Besides an extended warranty, residual insurance is another great option to protect yourself when buying a used car. Residual insurance is a type of insurance that covers you in case the car gets totaled or stolen. If you have a car that is worth less than what you owe on it, the car will get totaled. If you have residual insurance, it will cover the cost of the car. This way you don't have to pay for the car if you get it totaled. Best of all, residual insurance can be cheaper than an extended warranty. This is because an extended warranty covers maintenance and repair expenses. In contrast, residual insurance only covers the cost of the car if it gets totaled or stolen. This makes it much cheaper and a good alternative to an extended warranty.