The lender formerly known as GMAC is starting a pilot program that will expand coverage on certain vehicles up to 12 years and 175,000 miles – changes that could help borrowers with tarnished credit
Longer warranty coverage
One of the keys to successfully completing a high-risk car loan is making sure the vehicle being financed keeps running. This means that consumers with poor credit should make sure they don't encounter large unexpected repair bills.
If they finance a new car, it's covered by a new car warranty, although they'll want to review how many years/miles it covers. In most cases, the comprehensive portion of the warranty is limited to 36,000 miles and the engine/drivetrain is only covered for 60,000 miles (in fact, GM recently announced that beginning with the 2016 model year, GMC and Chevrolet drivetrain warranties will expire at 60,000 miles instead of the previous 100,000 miles).
Borrowers who pick a used car (unless it's still covered by a new car warranty) have the choice of a manufacturer certified used car (covered by an enhanced warranty but still mileage-limited) or a traditional used car that typically has no warranty.
In all three cases, borrowers can buy a used car service contract that, when tailored correctly, will cover the entire loan term and insulate them from large, unforeseen vehicle-related expenses.
We were reminded of this recently when Ally Bank announced it was rolling out a pilot program for a new vehicle service contract platform.
Ally Premier Protection
Called Ally Premier Protection, the platform consists of three different levels of protection – Major Guard, Value Guard and Basic Guard.
1. Major Guard: Eligible vehicles - up to 10 years old/100,000. Coverage is capped at approximately 125,000 miles. The most comprehensive coverage offered. The max plan term (overall) for Major Guard is 96 months/100,000 miles for a vehicle that is less than 12 months old with less than 12,000 miles.
2. Value Guard: Eligible vehicles - up to 12 years old/125,000 miles. Coverage is capped at approximately 150,000 miles. It covers nine major assemblies of the vehicle.
3. Basic Guard: Eligible vehicles - up to 12 years old/ 150,000 miles. Coverage is capped at approximately 175,000 miles. It covers four major assemblies of the vehicle.
Ally will also offer Powertrain Wrap. Vehicles are eligible for this plan anytime within the New Vehicle Limited Warranty period. This coverage wraps around the manufacturer's powertrain limited warranty. The maximum plan term for Powertrain Wrap is 120 months/100,000 miles on eligible makes.
Prices for all four plans depend upon the year, make, model and mileage of a vehicle and will be sold through dealers that are signed up with Ally. For more information, consumers can contact Ally directly at 877-357-8477.
The Bottom Line
From our own experience, one key to successfully completing a subprime car loan is the ability to keep a vehicle in running condition. In many cases, a service contract can help borrowers on a tight budget avoid unforeseen expenses while keeping their credit repair plans on track.
One more tip: Auto Credit Express matches consumers that have experienced car credit issues with dealers that can offer them their best chances for approved car loans.
So if you're ready to establish your auto credit, you can begin now by filling out our online car loan application.