When you buy a new car, you may have an opportunity to purchase extended auto warranty services. Add-on policies like these act somewhat like insurance coverage for your vehicle, helping to cover the cost of certain types of repairs.

Most new vehicles come with a warranty from the manufacturer. However, this warranty is relatively limited in terms of its length, usually only extending for 2 to 3 years after the purchase.

If you want your vehicle covered longer than that, you may want to think about buying an extended auto warranty. Before you do, however, you need to consider whether or not it is worth it. Every situation is different, which is why it is important to take a step back and really evaluate your circumstances before deciding if it is right for you. Some of the factors you should consider include:

1. How long do you plan on keeping the car? If you are only going to keep the vehicle for a couple of years before replacing it, you probably don’t need an extended warranty – especially if the vehicle is covered under the manufacturer’s warranty during that time period. If you are going to be keeping the vehicle for a long time, on the other hand, one of these longer warranties may be a good idea.

2. What type of repairs are covered? Every policy is different. You need to read the terms carefully to figure out exactly what type of repairs are covered. Spend a little bit of time researching each of the covered repairs to find out how much they usually cost. Then, compare that cost to the total cost of the coverage. This will help you determine if you really can get your money’s worth from the policy. For instance, if the coverage costs $1,500 and the covered repairs all average less than $200, you may be better off putting the money you would have spent on the policy into savings to cover the cost of any repairs on your own.

3. How long will the coverage really last? A five-year extended warranty won’t always last five years. Most policies also have a limit on the number of miles that they will cover. For instance, if you have a five-year, 100,000-mile warranty, the coverage will end as soon as you cross the 100,000-mile mark. If you spend a lot of time on the road, you may hit this number before the five years are up, limiting the length of your policy.

Extended auto warranty services aren’t for everyone. In some cases, they make a lot of sense. In other cases, however, they may not provide as much coverage as you need. The only way to know for sure whether one of these policies is the right choice for your situation is by crunching the numbers. Spending a little bit of time figuring out how long the coverage will last and what types of repairs are covered can help you determine if you will really get your money’s worth out of the investment.