Explaining those Car Dealer Extrasby Steve Cypher on Monday, December 10th, 2012
Car buyers that have experienced credit problems can sometimes go overboard when it comes time to make a number of decisions about which, if any, additional finance products to choose from following a sales pitch in the business office.
At Auto Credit Express we not only realize that this can happen but we also understand why it does after spending the last twenty years helping car shoppers with poor credit scores find dealers that can offer them their best opportunity for approved car loans.
Auto dealer extras
Even if your FICO scores are low, in many cases the high-risk lender that approved the loan will allow enough room in the payment call so the dealership can offer you the choice of a number of finance, insurance and other “protection” products (which dealers normally refer to as the “back end” of the sale because the vehicle itself is the “front end” of the sale).
But just because you’re given the opportunity to purchase one or more and conveniently roll the cost into your car payment doesn’t mean you should.
In fact, we believe you’ll find them much easier to understand if we sort them like the classic the Clint Eastwood movie: some can be good and some are usually bad, while others tend to be just plain ugly.
Here’s our take on a few of the choices you may encounter:
What could be good
Gap insurance – If you’re a bad credit car buyer with a small down payment or a finance term of over 36 months, this insurance product can be worth its cost as it will cover the spread between what you owe and the vehicle’s value if you’re involved in a total loss accident within the first half of the loan term (when the value of the vehicle is less than the payoff amount).
Extended warranty – While this product is typically referred to as an extended warranty it’s actually a service contract that can end up saving you money. It makes the most sense if you’re buying a used car that has average or below average reliability, little or no warranty and you’re on a tight budget.
If you’re financing a new car, first check the warranty for length and coverage, then decide if the loan term and miles you drive justifies buying one (that is, if either will run past the new car warranty period). If this is the case, it’s also a good idea to get quotes from several dealers ahead of time so that you can be sure the price the selling dealer quotes is competitive.
Finally, don’t believe anyone who says you have to purchase one because the lender requires it.
What is usually bad
Documentation fees – Not really a back end product, but dealers charge these fees to recover the costs of doing the paperwork. But in reality, these fees are not required and many states put a ceiling on what dealers can charge. Verify this with your state DMV and remember that, like the price of the car, everything is subject to negotiation.
The really ugly
Window etching – Why pay to have your windows etched with the vehicle’s VIN number when it’s found in nearly a dozen other places? This procedure can cost from $200 to $350 or more. Even if it’s discounted, turn it down. If you really have to have it, buy a kit from any auto parts store and do it yourself for around $20.
Prep fees – There are still some dealers that think they can charge their customers for new car preparation fees. But a close look at the window sticker will reveal that this is included in the MSRP. If you see this fee on the buyers order, have it removed. If the dealer refuses, just walk away.
Other ugliness – Rusty, dusty and musty (rust proofing, paint protection and interior leather or fabric protection) are never needed. Also forego dealer-installed alarm systems, pinstripes and anything else you didn’t specifically ask for.
As we see it
Only you can decide whether or not you need any of these dealer extras. We suggest you check out the “good” while considering your own situation, negotiate the “bad” and stay away from any of the “ugly” ones.
One more thing: Auto Credit Express specializes in matching consumers with poor auto credit with new car dealers that can offer them their best chance for car loan approvals.
So if you’re ready to reestablish your car credit, you can begin now by filling out our online car loans application.