In addition to financing an auto loan with a higher risk lender instead of a BHPH dealer according to GMAC Insurance there are five questions even buyers with poor credit should ask before they consider purchasing an extended car warranty

Should you buy an extended auto warranty

Unfortunately, car buyers with problem credit are sometimes easy targets and can be taken in by sales pitches from questionable used car service contract marketers that have learned of a recent auto loan.

Here at Auto Credit Express, we have heard countless horror stories regarding this topic during the more than two decades we have been helping car buyers with questionable credit find those new car dealers that can offer them their best chance for car loan approvals.

So if you want to know how to buy a car with no credit or bad credit, here are our thoughts on a portion of that transaction that covers the topic of should you buy a vehicle service contract for your car.

Is a vehicle service contract worth it

One of the more important dealer backend products to consider if you have less than perfect credit and you're financing a used car is a vehicle service contract – sometimes referred to as either a "VSC" or an extended car warranty.

The reason we encourage people with low FICO scores to consider one is that it's a way of making sure they won't face a financial crisis if their car breaks down. For many consumers, especially those on tight budgets, the ability to get a vehicle repaired often means the difference between keeping their job and losing it of the transportation problems this would cause.

Five questions to ask

But don't take just our word for it. Here is what GMAC Insurance has to say:

"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."

Furthermore, according to GMAC, here are the questions you need to 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.

As we see it

The more you know about vehicle service contracts, the easier it will be to make an informed decision when the time comes to consider an "extended car warranty."

At the same time, if you've experienced credit issues in the past here's something else to consider: at Auto Credit Express we match applicants that have experienced car credit problems 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 loans application.