Pros and Cons of Extended Service Contracts

Service contracts get a lot of bad press, but the truth is there are good policies out there. Like anything that you invest a significant amount of money in, you should do your homework before you hand over the check -- to make sure you're buying a contract from a reputable company and to satisfy yourself that you actually need the coverage. We bought a used Z3 roadster for my wife a year or so ago. It had originally been a factory rep's car (being an hour or so from the factory means there are loads of them around here), and the second owner hadn't put many miles on it, but time-wise the basic warranty was about ready to go. It's a car we intend to keep, and BMW repairs can be pricey, so the additional coverage made sense. It turned out to be a good purchase, because the policy paid for a hefty repair a few months ago. Should you buy an extended service contract? Maybe, maybe not -- but weighing the pros and cons will help you make a decision.