With the recent announcement by General Motors that they will be extending the coverage on their Certified Used cars, the debate about buying an extended service contract when purchasing a used car has resurfaced.
Bad Credit Car Loans
At Auto Credit Express, one of the things we try to stress is that you should use common sense when you take out a bad credit car loan. This means that you shouldn't stretch your budget to fit the car. After all, the purpose of one of these loans is to reestablish your credit, not finance your dream car. During the buying process, you'll also probably get barraged with a number of dealer “add-ons”. These extras can range from window etching and undercoating to paint protection and extended service contracts. And while many of these items are useless, you might want to take a closer look at the service contract – also called a used car warranty.
Why you should get a used car warranty
It may sound obvious, but when you take out a high risk car loan, you are paying more - sometimes a good deal more - in interest, than you would be with a regular car loan. For that reason, a bad credit loan payment usually involves more of your budget. Sometimes this doesn't leave much wiggle room for unexpected expenses. The idea behind a used car warranty is the same as insurance – to spread out the risk into affordable monthly payments instead of one large, catastrophic one. It's much easier to budget for a small monthly increase than a large unexpected one.
Match the warranty to the loan period
When you choose a used car warranty, pick one that covers the entire term of the loan. Even though you should try and re-finance or trade in your bad credit loan as soon as possible and try for a lower rate, something might happen that makes it necessary to carry the loan through until it is paid off. If you have chosen a warranty that only covers a part of the finance period, you could end up driving your car without a warranty and being exposed to a big repair bill while still having to make car payments.
What about certified used cars?
Certified used cars generally have manufacturer-backed extended warranties. While this means you can get your car fixed at any dealer that carries that brand, these cars can sometimes end up costing you thousands more than a comparable vehicle with a warranty purchased from an independent warranty company. Do your research and compare the different prices and plans. If you plan on moving out of the area away from the selling dealer, a certified vehicle may be worth the additional cost since these warranties are honored at all dealers that sell that brand of car. For instance, if you buy a used GM Certified Chevrolet, any Chevy dealer can do warranty work on your car.
The Bottom Line
If you are about to buy a car with a bad credit car loan, it is important to consider a used car warranty. Ideally, this warranty should cover the entire length of your finance contract. You also need to remember that this decision is up to you. A warranty is not a requirement in any car loan.
As far as applying for a car loan, for years, Auto Credit Express has been helping people with credit problems get approved for new and used car loans. Our affiliate dealers work with the leading subprime lenders to get you approved. Once you're approved, each month you make your car payment you are taking a step toward rebuilding your credit score and reestablishing your financial future.
Unlike many other services, we belong to the Better Business Bureau and our online bad credit car application is SSL secured, ensuring the privacy of your personal information. Since our inception, we have processed over 1,000,000 online bad credit auto loans and closed over 1 Billion dollars in auto loans.
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