Why no Credit no Problem Promises can be a Scam

Ouch! Ouch! Ouch! My daughter got caught on one of these “no credit no problem” scams. Bankrupt and newly divorced, she had a car that barely crawled down the road. She needed something that ran just to get to work. Her old car practically need rebuilt from the tires up. She didn’t have the money for that, and normal credit wasn’t available for a decent different car loan.

The exact day she got enmeshed with her particular “no-credit, no-problem” firm was a day when I was driving down the road and heard a radio ad for one of these firms, possibly the same one. “Horrible interest rates,” began flashing through my mind. I tried to call her on my cell phone to say, “Don’t go for anything like this.” No answer. Got home to find out that she had already signed a contract – and she’s been paying for it for more than five years. And the outrageous interest rates were only part of the problem.

First of all, this dealership had no used cars, just new ones. Second, they had no lower-priced models of the cars available. She ended up with a mid-sized, pricey Pontiac she didn’t need or especially want; but it was available and she could drive off the lot by signing her life away at interest rates above even credit card rates-far higher than normal auto loan bank or dealership rates.

Of course, she got behind on the truly expensive payments and began paying interest on interest, plus horrendous late fees. Eventually, she did get a better job and has gradually pulled herself up to normal on the loan. She even, finally, managed to get a couple of payments ahead so that she was able to cancel out quite a bit of interest. Now she pays an extra $50 a month on the payment to keep this up. But she drives a lot. By the time she finally pays off this “easy credit” loan, she will need another car. Thank heavens, her credit will be at least somewhat better and she should be able to get a normal loan. And not have to buy a new or expensive model.

In the end, you always PAY extra for what sounds easiest. My daughter, at least, got a decent and real car from her “scam” (even if she was not able to afford a new one at any interest rate). I’ve heard about people who have received inferior quality items of different types with the same outrageous interest rates, strict payment penalties, etc. Nothing, ever, is “easy credit.” Or…well, maybe it’s easy but, when it is, it’s never CHEAP!