Finance Tips for Bad Credit Auto Loans

Avoid the mistake of adding unnecessary dealer extras to approved auto loans

Going overboard

If you’re unfamiliar with the number of backend products offered by dealers, you should continue reading.

We know, because Auto Credit Express has been involved with bad credit car sales for over twenty years. We’ve helped hundreds of buyers get online car loans with bad credit while showing them how to avoid a tote the note dealer (those outside our retail areas can fill out an online auto loan application and get directed to the right dealer) while educating them about the loan process (to avoid repossession).

Dealer back end products

Even with online auto loans you also need to know that car dealers sell a number of other products and services on the “back end” (the car sale is the “front end”) of the sales transaction.

While most dealers are upfront when it comes to selling you a car, there will always be a few dealers that attempt to trick buyers into paying for additional products and services they really don’t need when signing up for a problem credit auto loan.

To be fair, a couple of these back end products could end up saving you money, so here’s our take on a select few:

The good

Gap insurance – if you have very little money down or you’re financing for more than 36 months, this type of protection can be worth the cost.

Extended warranty – A service contract could also come in handy if you drive a lot of miles and you’re planning on financing beyond the original warranty term. It makes even more sense if you’re buying a used car with little or no warranty and you’re on a tight budget. But above all, don’t let anyone tell you that you have to purchase an extended warranty because the lender requires it.

The bad

Market adjustment – This one can be iffy. After all, if a customer can offer a dealer less than sticker price, why can’t a dealer charge above MSRP for a popular model in high demand and short supply? You can check this out by calling other dealers in your area to find out if you can buy it at or less than MSRP. If you can’t, it’s your call as to whether or not it is worth the extra money to buy now or whether waiting a few months might save you hundreds or even thousands of dollars.

The ugly

Window etching – Window etching involves etching your vehicle’s VIN number onto the windows of your new car. The cost generally runs from $200 to as high as $350 or more. Even if you’re able to bargain it down so it only adds a hundred dollars to your terrible credit car loan, that’s still more than it would cost you if you did it yourself. If you really need it, buy a kit at your local auto parts shops and do it yourself for around $20.

Preparation fees – There are still a few dealers that think they can get away with charging a vehicle preparation fee on a new car. But a closer look at the window sticker will tell you this is included by the manufacturer in the suggested retail price. If this fee is on the buyers order, ask that it be credited back to you. If the dealer won’t do it, just walk away from the deal.

The Bottom Line

Choosing a particular back end product is a decision that only you can make. Just try to avoid the “ugly” ones.

At Auto Credit Express, we specialize in placing customers with bad credit with dealers that can help them. These dealers are knowledgeable and work with a variety of lenders to ensure you get your best chance of an approval for a car loan.

So if you are serious about getting your car credit back on track you can begin by filling out our bad credit auto loan application now.

Posted on May 13, 2011 by in Auto Loans, Backend Products, Bad Credit
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