GMAC Insurance offers five questions you should ask before purchasing a service contract even with poor credit car loans

Vehicle service contracts

Approved applicants often wonder if it's necessary to buy an extended warranty if they're financing with terrible credit auto loans.

The answer is that it really depends on a number of things, something we know about since we've been in bad credit auto sales for nearly twenty years here at Auto Credit Express. Our web site is even designed so that applicants can learn about issues such as buy and pay here dealers and down payments, as well as today's topic, vehicle service contracts.

Extended car warranties

One of the more important dealer "adds" to consider especially when buying a used car with a bad credit auto loan is a vehicle service contract – sometimes referred to as either a "VSC" or an extended car warranty.

The reason we encourage people with bad credit to consider one is that it's a way of making sure you won't be faced with a huge expense if your car breaks down. Especially for individuals on a limited budget, the ability to get their car repaired often means the difference between keeping their job and losing it because they can't get to work.

Questions to ask

To help with the process, GMAC Insurance offers these tips before you consider purchasing a service contract.

"Purchasing a VSC can be significant investment, and every consumer needs to consider his or her own unique circumstances and expectations," explained Tom Callahan, executive vice president of GMAC Insurance's Dealer Products and Services group. "A VSC with a reputable company can more than make up for its cost by covering future vehicle expenses, as well as providing consumers with peace of mind."

According to GMAC Insurance, here are the questions you should ask yourself:

•    Is the contract easy to understand? Read the coverage terms before you purchase the contract -- the scope of coverage should be clearly stated in the body of the contract.

•    Do the coverage terms and limits make sense for your personal situation? Every situation is unique, but consumers should consider how long they plan to keep their vehicles and their typical annual mileage; the amount of the deductible in event of loss; whether coverage includes normal wear and tear; and the cancellation and refund terms. Ask yourself if the price seems reasonable for the level of coverage you are getting. If it seems too good to be true, it probably is.

•    Does the contract offer additional benefits? Some VSCs will cover repair expenses that go beyond just parts and labor by offering rental car coverage or reimbursing costs due to trip interruption.

•    Who is providing the coverage? As a general rule, a VSC should provide the right to make a claim against a licensed insurance company that maintains proper financial reserves to pay those claims. Make sure you are dealing with a nationally recognized company that has demonstrated a long-term commitment to the product and their customers.

•    Is it easy to receive coverage benefits? Is the repair process simple and convenient? Reputable VSC companies try to make the process of both purchasing and servicing the contract as easy for the consumer as possible. Consumers should investigate how claims are paid and if there are limitations on where vehicles can be repaired.

The Bottom Line

Following these tips from GMAC Insurance can help you make more of an informed decision when it comes time to consider an extended car warranty for approved auto loans.

One other tip: At Auto Credit Express we help people with bad car credit find a dealer for their best chance at approved auto loans.

So if you're serious about getting your auto credit back on track, you can begin the process now by filling out our online auto loans application.