When you are purchasing a used car, it may - or may not - have time left on the original manufacturer warranty. If the vehicle has exceeded the terms of the original warranty, you may want to purchase an extended warranty, also known as an extended service contract.  Service contracts are beneficial for used car buyers because although recent vehicles are indeed more reliable, the advanced features and safety systems cost more to replace if they malfunction. If you are trying to maintain a budget, and even if you should have some funds set aside to cover maintenance for the vehicle, you probably don't want to have to deal with high repair bills.