There's no doubt that used car warranties seem like a good idea in theory but in practice there are questions you should ask before purchasing one. After all, the people selling used car warranties are in business to make money – not save you money.

Used car warranties come in two basic shapes and sizes. There are those offered by manufacturers as part of their certified pre-owned used car programs.

They extend the warranties of used cars and are usually good because there is a nationwide network of repair facilities that will do the repair work needed.

The second – and these are the ones most consumers should avoid – are sold by third parties for both new and used cars. These are basically insurance policies that can be difficult to redeem when something goes wrong.

Q. Why are used car warranties a bad idea?
A. Simply put you end up paying too much for something you may never use or if you do use will end up costing less than you paid for in premiums. It's costly peace of mind.

Consumer Reports did an article on car warranties where it discovered, "Among survey participants who used their policy, the median out-of-pocket savings on repairs covered by extended warranties for all brands was $837. Based on a $1,214 average initial cost, that works out to a net loss of more than $375. Factoring those who didn’t use their policy, the median savings was zero."

You would be better off setting aside money each month, even as little as $40, for potential repairs.

That gives you almost $500 a year. The good thing is the money is there if you never need it for repairs. Once you spend the money on an extended warranty the money is gone forever, even if you never redeem the warranty.

Q. Which brands should I almost never buy a used car warranty for?

A. Lets head back to Consumer Reports to answer this one. Its survey covered vehicles built during model years 2006 to 2010 – a period when most are out of their manufacturer warranty coverage. It said, "[O]wners of Hondas, Subarus, and Toyotas—perennially high-ranking brands for reliability—were among the least satisfied overall with their extended warranties. They were also far less likely to have used them, compared with owners of most other brands’ models." As always, problems can arise with any brand, even Hondas, Subarus and Toyotas. Always have a pre-purchase vehicle inspection done before buying any used car.

Q. Which brands might be good for buying a used car warranty?

A. Consumer Reports found the less-reliable brands included BMW, Chrysler, Dodge, and Mercedes-Benz. Again, though, setting money aside monthly might be the way to go as a hedge against future high-repair costs.

Q. What are the best and worst used car warranty programs?

A. Intellichoice.com has come out with its rankings of the top extended used car warranty programs offered. It's up to you to decide if the programs are worth the extra investment. In most cases, they still aren't.

Intellichoice said in its 2013 Study of Third Party Extended Used Car Warranties, "There are clear differences among the programs evaluated in this process, from the extended service contract to the quality of the inspection process. Though there are not enough differences for IntelliChoice to definitively rank the programs from 1 to 9, our findings indicate that there are clearly three tiers of Other Make and Model CPO programs."

It breaks down the three tiers this way:

Top-Tier Programs

• Motor Trend Certified
• Payless Assurance
• Volkswagen World Auto

Middle-Tier Programs

• CarMark Certified
• Chrysler Diversified
• Enterprise Car Sales
• Q Certified

Bottom-Tier Programs

• Mota Sure Sale
• NIADA Certified Pre-Owned

Q. What are signs of a good used car warranty and bad used car warranty?

A. Lauren Fix, writing at Parade.com, has some answers. (By the way, some of you may recognize Lauren from her work as The Car Coach. She regularly appears on major networks like The Weather Channel discussing automotive issues.)

Signs of a used car warranty good plan:

• Corporate credit card to pay for services
• Ability to choose dealership or independent repair shop
• Warranty is transferable
• Trip-interruption coverage
• Free loaner car
• Towing is covered and roadside service.

Signs of a bad used car warrantplan:

• Out-of-pocket to cover repairs
• High deductible
• Specific caps on repair costs
• Large numbers of exclusions
• Third-party auto repair shop must complete the repair
• Non-ASE certified auto repair shop.
• Dealership pressure to purchase plan
• Non-transferable
• Towing and road service is extra
• Company lacking strong track record of customer satisfaction

Some other good advice to consider, via Consumer Reports, is to pay for your extended warranty and don't finance it as part of your new or used car loan. That just ends up making the potentially useless plans that much more expensive.