New Law could help many Bad Credit Extended Auto Warranty Buyers

Many buyers financing with terrible credit auto loans and purchasing an extended warranty are now covered by a new Missouri law designed to prevent a number of buyer scams from happening

We know extended warranties

Credit-challenged buyers financing with poor credit car loans have, in the past, been contacted by fraudulent call centers representing themselves as warranty companies.

We’re aware of this because we’ve seen this happen many times during the nearly twenty years we’ve been involved in bad credit auto sales here at Auto Credit Express.

Our web site was even designed for people with bad credit and spells out the bad credit auto loan process along with most of  the issues that can lead to repossession while showing them why, unlike a tote the note dealer, the loans our dealers make can lead to better credit scores.

An extended warranty

Even with the quality of used cars better than ever, we usually suggest buyers considering a service contract – sometime called an extended warranty – that covers the entire term of a bad credit car loan.

This is because if you’re on a tight budget and have bad credit, it’s to avoid large, unforeseen vehicle expenses – a big reason many bad credit auto loans end in repossession. We also encourage buyers to purchase one from the selling dealer so they’ll be covered by the consumer protection laws of their state. Here’s why:

Used car extended warranty scams

Whether you have good or bad credit, as soon as you buy a car there’s a good chance you’ll be swamped with letters and phone calls from companies that want to sell you an extended warranty.

Many will do just about anything to get you to sign up and, in fact, many of these call centers are located in and around the St. Louis, Missouri area – which prompted the State of Missouri Attorney General’s office to conduct an investigation over a year ago that resulted in a recently-passed state law.

Missouri Senate Bill SB132

Describing the state of Missouri as “becoming a hotbed for deceptive direct mail and telemarketing campaigns”, the Service Contract Industry Council (a group of prominent manufacturers, insurers, retailers, providers and administrators of service contracts representing 80 percent of the industry) worked closely with the Missouri Attorney General’s office to draw up legislation that was signed into law on July 7th of this year.

Here are some excerpts from the SCIC press release:

Missouri Senate Bill SB132 is the result of the State Attorney General’s Task Force on the Motor Vehicle Service Contract Industry, which convened over a year ago.  The law is designed to prevent companies from using deceptive or unethical marketing practices to sell motor vehicle service contracts, also known as auto extended warranties. The new law takes effect January 1, 2012.

“The SCIC worked closely with Missouri Attorney General Chris Koster to investigate and address misleading marketing practices of select St. Louis-based companies, including US Fidelis,” said Timothy J. Meenan, executive director of the SCIC.  “At the urging of the SCIC, specific language in the bill prohibits individuals or companies from engaging in false, deceptive, or misleading conduct with respect to a motor vehicle extended service contract program, and authorizes restitution to any victims.”

The SCIC collaborated with the Attorney General’s Office to draft a bill that more clearly specifies consumers’ right to a refund if they cancel a motor vehicle service contract.  The SCIC model language also requires consumers to receive a copy of the terms and conditions of a contract prior to sale.

In addition, the SCIC worked extensively with Assistant Attorney General Doug Ommen to create a new licensing framework for Missouri-based businesses and individuals selling motor vehicle service contracts.

The Bottom Line

Although the new law won’t take effect until next year, it should increase the protections for all buyers – especially those with bad credit.

Buyers should not to spend their money on any service contract until they’ve researched the company. Better yet, buying a warranty from the selling dealer means that if there are any issues, you’ll know who to contact (licensed car dealers must adhere to their state’s consumer protection laws).

Also be sure to price shop before you buy from the dealer to make sure their service contract is priced fairly.

Finally, when it comes time to establish your auto credit, you should know that Auto Credit Express specializes in placing customers with bad credit with dealers that can help them get approved for a bad credit car.

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

Posted on October 8, 2011 by in Auto Loans, Backend Products, Bad Credit
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