A good one can give you peace of mind but even owners with credit issues should beware of internet and phone scams associated with used car extended warranties
Both new and used car buyers with low FICO scores have been contacted by fraudulent phone centers representing themselves as warranty companies.
We're familiar with this here at Auto Credit Express since we've spent the last two decades we've been helping credit-challenged car buyers by matching them up with new car dealers that can give them their best chance for approved auto loans.
Whether our applicants eventually qualify for a new or used car, we typically recommend purchasing a service contract – sometimes called an extended warranty - to cover the entire term of their bad credit auto loan.
There are a number of reasons this makes sense, especially if it's a used car. The most important, especially if they're on a tight budget, is that it may help them avoid large, unplanned car expenses – one of the main reasons repossessions occur with subprime auto lenders.
But we also encourage buyers to purchase one from the selling dealer. Here's why:
Used car extended warranty scammers
As soon as you take delivery (and whether it's covered by a new car warranty/service contract or not), you'll be swamped with letters, phone calls and even emails from companies hoping to sell you a vehicle service contract. Many will do just about anything to sign you up.
Companies get your information from purchased lists of buyers that have recently taken delivery of a new or used car. This information is then added to email and mailing lists as well as turned over to telemarketers.
During some phone sales pitches, car buyers have been told that:
• Their warranty is getting ready to expire (not necessarily true)
• The company is selling an extended warranty (not true - service contracts do not “extend” a new car warranty and may even overlap an existing warranty).
• They are being called from the selling dealer or a manufacturer (when in fact they are being contacted by an outside company)
• The service contract is a “bumper to bumper” warranty just like a new car warranty (which it's not)
• If they're not completely satisfied they'll get a full refund (in many cases, when the customer calls back to cancel and get a refund, they're unable to reach anyone at the company)
If you're contacted by one of these companies, request a name, address and phone number. Then, before you commit to anything, contact the local Better Business Bureau and your state's Consumer Affairs department to verify that the company is licensed to do business.
If you were contacted at a number registered with the Federal Do Not Call List, the company shouldn't be calling you in the first place.
The Bottom Line
Buying a service contract from the selling dealer means that you'll know where to go or who to talk to if you encounter any problems. Licensed car dealers also fall under your state's consumer protection laws (this is not always the case with out-of-state companies).
Secondly, shop around before buying to be sure the service contract is priced fairly.
Finally, you should know that Auto Credit Express specializes in placing credit-challenged applicants with dealers that can offer them their best chance at getting approved auto loans.
Are you ready to begin restoring your auto credit? If so, you can start now by filling out our online auto loans application.