Why we believe used car service contracts can often mean the difference between successfully completing an auto loan and having your vehicle repossessed especially if buyers have questionable credit
Here at Auto Credit Express our specialty is helping car shoppers with problem credit find those car dealers that can give them their best opportunities for car loan approvals.
We’ve been doing this for over two decades and during that time, we’ve formed a number of opinions concerning not only the high-risk auto loans process in general but also about some of the details of it that can help buyers with poor credit successfully complete one of these loans.
Buying a car on finance with bad credit
Near the top of this list (just under buyers looking for too much car) is that far too many of them see absolutely no value in purchasing a used car service contract. Fair enough. Everyone is entitled to their own opinion. But for those consumers out there still considering this option, I offer a true story.
Used auto service contracts
This is a story about my brother-in-law. I’ll call him Robert. Robert grew up in the Midwest but he’s lived in New York City for nearly 30 years. For most of this time he never found the need for a car and, in truth, he really couldn’t afford one anyway. But he went back to school, earned his undergraduate degree, then a law degree and he currently practices in the city.
During all that time he never financed a car and, thus, no car credit. Six years ago he decided that he could finally afford a small car. Due to limited car credit, he knew that he would have to pay a higher interest rate. Robert picked out a used Chevrolet Aveo – both for its size and to keep the payments and insurance affordable. The dealer also offered to sell him an extended warranty, but he decided against it. After all, the Aveo only had 50,000 miles on the odometer.
Eighteen months into the loan he had to make a trip back home – about 900 miles. Halfway there the Aveo broke down and he ended up renting a car to finish the trip. Upon reaching his destination, he learned that the engine timing belt had broken and the Aveo needed a rebuilt engine. The total cost, including the rental car and motel (the dealership was closed when the car broke down) came to nearly $1000.
Fortunately, he was able to pay for the repairs – Robert’s career is going well right now. In fact, he plans on buying another car sometime this year and, because he paid like clockwork on the first loan, he’ll qualify for a much lower interest rate this time.
If you’ve been following this the question you have to ask yourself is simply this: If this happened to you, could you afford to do the same thing?
As we see it
Buying a car on finance with bad credit can be a challenge. Here at Auto Credit Express we’ve witnessed a number of variations on Robert’s story, but not all of them have the same satisfying ending. So you can see why we always suggest to people with poor FICO scores that they at least consider a used car service contract (sometimes called an extended warranty) that covers most, if not all, of the loan term.
There is one more thing we’d also like them to think about: at Auto Credit Express we specialize in helping credit-challenged buyers find car dealers that can give them their best chances for approved car loans.
So if you’re ready to reestablish your car credit, you can begin now by filling out our online car loans application.