Congratulations! You’ve made the decision to purchase a new, used car. The color is perfect; the stereo is sick, and she handles like a dream. All that’s left is to sign on the dotted line — but wait, are you interested in purchasing an extended warranty?

That one gives you pause.

Am I interested? Should I be?

There’s a lot to consider.

Always read before you sign.

Warranty policies are long, complicated documents, but it’s important to know exactly what, and how much you’ll be required to pay, and exactly what, and how much the extended warranty you purchase will cover. Didn’t anyone ever tell you what happens when you assume? Sometimes, you’re wrong. Read the policy; don’t get stuck with a hefty repair bill because you didn’t.

Where can I have repairs done?

The good ones will let you take your car to any shop. Imagine you’re 200 miles from home, and stuck on the side of the road with a blown gasket; the extended warranty that requires a visit to the dealership won’t do you any good.

How will my claims be paid?

Some warranties pay the repair shop directly, while others require pre-payment before reimbursement. It pays to know which you’ve signed on for.

What is my deductible, and how is it applied? 

Is the listed deductible applied per visit or per repair? You might think, “Oh, per repair is better, because my car could go into the shop, but not ultimately need repair.” Right? Wrong. Per-repair deductibles usually end up costing more out of pocket. When one thing goes wrong, chances are something else might be wrong, too — if it’s one issue, or four, a per-visit deductible applies across the board.

How is the expiration mileage calculated? 

In one of two ways: Your warranty might expire when your odometer reaches the policy mileage, while others expire “in addition” to the miles present when you purchased the coverage. Generally, bumper-to-bumper policies follow the former method; component and powertrain warranties, the latter.

You’ve read the policy’s every word, and gathered all of the important information, and decided that yes, indeed, an extended warranty is right for you. Just another signature on the dotted line — but wait; there are a few more things to consider.

Can I cancel my warranty?

Often, yes. Sometimes, no. Most policies allow 30- or 60-day cancellation terms with a full refund. Beyond the stated initial period, you might be eligible to receive a pro-rated refund based on months or miles covered, and the cost of any claims paid.

Can I transfer my warranty?

Be sure to ask this question. The purchase of a warranty that is transferable will only increase the resale value of your vehicle.

Keep the policy handy.

The point of an extended warranty is to ensure you’re protected in the event of a roadside emergency. Don’t get stuck without the warrantor’s phone number. Keep a copy of the policy in your glove box at all times.

Undergo routine maintenance.

As used car sales professionals, we can’t stress this one enough. Take care of your vehicle, and the warranty will take care of you. Follow the manufacturer’s routine maintenance guidelines — doing so will not only decrease your chances of a broken-down ride, but also your chances of having to deal with the hassle of a denied claim.

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