While an extended warranty can be a good investment when buying a car with a bad credit car loan, make sure the company you’re dealing with is legitimate.

Buy the warranty from the dealer when you buy your car

Here at Auto Credit Express, we encourage you to purchase an extended warranty that will cover the entire length of the loan. We also encourage you to buy a warranty from the selling dealer. There is nothing more frustrating than having problems with a purchase and having no recourse if something goes wrong. If you buy your warranty from the selling dealer, you’ll know where to go and who to see if you have problems with your car or issues with the warranty company.

How the warranty scam works

There are warranty companies out there that will do anything to get you to part with your money. This is how it works: These warranty companies buy list that contain the names of customers who have recently taken delivery of new and used cars. The lists are divided up and given to telemarketers who call these customers to give them a sales pitch. The problem is, the pitch contains information that is not always correct. Among other things, customers have been told:

1.    Their warranty is getting ready to expire, when that’s not true
2.    The company is selling them an extended warranty, which is not true. They are selling them a service contract which does not “extend” the new car warranty.
3.    They say that they represent the dealership, when in fact they are calling on behalf of an independent service contract company.
4.    They say that they represent the manufacturer, which is not true.
5.    They represent the service contract to be “bumper to bumper”, which it is not.
6.    They tell the customer that if they’re not fully satisfied, they will get a full refund. When the customer calls to get a refund, they’re unable to contact anyone at the company.

You don’t need these kinds of problems.

If you’re contacted by one of these companies, ask for a name, address and phone number. Remember, if you registered with the Federal Do Not Call List, they shouldn’t even be contacting you. Contact your Better Business Bureau as well as the Consumer Affairs department of your state and ask if they’re licensed to do business in the state.

The Bottom Line

Don’t spend your money on anything unless you have done your research. Always buy your warranty from a car dealer. Remember, you can shop around for price before you buy from the dealer to make sure their warranty is priced fairly.