What Not to Buy with a Bad Credit Auto Loan

Avoid making the mistake of adding unnecessary extras to your bad credit car loan.

Our concern

At Auto Credit Express our business is to match up consumers with bad credit who have filled out our secure online bad credit auto loan application with a dealer in their area that can get them financed. These dealers, which are located across the country, use a wide spectrum of lenders and specialize in helping customers with bad credit find the right vehicle and the right lender so that they can begin the process of reestablishing their car credit and raising their FICO scores.

We also want to make sure that our applicants make the right choices during the car loans with bad credit buying process since a mistake at this time could possibly result in repossession later on. Once this happens, the only remaining choice for most buyers is a tote the note dealer. It also means that rebuilding your auto credit has to be put on hold for at least a year, since most lenders that offer car loans with bad credit will only consider approving applicants with a repossession that’s more than a year old.

Using the internet

Whether you have great credit or have less than perfect credit and need to finance your new car with auto loans for bad credit, the internet is probably one of the greatest resources ever devised to help you research all you need to know about new and used cars.

Web sites such as the one from Consumer Reports, along with their accompanying publication, will give you unbiased vehicle ratings that include such things as retail pricing and dealer cost information as well as detailed vehicle repair history reports.

Good, bad, and ugly back end products

But in addition to arming yourself with the knowledge of a vehicle’s specifications, you also need to know that car dealers sell a number of other products and services on the “back end” (the car is considered to be the “front end”) of the sales transaction.

At Auto Credit Express, we’ve been around the retail automotive business long enough to know that most dealers are pretty straightforward when it comes to selling you a car. But even we have to admit that there are a few dealers out there that give the rest a bad name by trying to trick buyers into paying for additional products and services that they really don’t need.

To be fair, many of these back end products could end up saving you money in the long run. Products such as gap insurance make sense if you have very little money down and are financing your car for more than 36 months. A service contract might also help you if you drive a lot of miles and are planning on financing your new car beyond the original warranty term. A service contract makes even more sense if you are buying a pre-owned car with little or no warranty and you’re on a tight budget (where a major repair would really strain your pocketbook).

Here is our take on a select few back end products:

The good

Gap insurance – depending on your situation, this type of protection is well worth the cost. See the explanation above.

Service contract – Although this is also one of the good adds, it isn’t always a good one for everybody. If you don’t drive very many miles and keep your vehicles for only two to three years, turn it down (if you are buying a new car). You don’t need it. Above all, don’t let anyone tell you that you have to purchase an additional warranty because the bank requires it.

The bad

Market adjustment – This one can be tricky. If a customer can offer a dealer less than MSRP for a vehicle (which is done thousands of times every day), why can’t a dealer ask more than the MSRP if the vehicle is popular and in high demand? One way to check this issue out would be to take a poll of various dealers in your area to determine if you are able to buy a particular vehicle at or less than MSRP. If you can’t, it’s your judgment call as to whether or not it is worth the extra money to buy it now or whether waiting a few months might save you hundreds or even thousands of dollars.

The ugly

Window etching – Window etching involves etching your vehicle’s VIN number onto the windows of your new car – for a price. The cost of this service can range from as low as $200 to as high as $350 or more. You might think that you did a good job by bargaining the price down to a hundred dollars or so, but that’s still much more than it would cost you if you did it yourself (and you can). If you really feel you have to have your windows etched, you can buy a window etching kit in most auto parts shops for around $20.

Preparation fees – Believe it or not, in this day and age there are still a few dealers that think they can add preparation fees to your bill for cleaning, test driving and replacing fuses on your new car. But a closer look at the Monroney Label (window sticker) will tell you these fees are included in the MSRP as set by the manufacturer. If this is added to the buyers order, ask that it be credited back to you. If it isn’t, just walk away from the deal.

The Bottom Line

Whether or not you decide that you need a particular back end product is a decision that you will have to make. Just make sure you’re not paying for any of the “ugly” ones before you sign on the dotted line.

At Auto Credit Express we have helped literally thousands of people with bad, blemished, bruised and tarnished credit buy cars and reestablish their credit at the same time. Our nationwide network of affiliate dealers specializes in bad credit car loans. Our web site, www.autocreditexpress.com, will help you determine how much car you can afford and unlike many other sites, our toll free number is listed on every page in case you have any additional questions.

So why not begin the process right now by filling out our secure online bad credit car loan application to see what we can do for you.

Posted on June 8, 2010 by in Backend Products
Reader Comments

One Response to What Not to Buy with a Bad Credit Auto Loan

  1. Auto Loans says:

    Gap Coverage is designed to cover the difference between the value of your car at the time it is totaled and what you owe to the finance company on your loan. There are many scenarios that would call for you to get gap coverage. First, consider this. Even if you paid exactly what your insurance company would pay out in the event you crashed your car for the car you purchase, you still will also have tax, title, and license fees on top of your loan. Also, most people have a deductible on their insurance so add on around another $500 dollars. If you have bad credit, that means you will probably not get prime finance rates. This will cause more of your payments to go toward interest decreasing the amount you knock off your loan. This will likely make you have negative equity for a longer period of time.

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