and all the little features start to break down. Part of the price of that car factors in the expense of expected repairs. That's true of every car, but the repairs are more expensive when there are lots of gadgets to break down, especially on imports. Why not get an estimate at few different shops?  Some that honor the warranty and others that don't.  Then you can make a math based decision on where to have the car fixed. While your fear is reasonable, information is a remedy.