Used Car Service Contracts and Bad Creditby Steve Cypher on Sunday, July 15th, 2012
Consumers with less than perfect credit are especially affected by unforeseen vehicle expenses – situations that, many times, could be helped by an auto service contract.
At Auto Credit Express we know this because for the last twenty years we’ve been helping car shoppers with low FICO scores. And while today’s topic, understanding service contracts (sometimes mistakenly called an “extended warranty”) is being brought to you by the SCIC (representing the industry that offers them), the Council does bring up some very valid points.
The Service Contract Industry Council not that long ago issued a press release that contained some valuable information for consumers thinking of purchasing a service contract for either a new or used car. Here are some excerpts from it:
Why should I buy a service contract if a car comes with a manufacturer’s warranty?
1. There are over 10,000 components on a vehicle; a manufacturer’s warranty covers only a fraction of these parts.
2. A manufacturer’s warranty does not cover steering, electrical, suspension, air conditioning, heating, fuel systems, brakes, and convenience packages such as a navigation system.
3. Manufacturers’ warranties are based upon defects in material and workmanship and do not cover normal wear-and-tear.
What does an automobile extended warranty typically include?
1. Comprehensive bumper-to-bumper coverage, including the exhaust system, electrical system, the engine, gas tank, the heater and air conditioner, normal wear and tear, the leather seats and the sunroof, etc.
2. Regular maintenance
3. Access to pre-qualified, professional auto technicians
4. Twenty-four hour technical assistance
5. Roadside assistance such as towing
Should I Buy an extended warranty for a used car?
• Buyers of used motor vehicles need the protections offered by extended vehicle warranties for essentially the same reason that new cars buyers do – to cover repairs not included in a manufacturer’s limited warranty and to continue protection after the warranty runs out.
• Extended warranties are not insurance. Most dealers offer minimal coverage (at least 30 days) for used vehicles to cover basic repairs but you are responsible for purchasing an extended warranty if you want to cover the cost of repairs beyond any manufacturer’s warranty.
• There are only a few comprehensive warranty programs that will cover the full cost of repairs on your used vehicle. Some of those programs have a high deductible that requires you to pay for a portion of the work upfront.
The Bottom Line
To successfully complete a bad credit auto loan it’s important to keep your vehicle in running order. By purchasing a service contract if it makes sense and following the tips outlined above there may very well be a better chance of that happening.
There is one more thing: Auto Credit Express specializes in matching applicants with poor auto credit to dealers that can offer them their best chance at getting approved auto loans.
So if you think you’re ready to reestablish your car credit, you can start now by filling out our online auto loans application.