Consumer Car Buying Advice Blog

The latest used car warranty law designed to protect used car buyers and prevent fraud has been on the books for nearly a year in the State of Missouri

Used car warranties and you

There is a history of used car buyers with low credit scores as well as those with perfect credit that, in the past, have been contacted by fraudulent call centers who represent themselves as legitimate warranty companies.

At Auto Credit Express we are well aware of this practice as we’ve spent the past two decades helping car buyers with less than perfect credit locate dealers that can offer them their best opportunities for approved auto loans. In fact, our website is designed so that potential applicants can research related topics such as BHPH dealers and auto loans after bankruptcy.

Today, however, we’ll be discussing something that still happens – although not nearly as often as it used to – after the car sale: purchasing an auto service contract (sometimes incorrectly called an “extended warranty”) from a fraudulent seller.

Used car service contracts

Even with the quality of used cars today being better than ever, we usually suggest that buyers, especially those with poor credit, consider purchasing an auto service contract that covers the entire term of the loan.

Our reasoning is simple: for consumers on a tight budget, it’s especially important to avoid large, unforeseen vehicle expenses – mainly because this is a big reason many higher-risk auto loans end in repossession.

We also encourage credit-challenged buyers to buy it from the selling dealer for a number of reasons – not the least of which is that by doing so they’ll be covered by the consumer protection laws of their state.

Used car service contract scams

As soon as they buy either a new or used car there’s a good chance buyers will be swamped with letters and phone calls from companies that want to sell them an “extended warranty.”

While many of these offers are from legitimate companies, some are not and those few will do almost anything to get customers to sign up for one.

In the past, a disproportionate number of these call centers were located in and around the St. Louis, Missouri area, prompting the State of Missouri Attorney General’s office to conduct a two year investigation that resulted in a new law.

Missouri law

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 in July of 2011.

Designed to prevent companies from using deceptive or unethical marketing practices to sell motor vehicle service contracts, also known as extended auto warranties, it took effect January 1, 2012.

According to Timothy J. Meenan, SCIC executive director, “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 law 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 one of these contracts prior to any sale.

Going further, it also created a new licensing framework for Missouri-based businesses and individuals that sell motor vehicle service contracts.

As we see it

Consumers should never purchase a vehicle service contract until they’ve first researched the company. We always suggest buying one from the selling dealer because if there are any issues, you’ll know whom to contact.

One other thing to remember: licensed car dealers must adhere to your state’s consumer protection laws while outside companies don’t necessarily have to.

Finally, regardless of where you purchase one, be sure to shop around first to be sure the service you’re buying is competitively priced.

One more thing we want you to remember: if been turned down for a conventional car loan due to bad credit or low FICO scores, we want you to know that Auto Credit Express specializes in helping people with credit issues find dealers for their best chances of approved auto loans.

So if you’re serious about reestablishing your car credit, you can begin now by filling out our online auto loans application.

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