The average new car costs over $25,600. With that cost, owners expect trouble-free operation and longer vehicle life. So why are many turning to extended warranty plans? The answer is simple: they want to protect their investment.

Extended warranties have been called "health insurance for the engine." In fact, extended warranties are nothing more than extended service plans, similar to automobile insurance in many ways. You pay money up front to avoid paying considerably more money at the time of the repair. As with insurance, you get what you pay for, and sometimes paying less means not getting the coverage you need.

In this article, we'll run through some simple tips you should keep in mind when considering an extended warranty.