Used cars are sold as is. This means that if some kind of mechanical breakdown happens to the vehicle soon after the purchase, it's up to you to shell out whatever it takes on the repair bill. Unless you have a used car warranty, that is.

As Is Used Vehicles

When you finance a used vehicle, you're getting the car exactly how you see it – scratches, rattles, mysterious smell, and all. The only used vehicles that come with a warranty built in are certified pre-owned cars. This is one reason it's so important to do a thorough test drive before buying a vehicle! But even the best test drive can't predict that a mechanical breakdown is just weeks, months, or years away.

In the best case scenario, nothing major happens to your car, you pay off your loan smoothly, and then drive the vehicle until the wheels fall off (as the saying goes). Everyone knows, though, that the best laid plans never quite go that way.

So, if something happens to your car, having a little extra assurance can go a long way. A used vehicle warranty can be just the peace of mind you need.

Do I Need a Used Car Warranty?

Understanding a Used Car WarrantyWhat's known as a used car warranty, or extended warranty, is actually a service contract between you and an insurer which allows you to have certain repairs, replacements, and maintenance for the vehicle covered at an additional cost. It can typically be rolled into your loan, and may cost as little as around $25 a month – a much easier cost to swallow than an expensive repair bill.

As a credit-challenged consumer, a used car warranty may make the difference between keeping you on the road and forcing your hand toward another auto loan. If you can't afford the repair, and you stop paying your car loan since you can't drive the vehicle, you default on your contract.

An auto loan default typically leads to repossession. A repo on your credit reports makes it hard to qualify for another car loan through a subprime lender for at least a year. You still have the option to work with a buy here pay here (BHPH) dealer that doesn't check your credit. However, vehicles at BHPH lots are used and sold as is – putting you in the same position on a different car.

Whether or not you think you need a used vehicle warranty is ultimately up to you. But it could save hundreds on covered repairs, and keep you out of a dangerous cycle of buying increasingly unreliable cars due to financial constraints.

The good news is that used vehicle warranties aren't typically very expensive, so it doesn't break the bank to have one even if you never need it. In fact, this is the best outcome in the eyes of many – really, you're just paying a little extra to keep undue stress off your shoulders when it comes to your car.

Know Your Vehicle Service Contract

Not all service contracts are created equal, and the issues that are covered can depend on your policy. Be sure to read the contract very carefully before you sign anything, there's no sense in paying for a used vehicle warranty if it doesn't really cover much. If a reliable car that lasts is important to you, it may be a good idea to err on the side of caution and get that service contract.

Here are a few things to watch for in your extended warranty:

  1. Where can you go for service? Can you take your vehicle to any franchise dealership of that brand for repairs, or is there a specific local repair brand you have to get service through?
  2. What exactly is covered? Is your used auto warranty worth the extra money you pay each month? Make sure to know if your coverage extends bumper to bumper, or if it only covers the powertrain. Determine if electrical malfunction is covered; electronics, electrical, and computer coverage may come at a higher premium. Ask for the list of inclusions and exclusions before you finalize the service contract.
  3. How long does your coverage last? Car warranties run out at some point, whether at a certain age or number of miles, and it's up to you to know these limitations and expiration dates.
  4. Do you have a repair deductible? Some warranties work just like insurance policies, which is basically what a used vehicle warranty is. This often means paying up front for services out of pocket, and being reimbursed by the policy later.

Remember, all service contracts can vary by provider, so read yours carefully and ask yourself how much you’re willing to pay for peace of mind.

Considering an Auto Loan?

If it's time for your next auto loan, don't let bad credit stand in your way. Here at Auto Credit Express, we have a large network of special finance car dealers that spans the country, and we want to guide you toward one that's right for you.

Simply fill out our fast and free auto loan request form, and we'll work to match you to one in your area. Once you've settled on a reliable, affordable used vehicle, don't forget to ask about an extended service contract!