When buying a new or used car from a dealer, you often have the option of having a warranty included, or of extending a warranty on a car that you select.
The biggest advantage to having a warranty is lemon protection - almost every country has some regulations on a car with multiple problems reported over a short span of time. Typically, three separate "major" issues or one issue that can't be fixed after three separate visits can be enough to qualify the car as a lemon, giving the owner the option of taking the car back for the book value of the car, or forcing more attention to the repair process. Even if the car is not a lemon, a warranty is a good idea on any product where the potential cost of something breaking is prohibitively high. Because of the potential cost vcan be high when replacing engine parts, transmission, etc, a warranty helps to shelter you not only from being the unlucky recipient of a "Friday afternoon build", but also from any manufacturer annouced defects or recalls.
The only time a warranty may not make sense is if you are familiar enough with the vehicle and if you are willing to accept the risk of some potential expensive maintenance by taking care of the car yourself. Sometimes the cost of identifying and repairing the problem yourself can be cheaper than the added cost of the warranty - remember that warranties are not different from any other part of the business world, as dealers and garages are still out there to make a profit. The warranty is like insurance: you may not ever need to use it, but having it may give you enough peace of mind to make it worthwhile.
Typically, there are two main kinds of warranties. The standard "new car" warranty that covers mechanical problems (like transmission, engine), manufacturer's defects, and for a shorter period, any other items, often referred to as "bumper-to-bumper" coverage, like blown stereo speakers or a faulty trunk latch. The standard warranty is typically for standard blocks of time (2 years, 5 years) or for mileage milestones (100,000 kms or 50,000 miles), often, whichever comes first. The other type, the extended warranty, allows you to either extend a term of the original warranty, or allows you to broaden the range of faults that are covered by the existing warranty term - in either case, it allows you to cover more than what was originally covered under the original warranty on the car.
