Protecting Bad Credit Auto Loan Used Car Warranty Buyersby Steve Cypher on Saturday, February 4th, 2012
Missouri now has a law on its books that should help prevent a number of buyer scams which could especially help individuals financing with no credit auto loans
Used car service contracts
Bad credit buyers financing with a problem credit auto loan have, as have other buyers, been contacted by fraudulent call centers representing themselves as warranty companies.
We’re aware of this happening to customers more than a few times during our two decade involvement with bad credit car sales here at Auto Credit Express. It’s also a reason we constructed a website – so applicants could research issues such as FICO scores and repossession as well as today’s topic, purchasing an auto service contract that some buyers call an “extended warranty”.
Auto service contracts
Even with the quality of used cars better than ever, we usually suggest buyers considering purchasing a service contract covering the entire term of bad credit auto loans.
Because if you’re on a tight budget and have bad credit it’s important to avoid large, unforeseen vehicle expenses – because these situations are a big reason many horrible credit auto loans end in repossession.
We also encourage buyers to purchase one from the selling dealer for a number of reasons – not the least of which is they’ll be covered by the consumer protection laws of their state.
Service contract scams
Regardless of your credit, as soon as you buy a car there’s a good chance you’ll be swamped with letters and phone calls from companies that want to sell you an “extended warranty” and many will do almost anything to get you to sign up.
Quite a few of these call centers are located in and around the St. Louis, Missouri area, which prompted the State of Missouri Attorney General’s office to conduct an investigation over two years ago that resulted in a state law passed last year.
Missouri Senate Bill SB132
Describing the state of Missouri as “becoming a hotbed for deceptive direct mail and telemarketing campaigns”, the Service Contract Industry Council (a group of prominent manufacturers, insurers, retailers, providers and administrators of service contracts representing 80 percent of the industry) worked closely with the Missouri Attorney General’s office to draw up legislation that was signed into law last July.
Here are some excerpts from the SCIC press release:
Missouri Senate Bill SB132 is the result of the State Attorney General’s Task Force on the Motor Vehicle Service Contract Industry, which convened over a year ago. The law is designed to prevent companies from using deceptive or unethical marketing practices to sell motor vehicle service contracts, also known as auto extended warranties. The new law took effect January 1, 2012.
“The SCIC worked closely with Missouri Attorney General Chris Koster to investigate and address misleading marketing practices of select St. Louis-based companies, including US Fidelis,” said Timothy J. Meenan, executive director of the SCIC. “At the urging of the SCIC, specific language in the bill prohibits individuals or companies from engaging in false, deceptive, or misleading conduct with respect to a motor vehicle extended service contract program, and authorizes restitution to any victims.”
The SCIC collaborated with the Attorney General’s Office to draft a bill that more clearly specifies consumers’ right to a refund if they cancel a motor vehicle service contract. The SCIC model language also requires consumers to receive a copy of the terms and conditions of a contract prior to sale.
In addition, the SCIC worked extensively with Assistant Attorney General Doug Ommen to create a new licensing framework for Missouri-based businesses and individuals selling motor vehicle service contracts.
As we see it
Buyers should not purchase any service contract until they’ve researched the company. In addition, buying a warranty from the selling dealer means that if there are any issues, you’ll know who to contact (licensed car dealers also must adhere to their state’s consumer protection laws).
Regardless of where you buy it, be sure to shop around before you buy to make sure the service contract is competitively priced.
Auto Credit Express specializes in placing applicants with bad auto credit with dealers for their best chance at getting approved for a bad credit car.
So if you’re ready to take that first step in improving your car credit, you can begin now by filling out our online car loans bad credit application.