Add-on expenses are any products that the dealer tries to sell you above and beyond the car itself. Since auto loans in Illinois (and across the nation, for that matter) are easier to get on lower dollar amounts, especially if you have bad credit, avoiding these add-ons could improve your chances of approval. In addition, many of these add-ons are just profit makers for the dealer and are not necessary. Let’s look at a few and whether they are needed or not.Gap insurance is a popular add-on for new cars or used cars that are less than five years old. Many dealers will point out that the car will depreciate faster than the payments will lower the principal, leaving you with a possible liability if the car is totaled in an accident. This insurance may be wise if you do not put at least 20% down on a car that is less than five years old. With a higher down payment or a car that is older, it is unnecessary. Extended warranties are a real risky buy. If the car is new, it should last the life of the loan. Any car over five years may not. It is a close call whether you are wasting your money here. Dealer prep fees border on fraud. The dealer has no fees involved in prepping a new car. They take them off the truck and park them for sale. Undercoat, window etching, or window tinting are all going to be marked up 300-500 percent in a dealer’s shop. Do not let a dealer talk you into any of these garbage expenses.
Getting a bad credit auto loan in Michigan is all about setting yourself up for traditional financing in the future. You need to show a high down payment and a low debt to credit ratio as well as adequate income to repay the loan. Unnecessary add-ons at the dealer will defeat your purposes. Keep the deal as cheap as possible.