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Whether to take the warranty or save the cash is a topic that's been discussed on here several times in the past. It's very much a personal decision, and you need to weigh up your own circumstances, the knowledge you have about the history of the car, the potential for future problems/issues, and the cost and coverage provided by the warranty.
For example, given that it's an '06 350, does it fall within range of the potential balance shaft issue, and would that be covered by the warranty, should the issue occur?
Some people say that it's a waste of money to take out a warranty, and that over time you can save more than you spend by not buying warranties. Others find the peace of mind great from having a warranty that provides good coverage (especially if you're not great at mechanics or DIY on the car). Bottom line is that it's effectively a type of insurance against some of the failures that might happen, and you need to weigh up the cost against the coverage that it provides for you... Good luck, and I'm sure you'll love the 350, especially with a manual transmission!
Welcome from not too far across the border in Kirkland, Washington.
As far as the warranty decision, I asked myself two questions:
1. What is the cost of the warranty and what does it cover?
2. Based on the age/mileage/condition/service history/PPI of the vehicle and typical owner experience and trouble spots, how much would I expect to spend repairing items covered by the warranty over the life of the warranty? This second part calls for some assumptions to be made regarding the probabilities of items needing repair/replacement, but search is your friend for those.
In the end, I declined the warranty for my SLK. I was quoted over $4K for a three year warranty on the car (43K miles, third owner, car was new in 2006, MB CPO in 2009, and always maintained by the MB dealership). Based on my experience with my CLK55, which I've owned for five years and the last 60K of its 125K miles, repairs that would have been covered under warranty have totaled less than $2K. Consequently, I figured I'd be better off hanging on to the money assuming the risk that something might go wrong.
Short answer: research what's likely to go wrong and weigh that likelihood against the cost of the warranty.