Car Buying Tip #9 -- Extended Warranty -- Don't Get One!

This is a follow up to my original article entitled Extended Warranty -- Get One! In this article, I'm going to point out the customers I've found that don't necessarily have to have the protection an extended warranty can offer.

The first set of customers I'd like to identify are those that only buy new vehicles and trade regularly before the factory warranty expires. I don't think I need to spend a lot of time on this, because you are already covered, and to buy an extended warranty, legally referred to as a service contract, would be a waste of money.

The second set of customers I'd like to identify are those that have extreme incomes with a low debt ratio. If, using an extreme example, you have a monthly income of $20,000 with monthly expenses of only $3,000, then you should be able to comfortably afford an unexpected $1,500 repair. On the other hand, I've found people with those types of incomes are usually buying high end vehicles where the average repair might be in the several thousand dollar range.

I'm reminded of my days working for Volkswagen, and the repair costs for one of their Touareg models. I remember a customer that had to have the diesel engine replaced...cost: $18,000 plus. Just to have the brakes changed was close to $1,100...Ouch! Now imagine even higher end vehicles like Mercedes, BMW, Porsche, etc.

The option to purchase an extended warranty will simply be up to you at this point. Keep in mind that both the extended warranty company and the car dealership profit when you purchase an extended warranty, so you'll want to weigh your options carefully. On the other hand, even with a profit for both the extended warranty company and the car dealership, I've seen where extended warranties have more than paid for themselves, on many an occasion.

I know of many well to do customers that "will" purchase the extended warranty, simply because $1,500 to $3,000 for the warranty is a drop in the bucket for them and they simply don't want to deal with the hassle of haggling with the service department over repairs. They just want it fixed and fast!

The last set of customers that I'd like to identify are those that are purchasing very inexpensive vehicles. Extended warranty companies will typically have a clause in the contract that states that the repairs they will make to the vehicle shall not exceed the wholesale value of the vehicle immediately prior to the mechanical breakdown. What this means, is if your vehicle has a wholesale value of $1,500 the extended warranty company will not authorize any, accumulated over the life of the extended warranty, repairs that exceed the value of the vehicle.

The reason this is important to note is that a vehicle that is worth $1,500 wholesale is probably old, with high miles and the extended warranty is probably going to cost more then the max payout you could ever expect to receive.

I hope this car buying tip has helped to shed some light on the sometimes confusing issue of extended warranties.

As mentioned before some people that fall into the categories listed above still opt for the protection, and additional benefits, of the extended warranties. If you'd like to get more information, I've found what I consider to be the most comprehensive coverage available. In fact, this coverage is more comprehensive then the coverage I offer at my car dealership. To get a FREE quote Click Here...

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Car Buying Tip #8 -- Extended Warranty -- Get One

If the thought of an extra $25 - $30 a month seems like more than you can handle to get an extended warranty, then you probably need one.

I see it all the time, customers come to the car dealership I work for and are looking for a $300 payment. By the time all is said and done their base monthly payment is $350, already exceeding their "max" payment by $50, and now they are faced with the decision to protect their personal finances and credit rating with an extended warranty, but the increase in payment is more than they feel they can bare.

First off, I'd suggest you work a deal on another vehicle where payments would be more comfortable for you. One of the number one reasons people face repossession is that they simply can't afford the vehicle and have no choice but to give it back. This is especially true when a customer is maxed out on payment and the vehicle breaks down.

Think you are having problems with a $350 payment, what happens when you take that $350 payment and add a $900 unexpected repair to that? To simplify this, your monthly payment would have been more like $1250, with repairs, vs. a $380 payment with the extended warranty. I hope you catch my drift on this, because it can mean so much to your present financial condition and to your future credit rating.

If you do opt to purchase the extended warranty, legally referred to as service contract, read the contract carefully. You'll want to know if you are purchasing a stated components coverage, or an exclusionary coverage. Exclusionary coverage is always the better option.

Exclusionary coverage will simply state that everything on the vehicle will be covered except for what is listed in the Items Not Covered section of the contract. A stated components coverage will state that the items listed are the only parts that are covered. Unless you are a Master Mechanic, how will you know what the items are that won't be covered? This is where a lot of people have had bad experiences with extended warranties.

It all comes down to the Finance Manager at the car dealership not explaining the warranty in depth and customers not knowing the right questions to ask.

To sum this up, unless you've got several thousand dollars available that you could comfortable part with over the course of your ownership of this vehicle, buy an extended warranty.

I hope this car buying tip sheds some light on the sometimes confusing issue of extended warranties.

I have found an extended warranty company online that, hands down, has the most comprehensive exclusionary coverage available. In fact, this company offers coverage that I don't even offer at the car dealership I work for. Not because we wouldn't want to offer this coverage, but we simply haven't found a company that has coverage like this available to car dealerships. They are a very financially sound company, and they pay claims quickly, without hassle. To get a FREE quote Click Here.

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Bad Credit Tip #3 - Bad Credit Loans

So you've got bad credit, no credit, or straight out horrible credit. You've applied to nine lenders online and gone to four different car dealerships to get the same answer from all. A resounding, NO! Well, don't despair. Your world is not tragically crumbling down around you.

"What's the problem," you ask. Good question. You're looking in the wrong places. You may be thinking that you have applied to some of the biggest banks in the country and have gone to some fairly large dealerships, so if they can't get it done, who can?

First off, the larger banks, do not typically cater to those in search of bad credit auto loans, nor do most car dealerships. For the lenders there is simply too much risk and for the car dealerships it is, in their minds, too much of a hassle.

That is where sub prime loan specialists, like myself, come into play. A good sub prime loan specialist understands your needs, knows the right lenders, knows how to properly structure a bad credit auto loan, and stocks the right inventory.

My advice would be to call local car dealerships, ask them if they have a sub prime credit department and if you could speak to one of the finance specialists (be sure it is not a sales person you are speaking with). Once on the phone with them explain your situation and see what services they can offer to help you. If you like what they have to say, go visit them. If you don't like what they have to say, call the next dealer in the phone book, until you find the right one.

It's a little time consuming to make all these calls, but it's well worth it when you find the right loan specialist that can get you on the road and driving again.

If you'd like to bypass all the time consuming calls and find local loan specialists that can help you quickly I'd strongly suggest applying Here. It's FREE, fast, easy and with their huge nationwide network they can put you in touch with a loan specialist that can have you driving your new vehicle in as little as 24 hours.

In the mean time...

Take care and beware,
J the car guy

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Bad Credit Tip #2 - Settle For Less

This is an easy one that can help you to save hundreds, if not thousands when trying to clean up your credit. Before I get to the Bad Credit Repair Tip let me quickly explain how collections companies work.

Most collection companies will buy your debt from the original creditor for pennies on the dollar, hoping that their expertise in collecting will allow them to make a rather substantial profit if they are successful, and you pay in full.

Let's say that XYZ company had given you a loan for $1,000 and you were to repay the loan within one week. Well XYZ hasn't received a payment and it's now two months later. They forward your now delinquent account to their in house (if they have one, not all do) collection department, where they will try to collect. Now, another four months has passed and they haven't been able to collect, so XYZ company is now going to try to cut their losses and get paid whatever they can for that $1,000 from whoever is willing to pay them something.

In this case, ABC collections is glad to step up to the plate and pay $200 for your $1,000 debt in hopes that their far superior (sometimes they get big heads) collection skills will allow them to collect that $1,000 and gross an $800 profit.

Here's where you can save some money...Your ready to get a new loan for a car, house, credit card, etc. and realize to get the better rates it's time to clean up your credit. My suggestion is to try and settle for less.

Using the above example, you call ABC collection agency and tell them you'd like to settle your debt, but have let's say only $500 and that's all you can afford, would they agree to accept your $500 to settle your $1,000 debt. More often than not the bulk of these collection agencies will settle for less, and in this example would have pocketed a $300 profit plus their $200 initial investment.

Way to go!!! You just moved yourself one step closer to getting your credit restored and saved yourself $500 in the process. Don't forget to ask them to stop reporting to the credit bureaus. Read my post on removing these items Here

In the mean time...

Take care and beware,
J the Car Guy

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Random Car Buying Tip - Buying Cheap Used Cars

Just a heads up for those of you that have $2,000 to $3,000 cash to buy a car with, a car dealership is probably not your best option. You see a car dealer has a certain level of responsiblity they take on when they sell a vehicle and they don't want to get caught up selling a $2,000 which is probably old with higher miles for a $200 profit let's say.

You will also need to pay sales tax and any dealer fees that apply. In Arizona, where I live, a private party purchase for a vehicle is exempt from taxes, which is always nice, and you avoid all dealer fees, which applies to any private party transaction (obviously).

If you're looking for an inexpensive vehicle I'd definitely not waste your time looking at car dealerships, until you've exhausted your search in your local paper, or one of the online sources available. You'll probably find you'll get more vehicle, in better condition, with less miles, for the same money.

I know of a great site to sell your vehicle private party, so I'll go way out on a limb here and assume they are a great place to buy a used vehicle Here.

In the mean time...

Take care and beware,
J the Car Guy

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Watching the car dealer auction

I'm watching the car dealer auction, out of Phoenix, online right now and I'm telling you if you're in the market for a used Truck or SUV now is the time to buy. These things are selling so cheap right now!!! I'm watching these vehicles sell for $5000 to $8000 back of wholesale book. Cheap, Cheap, Cheap...

On the other hand I would absolutely stay away from New Trucks or SUV's. If you buy one expect to take a bath, a major bath, as soon as you drive off the lot. If you absolutely have to go with a new one lease it.

Take care and beware,
J the Car Guy

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Bad Credit Tip #1 - Have that collection removed

I see it all the time, people trying to do the right thing and clean up their credit, but doing it the wrong way. One of the easiest, but top mistakes I see people make when cleaning up their Bad Credit is to pay off or settle a collection and not insist that the company stop reporting to the credit bureaus.

It's simple to do, just insist that before you pay the company will stop reporting the collection. Make sure to get an actual commitment and not some round about we'll see what we can do. Preferably get it in writing.

The reason this is so important to cleaning up Bad Credit is because you don't want any sign to future lenders that an account had to go to collections before you were willing to pay. Not to mention, it will drag on your score for some time to come.

Repairing Bad Credit can save you thousands in the long run with lower APR's on vehicles, mortgages, etc... It's also a little embarassing to get turned down for a loan in public. Do yourself a favor and review your credit today Fico Scores/Reports

Take care and beware,
J the Car Guy

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The car market is terrible, now's the time to buy!!!

First off, I'd like to apologize for not posting in awhile and for some of the delayed responses to emails I've received. Unfortunately, there hasn't been much to report due to the very big slow down in sales. Secondly, I had to attend to some personal family matters that had me out of town for more than a week.

That being said, NOW is the time to buy if you are in the market for a new (I personally wouldn't go new) or used SUV or Truck. Dealers are practically giving them away! If you're trading in a truck or SUV don't be too shocked when you see the trade in value. Cars are currently selling at auction for over wholesale book, while some of the large trucks and SUV's are selling for as much as $9,000 back of wholesale.

I personally just bought a 2005 Expedition Eddie Bauer addition with 23,000 miles for $4500 back of book and traded my '06 F150 Crew Cab XLT for about $5000 back...OUCH!!! The Expedition I bought is way nicer with the big V8 and I'm very happy. I thought I'd share that with you, just to let you know that even me being inside knew I was going to take a bath on my truck, because I could see what they were selling for at auction. So again, don't be surprised to see little numbers for your trade, but definitely don't pay retail for the new one.

You may want to try and sell your trade in on your own and get yourself more money. If you do I'd Sell your car on Cars.com: reach 65% of online used car shoppers


In the mean time...
Take care and beware,
J the car guy

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