The Pros and Cons of Purchasing an Extended Warranty on a New Vehicle

Before you sign on the dotted line to become the proud owner of a new vehicle, you'll often be approached to purchase an extended warranty for the vehicle. Extended warranty coverage kicks in once the manufacturer's warranty expires. If you're not planning on keeping the vehicle long enough to see the manufacturer's warranty end, an extended warranty is not a wise buy.

Warranty's Issuer -- Con

If the extended warranty you are considering purchasing is offered by a third party -- not the manufacturer -- there's no guarantee the company will be around in several years when you need the coverage. If you invest the money up front to buy the warranty and the company no longer exists when you need it, you'll have made a worthless investment.

Coverage for Excessive Use or Long Term Ownership -- Pro

If you plan on keeping your car for five or 10 or more years, an extended warranty can be useful. Once the manufacturer's warranty runs out, you'll have the advantage of the extended warranty that can cover your vehicle's repairs. This is especially helpful if you plan on driving your vehicle excessively and racking up the mileage.

Exclusions -- Con

It's important to read the fine print when deciding whether or not to purchase an extended warranty. Some of these warranties exclude so many instances of repairs or replacement parts that the purchase price is not worth what you will receive in return. While many of these type of warranties won't cover car parts that can wear out many times over the life of the vehicle, such as batteries or mufflers, some of them will have more uncommon exclusions such as shock absorbers and brakes. Take the time to read the fine print and ask the issuer of the warranty if you have any questions.

Transferability -- Pro

Some extended warranties will end when you transfer the ownership of the vehicle, while others will not. Having an extended warranty in effect for prospective buyers can sweeten the deal -- especially if you are selling your vehicle privately and not trading it in through a dealer. Before you sign up for an extended warranty, ask if it is transferable.

Other Cons

Since extended warranties differ, it's important to thoroughly understand what the proposed warranty entails before you purchase. For instance, ask if you can take your car anywhere for repairs, or if there's only one or a few choices for repair work. In addition, many extended warranties require that you pay the expenses out-of-pocket and receive reimbursement later, which can sometimes take months. Some extended warranties offer a per-repair deductible, which can add up. You will have to pay the deductible amount -- such as $100 -- for each repair performed during a visit. It's probably better to opt for a per-visit deductible.

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How to Refinance a Truck

Owning a truck has several benefits, the most obvious of which is the truck bed that provides much more cargo area than cars or smaller vehicles. Buying a truck with an auto loan allows you to pay for your truck over an extended period of time, commonly up to five years. If your truck loan is difficult to repay or you think you can get a higher interest rate, refinancing your truck may save you money and extend your repayment period.

Instructions

1

Review your payment history and contact your current loan holder to find out the exact amount still owed on your truck. If you have made all of your payments on time then you are likely to get a better deal on a loan refinance, but you can still refinance even if you have some late payments. Checking your credit is also important, as it will show you how much your credit score has changed since you took out the original loan on your truck.

2

Contact the bank or other lender that holds your current auto loan and request a quote on a refinance loan. Explain to them your reasons for wanting to refinance, being upfront about having difficulties making your payments in full or simply wanting to save money. Do not apply to refinance at this time, since you just want a quote to see how you could benefit by refinancing through your current lender.

3

Visit other lenders that offer automotive financing and request refinance loan quotes from them as well. Don't forget to include online lenders in your search, as some online lenders are backed by nationally recognized banks and specialize in refinancing existing auto loans. Provide as much information as you can for an accurate quote without applying for a loan, and ask whether any fees or other charges must be paid during the refinance process.

4

Compare the loan quotes you've received, looking at the quoted monthly payments and interest rates. Take special note of any introductory refinance rates, as these will increase once the introductory period ends. If there are fees or other charges associated with the loans, take these into consideration as well. Contact the lenders that offered you specific quotes that you have questions about and ask them to clarify the quote.

5

Visit or contact the lender who offered you the best quote on a refinance loan for your truck, speaking to the same individual that gave you the quote if possible. Remind him of the quoted interest rate and loan terms, keeping in mind that your interest rate may vary slightly on the actual loan depending on the credit score they receive when they run your credit during the application process. Fill out and submit the refinance loan application, and then wait for the lender to contact you concerning the loan's approval.

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Can I Finance a Car with a Rebuilt Title?

One way to minimize the cost of purchasing a vehicle is to consider buying one with a rebuilt or salvage title. While these vehicles have sustained prior damage, this often means that you can purchase them for less than a similar model with no prior damage. However, if you need to finance the purchase, you're likely to have difficulty obtaining a loan.

Identification

A rebuilt title may be issued to a vehicle that has been declared a total loss by an insurance company after an accident and is then reconstructed. Each state has specific guidelines that vehicles must meet to receive a rebuilt title before being put back on the road, and many require that they be inspected first to ensure their safety. The vehicle owner must also find an insurance company that is willing to provide coverage for the vehicle.

Obtaining Financing

According to the Fox Business website, it can be extremely difficult to obtain financing for a vehicle with a rebuilt title. Financial institutions tend to shy away from rebuilt vehicles because it can be difficult to assess the true amount of structural damage the vehicle sustained. Understandably, banks are leery of loaning money for a vehicle with uncertain reliability and that may not last for the life of the loan. Another problem is that insurance companies are often reluctant to insure rebuilt vehicles.

Borrower Default

Banks also avoid financing rebuilt vehicles because of concerns over borrower default. Some potential borrowers may resort to purchasing a rebuilt vehicle because credit issues may prevent them from obtaining a loan for a standard vehicle. If the borrower defaults on a loan for a vehicle with a rebuilt title and the lender needs to repossess it, the vehicle's low value means the bank will receive little when it attempts to resell it.

Options

If you have a very good relationship with your current bank and have previously financed vehicles through it, you can see if it is willing to finance a rebuilt vehicle. Another option is to explore purchasing a vehicle through rebuilt vehicle dealers such as SalvageTitleAutos.com, which offers financing in some cases. You can also apply for a personal loan from a source such as a consumer finance company and use the money to purchase a rebuilt vehicle.

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What Do I Need to Know When Purchasing a Car?

Buying a car is one of the most important decisions the average person will make in his or her life lifetime. The type of car you buy can affect your safety as well as the number of people you can transport or the amount of cargo you can haul. It is important to have as much information as possible before purchasing a car to ensure that you make an informed decision.

What is the Vehicle's History?

If you are buying a used car, it is imperative that you are aware of the vehicle's history, such as any accidents it has been involved in and other events that may have damaged the car. Sellers of used cars may be reluctant to divulge history information if they think it will drive customers away. CARFAX is a vehicle history reporting service that is able to provide information on crash history of cars based on the Vehicle Identification Number (VIN).

What do I Need out of My Car?

It is important to know exactly what you plan to use a car for before buying it. The features of the car should fit your needs and preferences. For instance, if you simply plan to use the car for commuting to work, a small sedan with good gas mileage might be a good choice. On the other hand, if you need to transport children or carry large amounts of cargo, a van or truck might be a better fit.

How much Car I Afford?

Salesmen specialize at getting people to buy more than they want or need. It is important to determine your budget for a car ahead of time and stick to the budget so that you do not stretch yourself financially. Consider leasing a car if you like having the newest and best technology. When you lease, you pay a monthly fee to use a car instead of buying it outright. Leasing can be a costly option, but buying new cars every few years to upgrade to newer models can also be very expensive.

Warranties

New cars typically come with a manufacturer's warranty that covers various mechanical failures the car might suffer. It is important to be aware of all the warranties that apply to the car and how they compare with other vehicles. For instance, one car might have a five-year power train warranty while another might have a 10-year warranty. If you purchase the car with a shorter warranty and the engine fails, you might be stuck with a costly repair bill. Some car dealers also offer special deals, such as free oil changes and discounts, if you bring the car back for maintenance after you buy it.

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How Does Car Refinancing Work?

A car refinancing can lower your interest rate, reduce or increase your payment period and decrease your payments. When a car is refinanced, the original loan is paid off by your new lender, and the lender then establishes a loan agreement with you.

Definition

A car refinancing occurs when a borrower replaces the original loan with a new loan, whether from another lender or with the same bank. The new lender pays the entire original loan and gets the title to the vehicle being refinanced. A new car financing contract is drawn up between the borrower and new lender. The borrower makes payments on the car loan as usual, but he now makes them to the new lender instead of the original lender.

Process

A borrower does not need to wait for a certain time to look into car refinancing, unless his original loan contract has a prepayment penalty. Such a penalty charges a fee if the loan is paid off early, but this clause is more often seen in mortgages than in car loans. The borrower can talk to his original lender about refinancing options or gather quotes from other lenders. Once the borrower has found the quote that meets his needs, he applies for the loan. The application process varies from lender to lender, but it should not vary greatly from the original loan application process.

Advantages

Refinancing a car loan comes with many advantages. One major reason for refinancing your car loan is to reduce the interest rate. If you took out a car loan while your credit was bad, your interest rate may be much higher than the prime rate. Refinancing after your credit is cleaned up can save a great deal of money. You may also choose to lower your car payment by extending the amount of time for the loan contract. If you extend the contract, you will owe a higher amount due to accumulated interest, but the monthly car payment may be lower.

Disadvantages

If you are in a worse credit situation than when you initially got the car loan, you may not be able to find refinancing terms that are favorable to you. Your car may not be eligible for a refinancing due to the amount of equity in the vehicle --- namely, if you have negative equity. Negative equity, referred to as an upside down loan, occurs if an auto loan is higher than the car's actual value. The lender may also refuse to refinance if the car loan is not large enough.

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What Is the Law in Florida If Someone Sells You a Car With a Lien?

Florida law requires you to acquire a car's title when you buy a car. To acquire the title, the former owner signs the title over to you and you also sign. Any liens on the car are stated on the title. Paid liens should have a stamp that says "lien satisfied" over them. If you buy a car with a title that includes current liens, you must pay the liens off before you can fully own the car.

Liens

Liens are claims by creditors made on a piece of property. A creditor can sell the property to repay the debt if the debtor does not stick with an agreed upon payment plan. All liens are reported on the property's title, and in Florida, car liens fall under the "liens on personal property" category. Many people take voluntary liens when they sign up for car loans.

Mechanical Liens

Florida allows businesses that have worked on property to place a lien on the property if the property's owner cannot pay. If the previous owner could not pay a car repair bill, a lien may have been placed on the car. Furthermore, subcontractors can place liens on property if the contractor did not pay them.

Car Liens

Once a lien is placed on a car, it stays on the title until the debt is paid off -- even if the title transfers to a new owner. Because the lien is on the car, you are not responsible for paying off the debt; the creditor cannot go after you, take you to court or try to take any other property. The creditor can reclaim the car to pay for the lien, though, and you can only be clear of this threat by paying off the lien.

Warning

Always request the title, research the title, and have the previous owner sign over the title before giving the owner money for a car. Florida law assumes that you saw the title and received the title before giving the previous owner money, because you cannot legally own the car until the title is in your name. As such, the law offers no recourse for liens that came with the car, as valid liens are stated on the title.

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How to Refinance My Auto

You're the proud owner of a brand-new auto but the interest rate on the loan you got from your dealer is sky high. If you have a good job, better than average credit, have been making auto loan payments for at least three to six months, and have not moved in the last six months, you may qualify for an auto refinance. Even if you have bad credit, a discharged bankruptcy or other liens on your name, you can refinance your car and drive away with bigger savings.

Instructions

1

Gather information necessary for an auto refinance, such as your current auto loan contract and the account number, the exact name and spelling of the owner of the auto, the year, make, model and vehicle identification number (VIN), and any modifications that were made to the auto since you bought it.

2

Obtain a copy of your credit report from Experian or Equifax and look at it closely. Get old addresses removed, correct any errors and close old accounts before applying for auto refinancing. Your credit score, debt-to-loan ratio and your past payment history will be examined before a lender will qualify you and lock you into an interest rate.

3

Call your current auto loan company and get the loan payoff amount and the date it'll expire. Find out if there's a prepayment penalty and how the interest has been calculated. Read your current loan contract to find out if you can get an interest refund for paying off the loan early.

4

Request free refinance quotes from My Auto Loan or Bankrate.com and compare rates and fees from several companies. Alternatively, visit local credit unions and ask about their rates. Credit unions can offer interest rates at about 2 percent lower than commercial banks, and you can be approved over the phone in a matter of minutes.

5

Refinance your auto if you can get a simple interest loan at a rate at least 1% lower than your existing loan. Ask for a detailed itemization of loan and title fees before you sign on the dotted line. Punch numbers on an online calculator to get an idea of what your monthly payments will be. Auto refinance loans may provide lower monthly payments, but may cost you more in the long run because they may be stretched out longer than your original loan.

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