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Do you remember the old saying, "If it seems to good to be true, it probably is"? That is true of most all no credit (or poor credit), no problem' deals. Especially for car dealerships offering this deal, the deal is very good for the dealership, and very bad for the consumer. If the company is willing to take the huge risk of granting credit to someone with a low credit score, they are hiking the interest rate up dramatically. The payments end up being huge, and if the consumer fails to make payments, the car is repossessed and the dealer makes out. If the consumer does make the payments, the company will make thousands more in interest payments.

It is not only missing payments that can cause problems on a credit report. Companies can also see the interest rate you are paying, and know immediately that other companies found you to be a big risk. This is certainly not going to get you a great rate there. If your credit score is less than stellar, it might be best to try to build it back up a bit before trying to finance anything. Paying down balances, and paying on time is the best way to make your credit score go up, which in turn will lead to lower interest rates and lower payments in the future.

Many companies will lower your risk level and your interest rate if you have money to put down. Saving up for a larger down payment may be worth your while when it comes to payments and interest rates. Keeping the money in the bank is not a good decision if the interest rate on your loan is higher than the interest you are making keeping your money in the bank. The extra money spent on interest payments would be less than you would earn in interest.

Very often companies that offer deals for poor or no credit customers have many hidden clauses, and it is crucial to carefully read all paperwork before signing. Often the high interest rate given in the beginning skyrockets if a payment is late, and will stay at that high rate permanently. It is important to know all the terms and conditions before agreeing to any contract or financial agreement.

Unfortunately there is no such thing as no credit or bad credit not being a problem in our economy. Credit scores are very important in our financial lives. Credit scores should be checked at least yearly. There are sites on the web like myfico.com and Equifax.com that offer downloadable credit reports for a fee. Again there are sites that offer them for free, but beware. Nothing is free. These sites often sign you up for a monthly monitoring service, and your credit card is charged each month. It is much less expensive to spend the $10 and monitor your report yourself yearly.

Always beware when you hear or see an offer that just seems to good to be true. The last thing any of us want to do is get in over our heads, struggle with payments, and lower our FICO score. We must all be vigilant in reading documents, and knowing exactly what we are getting into when we sign our name on the bottom line. After all, your credit is at risk.

Learn more about this author, Melissa Myrick.
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