Bad Credit Car Loans and Extended Car Warranty Fraud

February 6th, 2011 Mary Stults Leave a comment Go to comments

An extended service contract can be a smart choice when financing with a bad credit auto loan but beware of scams from illegitimate companies

Take it from us

If you’re currently thinking of purchasing an extended warranty for a bad credit car loan, you’ll want to be aware that there are a number of companies out there representing themselves as warranty companies that are fraudulent. We know because at Auto Credit Express we’ve worked with bad credit retail car buyers for more than two decades.

An example of our commitment includes a web site with a bad credit auto loan application – something we realized was needed after seeing the frustration and disappointment which customers with bad credit experience at dealerships that don’t offer second chance auto loans.

And while credit-challenged buyers can always visit a local tote the note dealer, this won’t solve their car credit issues since these dealers usually don’t report loans or loan payments to the credit bureaus.

Buying used

With the high cost of most new vehicles, we know that most of our applicants will decide that it makes economic sense to finance a used car. Buying a one, two or three-year old vehicle helps avoid the 15 to 30 percent depreciation that will most likely take place during these years.

But even though the quality and durability of used vehicles is at an all-time high we do strongly suggest you consider purchasing an extended auto warranty that will cover the entire length of the loan.

There are a number of reasons for buying one if you have bad credit and are on a tight budget, not the least of which is that it may help you avoid large, unforeseen car expenses – one of the biggest reasons bad credit auto loan buyers are forced into repossession. We also encourage you to buy it from the selling dealer, for reasons you’ll see here: Being aware of warranty scams

Take it from us, just as soon as you buy a car (even if it’s already covered by an extended warranty), you will be deluged with letters and phone calls from companies that “specialize” in used car service contracts. Many of these “warranty” companies will do anything to get you to part with your money.

To accomplish this, these warranty companies buy lists that contain the names of consumers who have recently taken delivery of a new or used car. These lists are then divided up and given to telemarketers who call these new owners in order to sell them an extended warranty. Included in these sales pitches, consumers have been told that:

• Their current warranty is getting ready to expire, when that isn’t true • The company is selling them an extended auto warranty, which is not accurate (they are selling a service contract which does not “extend” the new car warranty and, in fact, may even overlap their existing warranty). • The caller represents the selling dealer, when in fact they are calling on behalf of an independent service contract company. • The caller represents the manufacturer, which is also not true. • The service contract is a “bumper to bumper” warranty just like the factory new car warranty, which it’s not. • If they’re not fully satisfied with the service contract, they will get a full refund. In many cases, when the customer calls back to cancel the contract to get a refund, they’re unable to contact anyone at the company. What you can do

If you’re contacted by one of these companies, request a name, address and phone number. Then, contact your Better Business Bureau as well as the Consumer Affairs department of your state and ask if the company is licensed to do business in your state before you do anything, to be sure it’s legitimate.

If you registered with the Federal Do Not Call List, they shouldn’t even be contacting you in the first place.

Financial Freedom Expert