Consumer Car Buying Advice Blog

An extended warranty can save you money especially during a bad credit auto loan but beware of phone and internet scams from dishonest companies

How we know

If you’re wondering about extended warranties for approved auto loans, you should know there are a number of fraudulent phone centers that represent themselves as warranty companies.

We are aware of this situation because Auto Credit Express has been involved in bad credit auto sales for over two decades. During that time, we’ve helped hundreds of buyers get approved for a poor credit car loan (while our online car loans bad credit web site has directed thousands of applicants to local dealers).

And while poor credit buyers can always use a local tote the note dealer, this won’t solve their auto credit problems since these dealers don’t report loans or loan payments to the credit bureaus (and the loans often result in repossession).

When buying a used car

With the high cost of new cars, most bad credit buyers will finance a used vehicle. Buying something one, two or three-year old helps avoid the 15 to 40 percent depreciation that usually happens during these years.

But even though used car quality is extremely high, we usually recommend purchasing a service contract – sometime called an extended warranty – that will cover the entire length of horrible credit auto loans.

There are many reasons for buying one if you’re on a tight budget and have bad credit, the most important of which is that it may help you avoid large, unforeseen car expenses – one of the biggest reasons a bad credit car loan results in repossession.

At the same time, we encourage buyers to purchase one from the selling dealer for a number of reasons.

Used car warranty scams

As soon as you buy a car (even if it’s if it’s covered by a new or extended warranty), you will be swamped with letters and phone calls from companies that want to sell you an extended warranty. Many will do just about anything to get you to part with your money.

They do this by buying lists that contain the names of people who have recently taken delivery of a new or used car. The lists are then given to telemarketers who call these new owners in order to sell them a service contract. During the sales pitch, consumers have been told that:

•    Their warranty is getting ready to expire, when that isn’t true
•    The company is selling an extended warranty, which is not true (these are service contracts, which do not “extend” the new car warranty and may even overlap an existing warranty).
•    Callers state they are calling from the selling dealer or a manufacturer, when in fact they are calling for an independent service contract company.
•    Callers explain that the service contract is a “bumper to bumper” warranty just like a new car warranty, which it’s not.
•    Telemarketers will also state that if you’re not completely satisfied with the service contract, you’ll get a full refund. In many cases, when the customer calls back to cancel and get a refund, they’re unable to reach anyone at the company.

Your rights

If you’re contacted by one of these companies, request a name, address and phone number. Then, before you do anything, contact your Better Business Bureau as well as your state’s Consumer Affairs department to check if the company is licensed to do business there to be sure it’s legitimate.

If you’ve registered with the Federal Do Not Call List, they shouldn’t be contacting you in the first place.

The Bottom Line

Don’t spend your money on any service contract until you’ve researched the company. Better yet, buy your warranty from the selling dealer. That way, if you have any issues, you’ll know who to contact (licensed dealers also must adhere to your state’s consumer protection laws).

This doesn’t mean you can’t price shop before you buy from the dealer to make sure their service contract is priced fairly.

Auto Credit Express places customers with bad credit with dealers that can help them. These dealers are knowledgeable and work with a number of lenders to ensure you get your best chance of getting approved auto loans.

So if you are serious about getting your car credit back on track you can begin now by filling out our terrible credit auto loans application.

Tags: Bad Credit, extended warranty, poor credit car loans

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