Consumers faced with problem credit need to be especially choosy with the finance products that can be added to an auto loan
In our experience
Car buyers with damaged credit often either choose too little or go overboard when it comes time to decide about which finance products they should add to their car loan.
At Auto Credit Express we know the results of both of these decisions after spending over two decades helping people with poor credit looking for online car loans locate those dealers that represent their best opportunities for approved car loans.
Finance department extras
Even if with less than perfect credit scores, there is often enough leeway in a higher-risk auto loan payment call to enable the dealership to offer 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) to these buyers.
But just because the opportunity presents itself to conveniently roll the costs of one or more of these items into the car payment doesn't mean it should be done. In fact, we often compare them to the classic the Clint Eastwood movie: some can be good, some are usually bad, while others tend to be just plain ugly.
Here's our take on a few of them:
Gap insurance – For bad credit buyers faced with a small down payment or a finance term of over 36 months, this insurance product can often be worth the cost. It covers the spread between what's owed on the finance contract and the vehicle's value. In this case if an accident results in a total loss at any time during the loan term (including the critical first half when the vehicle's value is far less than the payoff amount) this product will cover the difference.
Extended warranty – These products are actually service contracts that can end up saving you money. They make the most sense if you're buying a used car with average or below average reliability and/or with little or no new car warranty left and you're on a tight budget.
For new cars, first check the warranty for length and coverage, then decide if the loan term and miles you drive justify buying one (that is, if either will run past the new car warranty period). It's also a good idea to get quotes from several dealers ahead of time so that you can be sure the price is competitive.
Also, don't believe anyone who says you have to purchase one because the lender requires it.
Documentation fees – Not really a back end product, 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, even this is subject to negotiation.
Window etching – Why pay for etching when the vehicle's VIN number can be 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 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.
More ugliness – Rusty, dusty and musty (rust proofing, paint protection and interior leather or fabric protection) are never needed. Also don't pay for dealer-installed alarm systems, pinstripes and anything else you didn't request.
The Bottom Line
In making a decision about dealer extras we suggest you consider the "good", negotiate any of the "bad" and stay away from the "ugly" ones.
Another good choice: submitting a loan application at Auto Credit Express where we match consumers with car credit problems to new car dealers that can offer them their best chances for car loan approvals.
So if you're ready to reestablish your auto credit, you can begin now by filling out our online car loan application.